Following on from The Fourth Industrial Revolution the next in our series of theme reports is Disruption. Again, this report will explain the theme and its importance and then break out the track sessions that have been identified and now form part of the MWC17 conference agenda.
Genuine disruption impacts consumers, societies, enterprises, markets and MNOs. The implications of disruption can be far-reaching, e.g. technological, economic and societal, and can impact business models, supply chains, consumer culture and sometimes regulatory and government policies across diverse industries.
The sharing economy is emerging as one of the most disruptive forces of recent years. Based on the idea that unused value is wasted value, the sharing economy is a democratised marketplace where services are offered by service providers to consumers who consume services collaboratively and “on-demand”. From accommodation, cars and online staffing to music and entertainment, new services are launching at a rapid pace across the globe as more consumers are realising the benefits of consuming services on-demand.
Sharing economy services are considered disruptive because they change how services are provided and consumed. Proponents of the sharing economy believe that it encourages community-building through crowdsourcing, reduces inequalities by offering services more widely and competitively, brings more wage-earning opportunities to more people, and is better for the environment since there is less resource waste. Opponents argue that the sharing economy is displacing traditional, secure jobs and creating part-time, low paid work. Furthermore, providing such services in regulated sectors can present challenges to sharing economy firms that are often looking to gain critical customer mass as quickly as possible.
Disruption in financial services is unprecedented today and can be seen throughout the industry such as in payments, remittances, savings, loans and insurance. Established players and start-ups are offering a variety of digital financial services aimed at different customer segments, from long-time consumers and small businesses to millennials and the underbanked. Digital financial services use channels such as mobile devices, ATMs, and point of sale systems, and are increasingly taking advantage of new enablers and emerging technologies to gain efficiencies, improve the customer experience and offer more targeted services.
In this competitive environment, digital financial services offered by new market entrants in established markets can have a profound impact on incumbent players who will either look to offer competitive services or retreat – and for incumbents, this will often depend on the service being disrupted and how much of a threat the new market entrant poses. Indeed, many established banks are creating fintech hubs and accelerators (working with their own staff and external start-ups) to help develop new products and services. So it is an industry which is seeing much competition and collaboration in bringing financial services to the market.
In some developed markets, new product and service innovation is leveraging technologies beyond the traditional financial services space and exploring applications of the blockchain, robotics and the Internet of Things. Digital financial services regulation is constantly evolving and is an important consideration for financial services that embrace emerging technologies.
The blockchain first rose to prominence as the digital engine of the Bitcoin currency, but its ability to record data such as transactions, contracts and agreements, and have them verified by users of the distributed ledger means that the blockchain has the potential to disrupt in a range of industries such as financial services, telecoms, legal, manufacturing, and transportation, for example. Large, established companies are exploring how they can use the blockchain to execute transactions and take the cost and complexity out. Also, there are estimated to be several hundred blockchain start-ups globally, seeking and securing partnerships with large organisations that give them a market and a distribution channel.
The blockchain’s impact on the financial services industry is expected to be profound, given the technology’s ability to speed up transactions and lower their costs. The blockchain is being evaluated by several financial institutions to determine how the technology can be used in executing different transactions, particularly as they are regulated. For example, the blockchain could be used by all the relevant parties to record, verify and track the transaction of a financial asset.
The blockchain could also play a key role in the Internet of Things. A distributed ledger could be used to effectively manage the big data associated with IoT, such as assigning digital signatures to data at each stage of a transaction between connected devices. Furthermore, the blockchain’s distributed nature makes it difficult to hack so it could provide the security and transparency that the IoT needs.
The blockchain can also be used in smart contracts to facilitate the transfer of ownership of an asset by executing the terms of a contract, such as the passing of property ownership from one party to another.
There are numerous examples of how the blockchain could help companies do business better, but an example of a consumer-focused application of the blockchain is blockchain ID. A person’s identity is immutably recorded and the person is provided with a unique, time-stamped blockchain ID. This ID could potentially replace the need for usernames and passwords when accessing digital services.
The potential use cases of the blockchain are almost limitless, but the blockchain will likely be most successful where there is a clear business case and where it is used to solve real-world problems.