Leveraging Digital Technology for Business Transformation 

Digital platforms are defined as online networks or systems that facilitate the exchange of information, products, and services between different parties. Examples of digital platforms include e-commerce platforms like Amazon, social media platforms like Facebook, and online marketplaces like eBay. 

A digital transformation is the adoption of digital technology to fundamentally change how an organization operates and delivers value to its customers. This can include the use of technology to automate processes, improve the customer experience, and drive innovation. Digital transformation services can help organizations become more agile, efficient, and competitive in today’s digital economy. However, it also requires significant changes to an organization’s culture, business processes, and technology infrastructure.

Innovative Models: Exploring New Ways of Doing Business 

Digital platforms may initially appear to be just another channel for delivering goods or services. However, companies with platforms build value with external customers, in a way switching manufacturing from the inside to the outside, whereas a traditional company scales by selling more and more for less and less of that product or service. The value of the platform ecosystem, which enables the exchange of value between various parties, increases with the number of players. These businesses have also been able to produce network effects that increase value at a previously unknown rate without the labor, production, and infrastructure expenditures that traditional players bear. 

Digital platforms have several advantages over traditional brick-and-mortar businesses. For example, they have low barriers to entry, allowing small businesses to reach a global audience without the need for a physical storefront. They also offer flexibility, allowing businesses to quickly respond to changing market conditions and consumer preferences. 

However, digital platforms also come with their own set of challenges. For example, they are subject to intense competition, with new competitors entering the market all the time. This can make it difficult for businesses to differentiate themselves and stand out from the crowd. Additionally, digital platforms are constantly evolving, requiring businesses to constantly innovate and adapt to new technologies and consumer behavior. 

A Look at the Digital Future 

The future of the marketplace looks bright for businesses that are able to effectively leverage digital platforms. As more and more consumers turn to online channels for their shopping needs, digital platforms will continue to play a crucial role in driving growth and success in the marketplace of the future. 

The digital platform titans of today face unique challenges, ranging from charges of spreading fake news to looming antitrust action. However, there are numerous lessons to be drawn from their success for more traditional, non-digital platform businesses. Many of these companies have already progressed with their digital platform and ecosystem strategies. While the big names may get the most attention, the growing platform presence outside of these few may indicate that the true impact of digital platforms and ecosystems has yet to be felt. 

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In the wake of this uncertainty, firms have been focusing on investing only in the following areas:

Operations: to ensure continued access to basic services;

Supply chain: to address emerging supplier and customer needs;

Revenue: to ensure the continued viability of the business; and

Workforce: to support employees and remote working amongst disruption.

As per a study conducted by Boston Consulting Group (BCG), around 60% of firms have paused the deployments of new IT systems, for instance, and 44% have delayed upgrades to their existing systems. A study done by Gartner shows that the banking industry, one of the largest IT spenders, is expected to cut down on their IT spending by nearly 4.7% owing to the turbulent market. They are focusing on investing in technologies that will keep their businesses running – specifically by going digital and investing in emerging technologies trying to adapt to the “new normal”.

The New Normal

The entire world is currently transforming in an attempt to adjust to the new normal – the practice of social distancing. Even though a lot of industries can work with the limitations of social distancing poses, there are many which cannot. 

Banking is one such industry. Banks build trust in very tangible ways – with retail outlets that are designed to emanate confidence and security. Older and larger banks rely on the security that comes from human contact, reassuring customers that their money is safe and in a concrete vehicle, as opposed to a mere tab in their internet browser. 

When COVID-19 struck, their business took a hit even though most banks had already enabled digital banking for their customers. This was not because the business operations affected their customers drastically, but because they needed their employees to work out of their retail outlets to process transactions. Social distancing and working from home is feasible only when employees are enabled by the infrastructure they need. This new normal meant molding a secure environment that was safe for both the employees and for customers’ transactions.

Agility and Customer Experience

Banking, insurance, and other financial services are highly customer centric. Traditionally, they have always needed the human component to provide a sense of confidence to their customers. COVID-19 has put these companies in a situation that they haven’t ever seen before. Traditional financial systems have not been very agile when it comes to change, with a large cluster of systems hosted in an on-premises environment and large IT teams supporting it for years. The pandemic showed them the importance of agility in their systems and how it can impact their overall customer experience and hence, their business too.

During the initial days of the lockdown in different geographies, many banks could not keep up with the number of customer requests pouring in, and multiple outages were reported owing to the lack of staff. This was heavily impacting their business’s reputation. Soon, their customers’ behavior changed with the new normal and the demand for digital banking was at an all-time high. This is where an agile system would be quite useful, so they can quickly and efficiently change their business operations as needed by customer behavior. 

Risks and Business Continuity

With COVID-19, every organization was faced with a pressing question – how to keep the business running? This was definitely a concern for those who were doing business with banks or other financial services companies. 

For the banks themselves, the actual challenge was to reassess their customers’ Credit Risks. With a looming NPA crisis, it was already a tough task for banks to give out loans to corporates. Their existing formulas now needed a revamp, as the variables had changed. In many countries, a moratorium was announced by Central Banks, keeping private banks devoid of any interest revenue for that time. Handling the collection process and dealing with distressed customers was the other big challenge they faced as problems caused on this front were leading to a lot of reputation risk for the organization. Robust risk management functions would be needed with the active tracking of borrowers. 

Given the circumstances; their business operating model needed rework to ensure that business continuity is maintained.

How Can Technology Help?

Technology has been a key driver of the financial services industry for ages now, with the domain spending around 10 percent of its revenue on IT expenditure. However, now is the time for these companies to use this budget wisely, as technology is going to be what saves them from bankruptcy. 

In the current situation, there is an acceleration to the digital strategy of all bank leaders. Decision-making concerning these projects has quickened and “someday” or “one day” has become “today”.

Operational costs have become much higher during the pandemic due to unconventional methods of working and handling crisis management. Organizations have had to provide facilities for everyone, including their call center employees, to work from home. Thus, technology must play a key role to provide these facilities remotely – be it secure access through a VPN, or a security system to process the transactions without fail or delay. 

Machine Learning, RPA, and other emerging technologies could be an essential component to help solve a lot of these challenges, as they reduce the dependency on humans to an extent. It could be expected that financial services companies could start to adopt Machine Learning algorithms for their credit scoring systems to make their systems more agile. Insurance companies could adopt technologies such as image processing to help underwriters in claim processing and so on. There has also been a shift to Cloud hosting from On-Premise installations, which was highly preferred by the large traditional banks, to keep all activities remote. Some banks have started turning to intelligent automation to tackle problems related to collections and debt as well.

Conclusion

Going digital is the key solution, even though that is not the ultimate goal, as human interaction is still imperative when it comes to the banking and financial services sector. However, if  you work in financial services, now is the right time to look into developing a viable Digital Transformation roadmap for your company, and ensure you have the right technologies to stay agile and customer-centric.

The ability to balance technology and the human element will define every organization’s success in the future. At Experion, we help enterprises on their digitization journeys by developing FinTech solutions that are truly future-proof.  For more information on how we can help you stay future-ready, drop a mail to sales@blackrockdxb.com 

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With the popularity of the internet, it has become easier for individuals to create consistent revenue from their underused assets. Any physical asset can be shared with the public as a service. Take for example, a private car that costs a fortune to buy and maintain, spends 95% of its time in a garage or parking space, gathering dust. Would it not be great if there is a system which could facilitate leasing the car to potential users, after the owner’s daily commute to work. The car could serve users for a wedding, special occasions as well as for corporates. The money earned through this sharing will cover the transportation/ service cost of the car, making its ownership expenses considerably less.

Current state of the sharing economy

The sharing economy has already become a major part of the global economy. Even if most of the global population is unaware of the term, most of us have used such services in one form or another. Please note that this term Sharing Economy is an umbrella term, and many of the below different business models can fall under it.

• Collaborative Economy  (Airbnb, Couchsurfing)
• On-Demand Economy  (UberEats, Netflix, UrbanClap)
• Gig Economy  (Uber, Lyft, Upwork, Freelancer)
• Peer Economy  (eBay, Craigslist)
• Crowd Economy (Kickstarter)
• Platform Economy (Amazon, Alibaba)

It is true that some of these new business models have disrupted the older and more established ones. By transforming such older models, these companies have brought in innovation and efficiency to the table in addition to convenience. At the end of the day, sharing economy is part of our larger economy and will spur growth, as it marries real world physical assets with the digital world.

Counter Opinions & Controversies

Experts have raised their opinion against using the term “sharing economy” in cases where such sharing is not true or does not focus on generosity in the strictest sense of the word. Uber is an example. Their argument is that many of the categories that are currently listed under this term are not entirely selfless as the term implies.

As per the WEF article published recently,

“As the sharing economy has grown, it has become a victim of its own success. Some people have charged that much of today’s sharing economy is not really “sharing”, an allegation that is partly right. While on the one hand, there are many platforms that espouse the true spirit of sharing – underutilized assets and building community – on the other hand, increasingly there is “sharewashing” going on: companies latching onto the term because it makes them part of a hot trend. Who doesn’t want to conjure up notions of community and cooperation?

An example of terminology confusion is Uber. Is it ridesharing when a driver leases out a car that they did not own before, in order to provide rides that they would not have taken otherwise? Hardly. Yet, for much of the public and media, Uber is one of the most touted examples of the sharing economy. That said, newer offerings such as Lyft Line and Uber Pool are wonderful examples of ridesharing: they enable more efficient use of cars, full stop. But they represent only a fraction of current rides provided. More broadly, when an entrepreneur claims to be the “Uber of X,” that is an immediate red flag of questionable sharing-economy status.”

(*Source: WEF Article)

However, it cannot be denied that the sharing economy has been responsible for a new world economic order, while parallelly enabling the sharing of idle assets. It has successfully enabled businesses/private individuals to cash in on user convenience. While the idea that Uber is not entirely selfless may be true, it is also true that the service has succeeded in taking off many a private vehicle from the road, thus paving the way for a less polluted environment /less congested roads.

Technologies Enabling Sharing Economy

Technology is the enabler and multiplier of this sharing ecosystem and plays an important role in facilitating both service providers and seekers. Some of the new technologies facilitating this new model of business are,

1. Online Digital Platforms: Sharing economy is often called a platform economy. This is because a digital platform or matchmaker is the most essential part of this economy. Such platforms act as intermediaries, enabling interaction between service seekers and providers.

2. Mobile Applications: More consumers would discover new products and services through their mobile devices than any other source. In fact, more and more people have started using mobile apps to browse, buy, borrow and sell goods than even a year before. This is quite evident from studies which predict that by end of 2018, mobile commerce would constitute a third of the total revenue earned by ecommerce companies.

3. Internet of Things: When sharing an asset as a service, it is important to track the usage of the asset and ensure routine maintenance. Internet of Things (IoT) empowers us to constantly monitor asset location among other parameters. This can be used for routine maintenance work of the asset.

4. Artificial Intelligence (AI) and Machine Learning (ML):  AI and ML can be used to personalize customer experience based on previous purchases and search trends. AI can also be used to determine the price of a product dynamically based on demand.

5. Blockchain:  Trust is a critical component for any trading platform, digital or not. Blockchain technology can be effectively used to build trust into a sharing economy system. Cryptocurrencies, Smart contracts and other implementations of the blockchain algorithm can and will play a critical role in this process.

The Future

In the future we will see a steep rise in the penetration of these type of digital services in our everyday lives. From an earlier model of individuals owning physical assets, we will see a shift where physical assets are shared between individuals. These assets are used only when there is a need and then, the asset will be readily available through a cloud platform. The result is lower cost of ownership while providing consistent customer experience. People have shown a higher level of interest in an on-demand model for shared services in all sectors such as,

• Hospitality & Leisure
• Automotive
• Transportation & Logistics
• Retail
• Consumer goods
• Professional services
• Healthcare

Conclusion

New technology has the immense potential to transform people’s lives. When mobile technology was introduced in some of the developing countries within Africa and Asia, it acted as a leapfrogging technology, saving such countries the huge costs associated with setting up of landline infrastructure, while providing a consistently improved user experience. It had a huge impact on the user lives as well as the GDP numbers (See Blog). Platforms supporting the sharing economy models are examples. Such platforms have the tremendous potential to bypass the asset ownership model of the past to the shared ownership model of the future.

At Experion, we have implemented several projects across the retail, healthcare and transportation domains, many of which have enabled the shared economy business model. We have worked together with nearly 70 early stage businesses to disrupt traditional business models and markets. We have also worked with large and medium enterprises to accelerate their transition to the digital mode by transforming traditional business models.

Please write to sales@blackrockdxb.com to know more.

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