staying relevant in a transforming world€¦ · serverless compute (e.g. aws lambda) past...

Joe Kennedy - Principal, PwC Financial Services Technology Advisory

Staying Relevant in a Transforming World

PwC’s Digital ServicesPwC’s Digital Services

Changing Digital World

Mobile Cloud Social Media Big Data RPA

Internet of Things

Online Payment Blockchain

Transportation Services

...


Cloud

Blockchain

How Cloud is Changing Our World

Serverless Compute (e.g. AWS Lambda)

➔ Past

Developers needed to setup and maintain application servers and infrastructure

➔ Now

Lambda is a serverless computing platform that automatically manages the underlying compute resources.

Developer don’t need to spend time on server maintenance, capacity planning or scaling

*Recent market report predicts the serverless market will grow from a $1.88 billion market in 2016 to $7.72 billion by 2021

Disappearing Data Center

➔ Past

Companies needed to build physical data centers and hire resources to maintain them

➔ Now

Many companies are utilizing cloud service platforms such as AWS for systems, storage and other compute relevant functionalities

Physical data centers are no longer needed by most companies


BlockchainTransportation Services

Mobile

Online Payment

How Online Payment is Changing Our World

Banking Industry

➔ Past

Banks controlled payment methods and profited from them

➔ Now

Companies with online payment capabilities (e.g. Apple Pay, Paypal, Alipay, Wechat pay*) are occupying the payment market

The shift in payments to apps makes it ever more difficult for banks to compete for consumer attention

*Alipay and WeChat handled 91% of the $5.5 trillion in mobile payments in China (2016).

Wearables

➔ Past

Wearables such as Fitbit were focused on showing customers health-related data

➔ Now

Wearables are adding Proximity Payment capability to allow customers to make payments at stores with their smartwatches (e.g. fitbit pay)


Blockchain

Uber/Lyft

How Uber/Lyft is Changing Our World

Car Industry

➔ Past

Cars were largely required by households as a basic transportation method

➔ Now

The convenience brought by Uber combined with ZipCar eliminates the necessity of buying a car. It could further impact the need of garages in housing market for dense population areas

Restaurants

➔ Past

Restaurants needed to hire employees to delivery food

➔ Now

UberEats deliveries food for restaurants to customers and decreased the need for hiring delivery people

*UberEats has passed 46,100 restaurants in 2017, more than doubling the number available on its platform in 2016



Mobile

How Mobile Technology is Changing Our World

Mapping Industry

➔ Past

Maps were the only way for travelers to navigate strange places

➔ Now

With mobile signals covering more and more areas, mobile navigation/ GPS navigation eliminates the needs for Maps even in areas without roads

Mobile


Cameras

➔ Past

Disposable cameras were widely used in weddings

➔ Now

With the technology development of mobile phone cameras, it’s now convenient and easy to take high-quality digital photos from mobile phone. The need for disposable cameras are largely reduced

*Many Camera companies (e.g. Kodak, Polaroid, Panono) did not respond well to the trend of going digital and ended up bankrupt

PwC’s Digital Services

Technology disruptions brought in for transport, payments and trust have forced firms to invest in digital transformation to stay relevant in market

Digital Transformation


1. Digital Business Strategy &

Culture

2. Staff & Customer

Engagement

3. Process & Innovation

4. Technology 5. Data & Analytics

Digital Transformation require changes in:

Resulting in value proposition changes including:

Demand Generation

Availability and

Selection

Customer Purchasing

Process

Customer Experience

Process Efficiency

Capital Use

Agility

Business Model Change


Paradigm Shift & Use Cases

From rental to online content production: Netflix

Past Business Model Current Business Model

● Low price DVD rental● Fixed membership fee

instead of late fees● Mailing DVDs to

customers from warehouses spread around the country to deliver fast

● Video online streaming membership

● Invest in online content producing

● Automated movie/show recommendation based customer’s review history

Transformation

● Cloud transformation● Changes in Capital Use● Changes in products

Successful Factors

● Netflix’s enormous customer and membership base

From low-liability credit card provider to self-bank : Netspend


● Aimed initially for consumers in their 20s making under 30k

● No personal credit checks so business doesn’t have to worry about personal liabilities

● Prepaid Debit Cards are available to be purchased in CVS, Walmart

● Marketed for small businesses and ‘self bankers’

● Referral program leveraging social media networking

● Six ways to load card, more than their competitors (e.g. PayPal)

● Virtual accounts to save money with 5% annual return

Transformation

● 2003 successful application to be F.D.I.C. insured

● MasterCard and Visa’s Zero Liability protection from unauthorized transactions

● Acquired by TSYS in 2013

Successful Factors● Shares transactions history

with credit card issuers to help rebuild credit

● Lower fees than check cashing and money transfer services

From coffee shop to omni- channel experience: Starbucks


● Coffee shop that provides a relaxed and comfortable environment

● Encourage customers to stay ‘as long as they want’ and use store’s free wifi to work/study

● High quality coffee

● Mobile app to pay for coffee and food in the shop

● Coupled the mobile app with the loyalty program, starting to craft personalized offers and experiences for their 24-hour connected customers

● Integrate technology into a wide range of business processes and procedures such as new product development, communication of the marketing message and monitoring the level of customer satisfaction

Transformation

● Mobile app● Changes in customer

purchase process ● Changes in customer

experience

Successful Factors

● High quality products● Large customer base - 13+

million active members as of 2017

● More people prefer to work in coffee shop as it help them to concentrate, adding productivity and creativity


Merge and Acquisition & Use Cases

Acquiring physical stores: Amazon


● Online retail● Prime membership that

provides free 2-day delivery

● Plan to achieve free Whole Foods delivery guaranteed in 2 hours to prime members across U.S. utilizing the local Whole Foods stores

● Lock in more customers by providing convenient day-to-day services/interactions/entertainments (e.g. Prime Music, Prime Movies) attaching to membership

Transformation

● Acquired Whole Foods● Partner with local stores

(e.g. Westside market in nyc)

Successful Factors

● Amazon’s tightly controlled system (‘Order to Shelf’) designed to streamline and track product purchases, displays, storage, and that helped reduce food spoilage and bring down costs

Acquiring e-commerce: Walmart


● Everyday low price ● One-stop shopping

● Since acquiring Jet.com, Wal-Mart's U.S. e-commerce sales have soared, climbing 63% in its most recent quarter

● Free 2-day delivery on order over $35, no annual membership fee

● Wal-Mart's online inventory has grown from just 10 million items in 2016 to at least 67 million today

Transformation

● Acquired Jet.com● Digital business model

transformation

Successful Factors

● Walmart utilizes processes that facilitates very effective supply chain

Acquiring younger users: Facebook


● Social networking site with over a billion active users

● Make revenue on user-data based advertisements

● Losing young users due to competitors like Snapchat

● Instagram stories have been introduced by Facebook to get an edge in its competition with Snapchat

● Online business ads to target millenials

● Investing in AI, Virtual and Augmented Reality, and increasing Internet connectivity to those without service

Transformation

● Acquiring businesses that may appeal to younger generation including Instagram and WhatsAPP

Successful Factors

● Facebook’s ability to collect and analysis users’ data to gain revenue

● Train speed stays almost unchanged over past 100 years ( 75-110 mph)

● In long-distance transportation services industry, airline develops advantages over trains

● In other countries, train business has evolved with technologies to enable faster and safer transportation, e.g. Shinkansen in Japan (up to 200 mph) and High-Speed Rail (HSR) across China (up to 217 mph)

Staying Relevant in the Changing world...

➔ Amtrak needs to involve its technologies and business model to become competitive again

In 2016, Alphabet's investment in R&D:

Is Your Company Prepared Enough?

$13.9 billion15% of revenue

In 2016, Goldman spend in

communications and technology:

$809 million2.6% of revenue

Form Digital / Business Model Strategy

Based on current strength /weakness and industry trends

Investment in R&D, Innovation and Technology

Increase the investment in technology to stay relevant

1. 2. 3. 4.Digital Capability Maturity Assessment

Look at firm’s operations, culture, org and etc.

Time to Adapt

Merge & Acquisition

Buy the firm(s) that suit your company’s digital strategy


Methodologies

• Financial gains - Improve the target company’s financial bottom line. Reduce costs, improve margins and cash flows, increase revenue growth

• Market gains - Work together to help accelerate market access. Acquirers can sell target company’s products &/or services to larger customers base and target company can increase revenue growth in emerging markets

• Consolidation gains - Remove excess capacity to balance out supply and demand. Consolidate the production lines with the target companies to optimize products portfolios, R&D, etc.

Acquisition Strategies

Obvious

❖ Technology acquisitionEnhance acquirer’s products by leveraging the target company’s innovative technologies. Acquire technologies faster or at a lower cost than they can be built.

❖ Talent acquisitionFind and retain employee’s sense of belonging. Place value on target company’s employees, their knowledge, opinions, and engagements will help increase contributions and decrease turnovers.

❖ Startups acquisitionFocus on potential winning startups and small businesses. Research favorable growing businesses, invest early before competitors, and have patience in nurturing the growth of acquired companies.

Use AgilePlanning

Design

Development

Implementation

Testing

Obvious

Business Agile: Companies are using Kanban Methodology to make business decisions and manage projects

1. Kanban projects run on need-based iterations during which the team produces incremental value to the end product.

2. Visualize workflow on a board with cards to represent user story in the product backlog. Color-coding to represent themes.

3. Kanban does not any pre-designed roles, but focuses on a cross-functional team to plan and complete the work

4. Limit “work in progress” by limiting the number of tasks the team an work on at any given point

• Agile is a software development method based on iterative and incremental development encouraging rapid and flexible responses to change.

• Timescale is fixed while requirements evolve• Develop small, incremental releases and iterate• Complete each feature before moving on to the next• Testing is integrated throughout the project lifecycle – test early and often

• Align M&A activity closely to business objectives and goals• Prioritize the cultural integration, that needs to be addressed in a distributed fashion across

geographies and at all levels in the company• Hire talent with the right skills for the integration• Delivery transparent and frequent communication to stakeholders• Identifying sources of value and translating those sources of value into quantifiable

performance goals

Integration StrategiesObvious - M&A

Integrate with services of other companies to deliver value to its own customers:1. Apple Pay: Integrate with credit card services to provide fast and convenient Proximity

Payment 2. Circle Pay App: Provides services for users to transit money between friends like

sending text that allows conversations and group payments. Circle Pay is not a bank, but it integrated the services banks provide (debit card transactions) to recreate values

Integrate the platform and devices customers will use to create Omni-channel experiences:3. Disney offers interactive tools to its customers that covers every perspectives of their

visits: My Disney Experience app to plan the trip with attractions and dining in the park; the Magic Band program that acts as a hotel room key, photo storage of pictures taken in the park, food ordering tool with integrations of Fast Pass

• A committed leadership team who role model the change, and have the change skills to lead it• A clear understanding of the scale and complexity of the impact of the change on individuals,

teams and the organization• Engaged people who have a stake in the change and are motivated to deliver the change• Organizational levers (e.g. HR processes and incentives) used to support the transition and

sustain the change

Change Management

❖ Adjust your people: implement various change management exercises to encourage employees to reduce their resistance to change. E.g. allow your employees to sit whenever they want for at least twice. Discuss whether they changed their choices and why, guide the discussion to highlight people’s innate resistance to change and the benefits of moving away from a comfort zone to the unknown

❖ Change the physical place: change the seating structures to allow more open spaces and communications between isolated groups; change the decorations and settings in office to indicate new cultures

❖ Leverage informal leaders: In addition to those who hold formal positions of power, informal leaders - whose power is more informal and is related to their expertise, to the breadth of their network, or to personal qualities that engender trust - could also play key roles in a change.

Obvious


Mobile Cloud Social Media Big Data RPA

Internet of Things

Online Payment Blockchain


...

Synopsis

PwC

Author Contact

Joseph Kennedy is a Partner in PwC’s Financial Services practice. He leads the Architecture, Integration and Mobile capabilities supporting Financial Services clients

[email protected]/in/joekennedy/

This publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication, and, to the extent permitted by law, PricewaterhouseCoopers LLP, its members, employees and agents do not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it.

© 2018 PricewaterhouseCoopers LLP. All rights reserved. In this document, “PwC” refers to PricewaterhouseCoopers LLP which is a member firm of PricewaterhouseCoopers International Limited, each member firm of which is a separate legal entity.


mailto:[email protected]

http://www.linkedin.com/in/joekennedy/

staying relevant in a transforming world€¦ · serverless compute (e.g. aws lambda) past...

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