The Secret To Generating Revenues Lies With Platforms

Image credit: iStockphoto/Melpomenem

COVID-19 has had on significant impact on the economy and transformed the market landscape.

Businesses are revisiting their strategies as the pre-COVID operating models and assumptions have been challenged. Retail and banking are reimagining their businesses, primarily driven by changes in end-customer behaviors as they adjust to a new practical reality.

Nishit Gupta, partner and DS & iX leader at IBM ASEAN, offered insights into what companies need to be aware of as they prepare for the new normal, speaking at a recent webinar titled “Emerging Stronger in the Next Normal — Fresh Starts and False Dawns and Emerging Industry Platforms.”

Trend 1: Consumer behaviors will continue to evolve across ASEAN based on demographics and economic recovery. The underlying truth is that low consumer and business confidence is leading to reduced spending. This has a direct impact on the retail and banking industry.

“Statistics based on data published by Asian Development Bank, overall GDP of Singapore will shrink by 4%, and Indonesia has recalibrated their growth forecast of 2020 to 0.4% to 2.4%, which is half of what they had originally forecasted,” said Gupta, citing the ASEAN Policy Brief dated April 2020.

Trend 2: Micro, Small and Medium Enterprises (MSMEs) are at risk considering their limited resources to wait out the pandemic.Small and medium enterprises (SMEs) and micro-SMEs (MSMEs) are the hardest hit, especially in the services sector, which constitutes 43.8% of the ASEAN workforce. The airline industry, which contributes most to the services sector, is under severe pressure with a reduction of flights ranging from 90%-99%,” said Gupta.

Gupta discussed the top three trends in the retail and banking industries:

Retail:

  1. A steep rise in e-commerce across ASEAN for essential goods. There will also be a reduction in discretionary spending, growth in home delivery and “click and collect,” and store-led shopping migrating to retail platforms.
  2. Growth in neighborhood shopping and local sourcing: Value retailers, in the long run, will offer discounts to get consumers back. There will be an increase in the consolidation of retail giants.
  3. Diversification of global supply chains and greater adoption of technology and AI.

Banking:

  1. A shift towards open banking: Expect more open, transparent, real-time, intelligent, tailored, secure, seamless transactions.
  2. Diversification of consumer investments to more risk-averse options: This will need banks to revise their product portfolio.
  3. Banks will increase their spend on customer engagement, developing partnerships, cross-industry business platforms, and customer value exchange.

“Amidst all the adversities lie pockets of opportunity,” Gupta observed. In this crisis, companies have expedited their digital transformation and are placing bets on creating business platforms to solidify competitive advantage and differentiation. Governments have emphasized the dependency on digital trade and business platforms to bounce back.

A platform allows companies to drive value from data by offering personalized experiences and services. A better experience and service leads to the stickiness of consumers, which results in a network effect, leading to “winner takes it all.”

Gupta advised companies to adopt a six-step process to build an “Industry Platform”.

  • Anchor your business platform to the “core of your company”
  • Define a business blueprint establishing open and transparent business design
  • Orchestrate compelling change by establishing a control tower operating across multiple levels
  • Build a human-technology partnership to up the human game
  • Perform with purposeful agility
  • Drive value from Data

Next steps

To schedule a discussion today to jumpstart your digital transformation plan, visit: http://ibm.biz/cdotrends

 

Image credit: iStockphoto/Melpomenem