2021 Outlook: Eric Jensen, Causality Link
Eric Jensen is co-founder and CTO of Causality Link, an AI-driven financial information technology provider.
What was the highlight of 2020?
We were fortunate to start 2020 off with the signing of a very large and significant new customer, a recognizable household name. Shortly after that, we closed a Series A investment round on the same day that the US stock exchanges halted trading. Using this round of funding, we completed the first iteration of our newest analytical engine, which enabled us to publish public, up-to-the-hour metrics that summarized how the entire world was viewing the impact of COVID-19 on segments, sectors and countries. It was humbling to experience these high points tempered by the fear and uncertainty surrounding us.
What surprised you in 2020?
As an investor, I was surprised by the recovery of (non-tech) stocks after the elections, as I had expected some industries to consider tax and regulation changes as potentially negative for their businesses. That macroeconomic theme was somewhat masked by vaccine announcements, so I will be quite interested to see how the continued COVID recovery will eventually and inevitably shift investors’ attention back to national and world trade and debt themes. We should expect this as the Biden administration begins to signal the changes it will attempt early in its term.
What industry trends have been prominent but are now fading (or will soon fade)?
Unsurprisingly, the oil industry, as well as the airline industry, have had serious blows and may never recover to pre-COVID norms, which also means a network effect for all of their subcontractors. Next, we believe the consumer banking industry will be hit hard due to vigorous attacks from the fintech sector. With all banking transactions moving online and significant growth and innovation in 2020 due to COVID, fintech companies will continue to encroach on the traditional consumer banking industry.
What are your customers’ pain points and how have they changed from 1 year ago?
Our customers are trying to predict the future of markets in general. COVID has introduced a level of uncertainty and volatility that has never been experienced before. This has disrupted all previous forecasting methods, including the change in customer behavior regarding travel, the change in commercial real estate usage and the change in shopping habits, each of which triggers a set of cascading effects that are difficult to predict using old models.
Financial firms can expect an increased in regulatory policing.
CEO sees AI, machine learning, and natural language processing gaining traction in investment research.
Firms need to analyze high volumes of data to deliver value to clients and boost workflow efficiency.
CEO sees buy-side firms increasingly focused on the structure of their outsourced trading firm.
Capital markets firms need to scrutinize compliance processes to keep pace with regulatory activity.