Digital Transformation Journey

Derek Osborn

8th SAPOA Postal Forum

Wednesday 12th February 2020

Derek OsbornInternational Business Coach - Whatnext4u

1979 – 2002: 23 years in Royal Mail

Since 2002 I have worked with the postal industry around the world as a business coach to:

Research and design, lead and facilitate workshops, and deliver management training, seminars, forums and master classes on:

Vision and strategy, fostering innovation, customer centricity, operational improvement, human resource development, leading change, reform and modernisation, efficiency, culture change and transformation, changing mindsets, developing sustainable business models

THOUGHT LEADERSHIP BOOKS

to inform, inspire, share ideas and latest industry knowledge, stimulate new thinking and highlight and

spread good practice

This is my digital transformation … since last year

Some of the challenges outlined at the opening of the forum on Monday ..

• Mr Festus Hangula “we are competing with digital natives but we must embrace digital transformation – we have no choice!”

• Mr Andrew Nongogo “We must be in the business of value creation – are we creating value for our customers? Digital is just the ‘means’ – it is not the answer. Ultimately we must be able to deliver value”

• Ms Gladys Mutyavaviri talked about our role in serving marginalised communities and the opportunity for private partners to invest in us

• Ms Nonkqubela Jordan reminded us that we must stay relevant to our customers and the post is a critical component to empower businesses and build the economy – we have the network, the platform and the tools to delivery right across the SADC region

Emerging trends

• Digital disruption … continues – now digital is ‘business as usual’

• Continued fast growth in internet penetration with smart phone growth/usage giving widespread mobile access √

• Sector boundaries dissolving - and increasingly irrelevant √

• Even greater possibilities for integrating services on digital platforms √

• More globalised financial and payment systems √

• The bigger digital platforms are getting bigger still and using advantages of scale to acquire competitors ?

• Growing number of emerging economies with growing GDP and more people with disposable income √

• Accelerating numbers and applications of new technologies such as AI, use of big data, internet of things, autonomous vehicles, automation, use of robots, blockchain √

Key drivers of trends

1. Changing customer behaviours and expectations – what is wanted, needed and demanded

2. ‘Industry imperatives’ such as security constraints, customs requirements, transparency, data integrity and other regulatory issues

3. Technology innovation and applications – what is possible, e.g. digital platforms and applications, blockchain technology and so on

Possible edge for ‘postal platforms’

• Major digital, media, e-commerce platforms have clear commercial objectives (ultimately to extract more value from users)

• Postal platforms however can present themselves as trusted intermediaries, more neutral and able to provide integration and access to services that commercial platforms cannot, such as Government and citizen services for identity, addressing and all other interactions with Government

• They can also choose to be more ‘ethical’ and take care with privacy and data, building on trusted heritage (e.g. deposits at postal banks during the recession)

• Exploit USP of having the USO which is to automatically have all citizens, households, small and large businesses as their customers

Some possible strategies…to create new postal values

Become the ‘aggregator ‘ and ‘solution provider’

Integrated platform providing access to multiple services (public, personal, business)

Deploy technology to improve efficiencies, cut costs, tailor personal services, engage with customers, …

Traditionally posts have been the centre of the community, the meeting place

• Convenience, Proximity, One-stop shop, Providing services that people need

• The new digital ‘postal platform’ can be at the ‘centre’ of business and the community in new ways

Partnerships and collaboration – we don’t need to do it all ourselves

Collaborate with service

providers

Integrate many services onto our platform

Digitisation is disrupting all market

sectors and so the wider market is also

changing and evolving

Sector boundaries dissolving and many overlapping and encroaching in each other’s traditional markets

TELECOMS RETAIL BANKING

LOGISTICS POSTAL TV/MEDIA

ADVERTISING BANKING INSURANCE

ALL END UP IN A CONFUSED “DIGITAL SOUP” with less differentiation between players = not clear where one ends and another begins

Emerging industry trends

However digital players often struggle with physical distribution (not core competence) and also find remote geographies and niche services challenging to provide

Appi-fication allows many small innovative start ups, with low barriers to entry, to challenge the ‘biggest players’ in the market

Traditional postal operators are on ‘digital transformation journeys’ (physical distribution experts struggling with digital presence) – some faster/better than others

So we can ask:

Why digital transformation is important essential?

What can it involve – with some postal examples?

What are some of the main challenges of digital transformation?

Why digital transformation

is essential?

• Everything that can be digital will be digital

• The world is populated now by digital natives – it is how they do things, nearly everything

• Evidence is all around us every day –people on their devices

• We have no choice – if we are not there on devices we will not have a business

• BUT that does not mean we have to become a pure digital player

What does ‘going digital’ mean? More than just providing digital access to our traditional services ….

So what are some posts doing on their digital transformation journey …

Market Developments Financial Services

Partnerships between fintech and banking

Banks have switched from selling to buying and partnering. A steady stream of

big bank and fintech partnerships continues to be unveiled.

Platform Platform Platform

Without a doubt, the platform play is back. It's hard (and often expensive) to

acquire customers. Selling access to your infrastructure or white-labelling

quickly brings access to a whole set of someone else's customers instead.

Lots of identity verification

Speeding up and simplifying the customer on-boarding process remains a

constant challenge. More and more companies are emerging that offer data

and technology for a quicker verification of a client or trade.

Future of Financial Services -?-

Is Digitized

Is Instant=fast

Is Free

Is Private

Data is owned by user=full control

Increasing comfort with electronic devices

Companies continue to seek ways to improve efficiency

Increasing sophistication of wholesale clients (e.g., increased cross-border trade, “globalization”)

“trust-issue”

(International) Regulatory pressure (KYC, AML in payments practices )

Increased regulation especially of capital and liquidity, de-risking

Increasing harmonization and standardization (e.g., ISO, SEPA)

Financial inclusion of unbanked

Increasing global bandwidth available at declining cost (4G and 5G)

Dialogue between customer and provider through multi-channels

Increasing processing power in personal devices (e.g., mobile phones, smart phones)

“What can be digital will be digital”

Privatisation

New entrants: Fintech companies

Growing consolidation of traditional players

Increasing sourcing, partner-ships, or white-labelling, collaboration

More demanding

customers

Regulation &

standardization

Increasing

competition

Improving technologies

“digitalization”

Trends

Postal Market for financial services development is impacted by 4 trends

So what do we need to set out on digital transformation journey?

• a coherent strategy

• a sound business model

• a clear idea of what we are transforming into, where we are heading

In other words, we still need the purpose, vision and values that we always needed to be a good business

Tensions and challenges

Changing market focus from universal public service outlook and traditional customer base to finding and establishing a new role in a more complex eco-system

From being the protected provider of the physical services – to providing integrated services on a platform in a digital jungle

Who pays for the services? Senders, recipients, users, revenue share with partner service providers – a more complex revenue model

Tensions and challenges

Parcels and e-commerce is worth being in for addressing, payments, parcel delivery, logistics – as key partners –but small margins

Don’t forget traditional services, eg direct mail, a service made more effective by good use of data, tracking and other digital enhancements

Speed of change – we can’t stand still

Digital transformation

is “2nd Postal Revolution”

Digital transformation is

transformation

Platforms, platforms, platforms

Integrated services, one stop shop –building on your trust, brand, reach

Don’t try and do it all – use partnerships

Digital transformation

is “2nd Postal Revolution”

Know what you are good at and what you can get others to do

Know your customers and create/deliver value for them

Culture and mindset change – re-focus

Invest in customers and staff – show that you value them

Build bridges into the future without burning our bridges from the past