Is digital transformation the panacea?

Every enterprise is in some stage of “Digital transformation” today. The new ones are born digital anyway. But, is transforming the enterprise digitally enough to maintain their competitive advantage? Does this automatically bring the organizations closer to the business? The answer is NO.

Today’s digital world is shaping the way customers, markets and even employees think, write, share ideas, experience the world leading to changed buying behaviour. The options, before the stakeholders, are vast. Customers change their needs fast even building up some en route. How efficiently can the enterprises understand these changes? The key to success is whether they can make use of this digital transformation into delivering “Personalized experiences or realities” on time. An example is the Japanese e-commerce site Zozotown. Its mobile app is paired with Zozosuits to take customer’s body measurements. They can then order individualized clothes online.

Whilst this is on the customer side, what about employees? Employees should become more like “Human + workers” ready to embrace and apply digital technologies to enhance the way they work and deliver products or services.  Both the entire organization and the employees must keep pace with digital maturity. If either one is incompatible, it may pull down the enterprise ability to differentiate.

The markets are no longer fixed or in a single location. They may not even exist today. Welcome to the world of “digital”, “on-demand”, “At the moment” multi-market scenario. Some may last for a while. Others may not. Enterprises must act keeping this in mind. The underlying processes and structure can be monolithic but the entire firm must be nimble and ready to shape-shift in a moment’s notice. For this, the organizations can and should use appropriate AI tools that help predict preferences and changes in the customers’ thinking.

The essence lies in how the enterprises can effectively use the digital technologies to harness the virtual markets simultaneously building “Trust” with customers, employees and business partners.

Potential introduction of a digital currency called e-Krona by Swedish Central Bank

Usage by % of Households in Sweden

As the markets change rapidly, one important aspect is the movement towards a cashless society. Sweden is at the forefront of technological changes in terms of electronic money and payment systems. The Swedish Riksbank has started a project on the feasibility of introducing digital currency e-krona in place of the usual cash krona.

But once the population moves away from cash, will it rob them of flexibility? Will it make them more dependent on private players and payment systems? What roles does the central bank want to play? All these conundrums are being studied by the central bank. Digital money, by itself, is not something new. The Riksbank already deals with digital money with its participant banks but not the public.

Two important factors of Swedish market are as follows:

The cash to GDP ratio is the lowest in the world for Sweden. Most people do not use cash at all so much so that the tourists have started complaining!

The growth of alternative payment solution providers like Swish. Created by the Nordic banks and used by > 50% of Swedes, this is challenging the unicorns in the field.

“Just Swish it to me” will be the familiar phrase in Sweden when sharing bills or sending payments.  The steps are so simple in Swish – Open the landing page, enter the counterparty’s phone number, amount and comment, Mobile BankID app opens to authenticate payment, confirm with an option to send a text to the recipient and actual transmission without any fee. The transfer is instant and free of charge for private users. No wonder, the swedes have fallen in love with it. 6.5 million users! Norway and Denmark too use similar systems called Vipps and MobilePay. Look at its amazing growth...

Given these, no wonder, the Riksbank doesn’t want to introduce e-Krona without doing a feasibility study and its impact. It will be worth the wait to see how the payment systems and related settlement systems will be reconfigured.

References:

https://www.riksbank.se/en-gb/payments--cash/e-krona/

https://www.thelocal.se/20181016/sweden-leads-the-world-in-cashless-digital-payments

https://www.thelocal.se/20180527/tourists-complain-as-sweden-becomes-more-cash-free

https://medium.com/@etiennebr/swish-the-secret-swedish-fintech-payment-company-created-by-nordic-banks-and-used-by-50-of-swedes-cfcf06f59d6f

https://www.getswish.se