Recently, I participated in a bank survey. In response to a question about the number of apps I use, I was about to answer, “One”. But after adding up all my online credit cards and bitcoin wallets, I decided on “Six”. I take advantage of mobile and online applications for payments, cash transfers and investments useful to me. Previously I only used online banking.
Observations about my own life quickly convinced me that talk about the platform economy and digital transformation is not all meaningless hype. In a company struggling with day-to-day problems, it might sometimes be difficult to see how the digital transformation will affect its operations. All the same, pressure to change can clearly be seen in entire industrial sectors:
- In the retail sector, global giants have introduced e-commerce and massive product catalogues. The changes wrought by Amazon are influencing brick-and-mortar stores: Self-service registers create personnel savings. Retailers generate additional revenue by advertising to loyal customers walking past the store. New solutions are built by simply combining previously gathered data via software interfaces.
- Banking is being shaken up by the impending pan-European Revised Payment Service Directive. It will require banks to give third-party service providers access to their customers’ accounts and payment transactions. The banks must also let them process payments in digital channels. In future, consumers will be able to access all their bank accounts from a single application. In other words, they will be able to transfer money and make payments via a single third-party service provider. This means banks will lose one of their traditional sources of income.
- Power companies are moving towards more decentralised production and joint Nordic electricity markets. Consumer information will be collected in a datahub, which will use interfaces to open up consumer electricity consumption data to new service providers. This will facilitate the development of new applications promoting energy efficiency and create a wide variety of new business opportunities in that sector. Additionally, power companies will compete even more fiercely for consumer electricity contracts.
- In the manufacturing sector, we have seen opportunities generated by digitalisation, particularly in the expansion of services. This is already generating larger revenues than equipment sales for several businesses, although a more significant development wave might be just around the corner. Order tracking, maintenance of equipment registers, and data collection from equipment in the field will create completely new opportunities for applications supporting service sales.
These are just a few examples of what is already happening today. Technology is constantly maturing in the form of artificial intelligence, machine vision, speech recognition, virtual reality and blockchain. New conditions for even more innovative applications are continually being created.
The EU has estimated that by 2020, the value of data-driven business will exceed 500 billion euros, a significant sum for a business sector that did not exist a few years ago. Every company should consider how to address the platform economy – in times of business transformation, there are always winners and losers. Among the international giants, the winners have all shared a common factor: major technology investments. Even at this moment, more than nine million software developers around the world are working on software interfaces required for the platform economy.
Technological development and societal change are the drivers that force companies to develop solutions for regular consumers like you and I.
Underestimating the transformation could be the last mistake you make in your business. Make an inventory of your valued digital assets and begin planning how to get your share of the platform economy. By opening up data to your consumers or partners, you create new business opportunities.
The best applications always find their way into the hands of consumers. In just a couple of years, even I have become used to first-class mobile and web applications, like the six I use that challenge online banking. Next I will seize some other novelty produced by the platform economy.