As part of its Digital Transformation of Industries Initiative, the World Economic Forum has emphasised that many of the technology building blocks required for Digitization are already in place – including AI, Big Data, Cloud Computing, IoT, social media and fast mobile networks – which together can provide a potential value to society of USD 100 Trillion by 2025.
Despite its significant potential, the economic gains of Digitisation are still to be fully realised. Industries such as automotive, healthcare and manufacturing have been slower to adopt new technologies. While more enthusiastic players in the consumer, finance and media sectors will only see large productivity dividends once they fully absorb digital technologies across their entire business workflow, according to Mckinsey.
However, in a few short months during early 2020 everything changed. Covid-19 has brought the potential for Digitising society much closer to becoming an achievable reality.
Today, many organisations are facing a major threat to their existence. Sadly, there will be companies that fall by the wayside, but the survivors must adapt in order to build new momentum in an uncertain future. CEOs can now clearly see the vulnerabilities of their current business model and understand the risks of trying to continue as before. After the economic devastation of Covid-19, there is no harm in innovating. In fact, the bigger risk is probably just trying to maintain the old status quo. In this climate, Digitisation makes more sense than ever.
The value of this change is underlined by the fact that global tech-led companies such as Zoom, Amazon and Netflix – plus regional players like China’s Tencent and India’s Zomato – have more assuredly adapted their digital business models to meet surging demand online, while traditional businesses have struggled in the face of the overwhelming challenges of the current crisis.
How Covid-19 sets the scene for widespread Digitization
A core consequence of social distancing during Covid-19 has been more time spent working from home. For many office workers, this has translated into the daily use of online tools such as Slack, WhatsApp groups and CRM tools – instead of face-to-face meetings – plus frequent team catchup conference calls and occasional attendance at virtual events.
In a few short weeks, employees have become much more comfortable with a connected style of working and are likely to be more open-minded about the introduction of a wider range of digital work processes in the future, both in their professional and home life.
Other digital trends that have increasingly taken hold in recent months include a growth in online shopping for clothing, household goods, fresh food and health products which is moving shopping away from malls and encouraging retailers to develop omni-channel strategies that provide a better consumer experience including a variety of low-touch options to buy online and pick up in store.
With a surge in demand for Internet-based shopping that has seen Amazon(1) report 25% growth year on year in Q1 of 2020, E-commerce Financing has entered the trade financing mainstream as a source of working capital to stabilise supplier cash flow when large volumes of goods are shipped to the warehouse of major online retailers such as Alibaba or eBay prior to purchase by consumers.
Digital Payment platforms – such as FPS (Faster Payment System) from HSBC – have enjoyed a surge in popularity during recent weeks, with usage up twenty-five percent from a year earlier (according to the SCMP).
Equally significantly, Online entertainment and home fitness have taken off around the world.
In a global survey of consumers by McKinsey across 41 countries, around 40-60 percent of respondents who have adopted these new products and services intend to continue into the future.
Retailers, restauranteurs and business leaders all need to learn from these new consumption patterns – in order to build a suitable new strategy around Digitisation to come out on top when the Covid-19 crisis subsides.
Lessons from the Finance Sector
Organizations in the Finance Sector have been early adopters of many digital processes designed to enrich the customer experience, develop a competitive advantage and meet tough regulatory requirements.
These processes include real-time electronic money transfer, automated teller machines, mobile transactions, digital on-boarding of new customers, online document storage, automated workflow and technology tools for management oversight.
The more innovative players – often specialist Fintechs – have already moved towards a platform-based, self-service business model with a high degree of automation, utilising e-signatures and storing all documents on the cloud. Paper-free processes are conducted entirely online including customer on-boarding and KYC (Know Your Customer) with documentation to match regulatory requirements that is easy to follow without the need for staff intervention.
This compact and efficient model offers scope for a high degree of business scalability and the potential for partnerships with other industry players as a catalyst for the true Digitisation of the Finance Sector.
The highest quality organisations use data analysis extensively to continually improve their business model and maintain a sharp focus on security to protect their data and ensure the privacy of their customers.
Other industries can learn from these developments in Finance and apply a modified approach to fit their individual requirements for Digitisation.
Next Steps towards Digitisation in a post Covid-19 World
Once CEOs realise the value of a Digitisation strategy for the survival and future success of their business, a detailed plan is required ready for action as the world emerges into the post Covid-19 world just a few months from now. This is both a major challenge and a great opportunity – a necessary step to secure a competitive advantage ahead of rival companies.
This article does not constitute legal advice.
The opinions expressed in the column above represent the author’s own.