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Tech Trends for 2022

No one can tell the future, but at this time of year we can indulge in some crystal ball gazing!

2021 was not the year any of us expected. It was tough all round, for so many reasons. Following the initial reaction to a world thrown in to lockdown and pandemic restrictions emerged a shift in working patterns and consumer engagement through rapid development and deployment of new technologies. The shift in focus will go on to shape what we expect to see as key trends going into 2022.

We have seen at the end of 2021 that inflation in the UK now runs at over 5%, provoking the Bank of England to revise interest rates upwards. Until now, with interest rates at an all-time low (and consistently held there) cash has been cheap. As interest rates begin to rise, that cash is going to be squeezed. However, with more and more funds scouting for businesses including start-ups to invest in, the space is a competitive one very much in the entrepreneurs' favour.

Below we share some of our thoughts on tech trends for 2022. 


What Will Investors Look for in 2022?

Investors will likely have the following in focus as they assess next year’s investment opportunities:

Homeworking

Staff will have been faced with working from home, return to the office and possibly hybrid working going forward. Businesses will need to think about seamless transition of tools and communications between home and office in the new hybrid regime.

The demand on and for adequate IT infrastructure has seen a surge in value in tech companies and those that supply them. But they are not the only ones profiting. Cybercrime continues to increase and as businesses are pushed into greater reliance on IT and digital assets, they will need to also keep pace with cyber threats. Blockchain and other technologies continue to develop solutions in this field and gain the backing of investors.

The shift in work dynamics has also given rise to the “Great Resignation” and business will need to think carefully about how they react to the world awakening to the fact that in large part presenteeism was an illusion. Skills gap will emerge as staff rethink priorities and work-life balances with a drift of preference from employment to freelancer anticipated.

Health

For obvious reasons, remote health provision, whether it be patient monitoring or home testing is very much in the spotlight and we expect to see a surge in investor interest. Access to medical consultation through digital platforms will continue to grow and much of the development in this area will be in providing the patient with a human connection.

Education

This year has had a noticeable percentage of air time on news networks dedicated to the issue of educating children at home in lockdown. The educators themselves have been slow to develop the ideal solution short of re-opening schools and no particular tech developer has emerged as the forerunner yet. The space is set to be an interesting battle ground as education providers seek to facilitate more home based learning.

Environment

Notwithstanding that many of us may feel rather disappointed by what was achieved at COP26 by our political leaders, the world’s investors and entrepreneurs continue to see the benefit of developing green solutions. We expect to see renewed focus on impact and environmental technology investments. We also note the growing number of B-Corp businesses in the UK, something MBM Commercial has assisted a number of clients with over recent months.


Diversity Technology

Over the last year, businesses have been faced with adapting, responding and taking a stance on matters of equality, diversity and inclusion (EDI) in light of widespread social unrest and cultural division. If 2020 was the year for a movement to be reignited and bold statements to be made, and 2021 was the year for businesses to strategise their approach to EDI, then 2022 is the year for implementation and reflection. Technology has a central role to play.

The shift in working patterns (remote, in-person, and hybrid), and the significant move from employment to freelance, raises fundamental questions for businesses about maintaining culture and connection within the now-increasingly virtual workplace. As a core trend for 2022, businesses will have to continue to work hard to understand the diversity of their workforces, from appreciating the expectations and requirements of a multigenerational and multicultural workforce, to awareness of diversity of gender identity and gender expression.

Technology will be used to augment reality, enhancing social inclusion and communication amongst workers, investors, stakeholders and advisors. It will increasingly be used to capture data about the makeup of a business’s employees and clientele, leading to valuable insights. Data analytics and artificial intelligence will act as both a bridge to connect the new agile work force, and a ruler to measure gaps in the market. In 2022, we expect companies to both frequently use and create new technologies to quantify and capitalise on the value in a diverse population.


US Investor and Acquirers

What does 2022 hold for investment in UK businesses from the US and interest from US buyers?

Expectations on the US economic outlook include:

  • the US dollar will be strong;
  • the US economy will grow above trend in 2022, powered by strong labour markets and business investment;
  • more persistent or higher inflation is a risk that may provoke a harsher monetary tightening cycle; and
  • midterm elections in November are likely to usher in a change of control of the House and possibly Senate.

Our US Team expects the active interest from US investors in UK businesses to continue apace in 2022. USi nvestors and acquirers are attracted to the innovation offered by UK businesses and we expect that particular interest will be in disruptive technologies, including in healthcare, AI, big data, cybersecurity and net-zero carbon transition.

This is likely to mean that UK companies will continue to look to the US for investment in greater amounts than may be available in the U.K. and the trend for “Delaware flips” will continue (this is where a Delaware corporation is put in place as a new holding company), to facilitate investment from the US. An active M&A market is also likely to continue into at least the first half of 2022 with interest from US buyers in innovative UK businesses.

Will there be tightening of US securities laws in the wake of the Elizabeth Holmes verdict? Who knows - but it is a timely reminder to be very careful about what information is provided to potential investors especially in the US.


US Data Privacy

The need for a federal data privacy law in the US has taken on a greater urgency. In Summer 2021, the European Court of Justice invalidated the EU-US Privacy Shield. Plus, an increasing number of US states are taking up the mantle of legislating data privacy, which means companies which utilise personal data in their operations have to navigate a patchwork of privacy laws to their detriment. However, despite the pressing need and the relatively bipartisan desire to pass federal privacy legislation, the fact is that the Biden Administration has bigger fish to fry. Rising inflation, Covid surges, supply chain issues, a large infrastructure bill, and midterm elections on the horizon mean that any Federal legislation will likely take the back seat until at least the end of 2022. For now, businesses can take some comfort in the fact that the GDPR is generally seen as the gold standard. Businesses that abide by the GDPR are already well-versed in privacy by design when scaling up.


Going Meta

In the wake of Facebook’s rebrand to ‘Meta’, a key tech trend set to disrupt social media, technology, and businesses in 2022 (and beyond) is the emerging ‘Metaverse’.  

The Metaverse is a world which mirrors our own, but within a virtual platform, and is intended to provide an immersive, three-dimensional experience for users to socialise, create, buy, sell, and explore. A key aspect of the Metaverse is that it is not controlled by one specific entity. Like cryptoassets, it is a decentralized platform, however, with Facebook entering the Metaverse space, many believe this may compromise the values of decentralized platforms, which has resulted in the increasing popularity of other Metaverse worlds.

One key trend (from a legal and regulatory perspective) to follow in 2022 is the relationship between the Metaverse platforms and their respective cryptoassets that are used on their platforms to pay for services, products or experiences. How do our current laws protect consumers in a virtual world?

It will be challenging for lawmakers and regulators to keep abreast of the legal issues the Metaverse will inevitably pose, particularly as deregulated platforms do not provide certainty on how operations and transactions are managed, maintained and regulated. Until such time as the law catches up with the technology, consumers should be mindful that whilst the Metaverse may be the next frontier, it is still very much a wild west out there and care should be undertaken when making transactions or investments.


Focus on Employee Priorities

There’s no denying that the last few years have been challenging for employers – businesses have had to respond and adapt so quickly to different ways of working due to the pandemic. This seismic shift has been a catalyst for all manner of changes in the workplace and 2022 looks likely to be the year when employers need to turn their focus to what’s most important to employees in the workplace and how to go about delivering it. So, what trends do tech employers need to be aware of next year?

Diversity, Equality and Inclusion ('DEI')

2021 has seen many businesses and organisations making public commitments to improve diversity,  equality and inclusion, as the prominence of the Black Lives Matter movement has continued to grow, the pandemic has exposed significant inequalities, gender issues have been at the forefront (e.g. transgender rights, the increased acknowledgement of the impact of the menopause on employees and the (sadly) enduring gender pay gap), and broadcasters have made a sustained effort to support more people with disabilities into TV and the media.  And with at least four generations actively participating in the workforce just now, it’s more important than ever that employers put words into action, especially as millennials, in particular, are known to want to work with companies with a diverse workforce. 

In light of this, 2022 is likely to see more employers appointing diversity professionals and setting up DEI committees, ensuring workplace policies promoting DEI are put in place and followed, and initiatives are taken to acknowledge and combat bias in recruitment procedures, training and promotion opportunities.

Agile working 

Now that the majority of employers who can do so have implemented some form of home, remote or hybrid working policies and this has become the norm, what’s next for these types of work models? It’s become apparent to many employers and employees that one size does not fit all and 2022 is likely to see more refinement of company policies on the working model and a bigger shift towards agile working, whereby the employee chooses when, where and how they work. The key to the success of agile working is an employer’s ability to align staff to the company’s vision and values, allow teams to achieve business goals in their own way (without too much control), excellent communication, a focus on client care and a willingness to reflect on how services and work methods can be improved, admitting failure and learning from mistakes.

As all forms of remote working are likely to include some home-working, the issue of whether location-based pay could well be revisited by employers. For example, US Google staff who decide to work from home permanently after the pandemic will have their pay determined by their location. So, if a London-based company has employees who earn salaries increased by London-weighting but move to a less expensive areas of the UK and work from home, one option is to cut their pay to the market salary in that area. So far, only a small number of UK employers have taken this step as cutting pay, no matter the justification, is always tricky and risky, but companies are likely to watch each other keenly to see how different pay policies pay out. 

Talent attraction/recruitment/retention

On the one hand, given the move to agile working, employers can cast their recruitment nets much wider than before and attract candidates from all areas of the UK and abroad and this is certainly something we’ll see more of in 2022.  Recruiting employees from abroad is not without its challenges – there are tax, legal, salary, insurance and management issues to consider – but, on the whole, this is likely to be a positive development for employers. On the other hand, the UK is seeing “the great resignation” with surveys showing that one in four employees are planning to move employers in the coming months, prompted by the unprecedented number of job vacancies leading to an “employees’ market”, competitive salaries and working conditions, and pandemic burn outs and rethinks. There has been a power shift to employees and few sectors are immune, including tech.  So, for many businesses, 2022 will be the year of attraction and retention, with a lot of time and effort spent on determining what it is that employees want from work (across the generations), how to deliver it and keep delivering it.

(If you'd like copies of our diversity and agile working policies, click here.)


Cryptoasset Fraud

In 2022, consumers investing in digital assets, such as cryptocurrency or NFTs, will continue to face a significant risk of becoming victims of fraud. Reports of cryptocurrency fraud in the UK have doubled annually since 2018, with over £145 million being lost to crypto-scams in the UK between January and October 2021 alone.

Despite the growing prevalence of crypto fraud and scams, cryptocurrency law in Scotland remains remarkably undeveloped and the legal mechanisms for the recovery of stolen funds are equally unclear. Over the last year, however, the English Courts have begun contending with some of the key legal issues encountered in crypto fraud in the judgements of Ion Science[i] and Fetch.ai[i]

Identifying Unknown Scammers

A primary difficulty in cases of crypto fraud is that, in most cases, it will likely be extremely difficult to identify and trace the perpetrators. For instance, whilst all Bitcoin transactions may be viewed on the currency’s ‘ledger’, senders and recipients of funds are identified only by their ‘wallet number’ and not personal identifying information. However, whilst it may be difficult to identify crypto fraudsters, it is certainly not impossible.

To assist the claimants in identifying those who had stolen their crypto funds, the courts in Ion Science and Fetch.ai granted disclosure orders under Bankers Trust jurisdiction. These orders, which require financial institutions to provide information relating to accounts and account holders in cases of fraud, were directed toward the cryptocurrency exchanges (and others) who had dealt with the stolen funds, namely Binance. In the view of the court in Fetch.ai, it would be “entirely unreal to suppose” that such organisations would not hold information capable of identifying fraudsters.

In the future, Bankers Trust disclosure orders may prove vital in allowing the perpetrators of crypto fraud to be identified in England and Wales. However, an equivalent order does not exist in Scotland. It may be possible to obtain the same information through other processes, such as the commission and diligence process already available in the Scottish Courts which allows for the recovery of documentation. Section 1 of the Administration of Justice (Scotland) Act 1972 (which gives the Court of Session and the Sheriff Courts the power to order inspection of documents at the outset of proceedings and on an immediate disclosure basis) could prove an effective remedy in this regard.

However, such an approach would encounter significant difficulties and would certainly require the victim of a crypto fraud to establish a claim against the cryptocurrency exchange. While this may be a viable approach in some cases, it is unlikely to prove fruitful for the majority.

‘Freezing Orders’

In both Ion Science and Fetch AI, the English Courts granted propriety injunctions and worldwide freezing orders against ‘unknown persons’ dealing with the stolen funds. These orders mean that certain unknown persons would not be able to further transfer or otherwise dispose of the stolen cryptocurrency before being identified.

In Fetch AI, the unknown persons were grouped into three categories by the Court; (i) “those who were involved in the fraud”; (ii) “those who have received assets…without having paid the full price for them, or something of that nature”, and; (iii) so-called “innocent receivers”. The Court was particularly concerned with ensuring that this last group, “who have no reasonable grounds for thinking that what has appeared in their account belongs to the claimant”, did not find themselves subject to the Court order.

To stay on the right side of regulators, legitimate cryptocurrency exchanges and ‘crypto banks’ are likely to comply with propriety injunctions and freezing orders, preventing those in possession of the stolen funds from further transferring it from their account. As such, these types of orders may be effective in preventing stolen cryptocurrency from being disposed of before they are subject to a court action.

However, the closest equivalent order that may be granted in Scotland would be an interdict; a preventative remedy granted by the Scottish Courts to prevent some form wrong being committed. An interdict could certainly be construed in a way to prevent stolen cryptocurrency from being further dealt with by the perpetrators of fraud, however, it may be difficult to satisfy the jurisdiction criteria required to obtain such an order.

Another potential remedy which could be used to freeze assets could be an order for an ‘arrestment” which allows for funds held by third parties to be frozen. Traditionally arrestments are usually served on the bank of the target of the arrestment on the basis that funds are being held in a bank account on the target’s behalf. Jurisdictional issues aside this approach may raise more questions than it answers as it would require the Court to grapple with how this process can be applied to crypto assets.

Looking Ahead

While it may not yet be clear which type of approach the Scottish Courts will adopt in remedying crypto fraud, it will surely only be a matter of time before we find out. The sharp growth of crypto fraud globally means that it is almost inevitable that similar actions will be raised in Scotland in the coming years. In the meantime, those investing in cryptocurrency would be best advised to always act with caution and take note of any guidance issued by the Financial Conduct Authority.

[i]  Ion Science Lts v Persons Unknown, (unreported, 21 December 2020).

[ii]  Fetch.ai Ltd v Persons Unknown Category A, [2021] EWHC 2254 (Comm).


So, there we have some of our thoughts for 2022. Time will tell if our crystal ball was right, but in the meantime we wish you all a very Happy New Year!

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