Upheavals always have two sides: Existing vendors in the market regard them as a threat and a challenge; for industry outsiders they provide an entry opportunity and the possibility to earn money with new models and innovation. Here are four sectors that will experience enormous changes in the near future – or already have.
Traditional banking has basically slept right through the digital transformation. Though E-banking is now universally available there are few institutions that are truly customer-oriented. Bureaucracy is everywhere, a culture of fees and expenses is rampant and unfortunately a bit of arrogance as well. Is there anyone who doesn't know what I'm talking about? Employee xy from a large bank isn't allowed to transmit even the most inconsequential information via E-Mail. Instead, it's sent either via mail or Fax (they offer that option, though of course I don't have one). Not only is this arduous, it's not very safe either. If one questions or criticizes the policy, it won't usually take very long until the bank employee refers you to the strict regulations in place.
This is, and I explicitly include the legal regulations, a very clumsy excuse. Of course banks have to comply with the law and adhere to regulations. But they should do so while making it as easy for the customer as possible. And they should fight to deregulate the market – and conduct themselves in such a manner as to support the effort. This hasn't happened. On the contrary: There is hardly a sector that has maneuvered itself so completely into a dead end during the past ten years as the banking industry – solely through the industry's own conduct. Meanwhile, this has even spilled into the image of the bank employees.
NUMBER26 shows that there is a better way. There, I can open an account without any effort in 15 minutes. Even as a Swiss citizen. NUMBER26 makes the following claim: “NUMBER26 is banking as it should be – fast, transparent, safe and absolutely free-of-charge.” To date this promise has been kept.
We desperately need more banks like this. Banks that use new technologies to make it easier for customers to deal with their money and handle financial transactions. Not just a few apps and trendy sound bites, but a cultural shift. This is exactly what we need (ok, the apps too).
Insurances are good business as long as a large number of parameters remains stable. Risk becomes calculable. At its core this is how insurers make a living. Technological advances, however, add more and more heretofore unknown variables to the equation. It no longer suffices to statistically analyze a set of indicators. In order to offer innovative and profitable insurance products vendors must conduct their own research. What we know today as Big Data should be the springboard for every insurance company. In reality quite a few companies, especially large ones, have some serious catching up to do.
In addition, and this is a big problem, many insurance contracts take far too long to mature. Technological developments will fundamentally change our society over the next few years. Costs will change, demographics in any case, and with it the risks. I wouldn't want to be committed to long-term contracts should this happen. But this is exactly the case. All you have to do is consider pension contracts; on the one hand it is becoming increasingly difficult to achieve an agreed rate of return, on the other hand life expectancy is rapidly increasing. This cannot and will not turn out well.
When I spoke to a management-level employee of an energy provider in Switzerland a few weeks ago, he had no idea about Tesla's Powerwall. After we talked about it a little bit, he quickly dismissed the whole concept as nonsense – after all, there were still so many technological obstacles. Unfortunately, I regularly encounter this type of behavior in the energy sector. So often, in fact, that in the meanwhile I think that it has come to belong to the industry's culture to some extent. New technologies at first seem to be nonexistent in this sector.
The situation is paradoxical inasmuch as there are three residents in my immediate (sun-kissed) neighborhood who are thinking about ordering the inexpensive Tesla Powerwall. Not primarily to charge them through the solar panels. No, they want to use cheap off-peak electricity during the day too. According to Tesla the Powerwall will be available in Switzerland toward the end of 2015. In other words, in Q1 of 2016 the first users will draw only off-peak energy from the network of the aforementioned energy provider. Instead of dealing with the new technology now and trying to create a business case out of it, next year the energy provider will talk about threats to the business and try to limit usage through political means. Short term this might actually work, but in the midterm the new technology will win out. And the provider will then be not the established company but a startup.
The impact that the rapidly improving battery technology in general and that of Tesla specifically will have on society cannot yet be assessed. For battery technology is a driver for so many other technologies. It has a similar significance as broadband technology (cable and wireless) had for the Internet. After a certain data throughput was reached, that market and the opportunities with it literally exploded.
I expect the same to happen with battery technology. As soon as batteries are able to deliver twice the energy for the same current costs and with the same current size this will have a huge impact. The automobile industry is an obvious example which comes to mind. Just think about all of the theoretical innovations that would then be possible.
Now, doubling the capacity represents a huge effort and will take time, you say. But, if you are aware that technological progress proceeds exponentially, you must realize that we aren't that far away from this situation anymore. The situation will be a vastly different one five years from now.
Technological advances in the medical sector are enormous. But for the moment they are taking place behind closed doors. The basic paradigm shift consists of research moving from a trial-and-error approach to a calculating, model-driven methodology. Decoding the genome and the work based on that already enables us to grow and use body parts.
For example, there are already more than ten people worldwide whose lives have been saved by tracheae created by cultured stem cells. And more promising active substances have been developed during the past five years than ever before.
It is therefore only a question of time before medicine awakens from its Cinderella sleep of estimating, trying and failing as well as its more brute-force methods and moves up to a clear and reliable methodology that will improve the lives of all of us. I know it might sound ungrateful and crass, but it's apparent, that with the majority of serious illnesses, physicians unfortunately have only a limited idea about what is really going on with the patient. Chemotherapy, for example, isn't really a sophisticated form of therapy, but rather an attempt to bludgeon ants moving on an expensive tile floor with a baseball bat. In my personal experience good doctors will admit this, even if it's hopeless. So here we are also facing cultural change.
I think businesspeople have enormous opportunities in all four sectors mentioned above. Established market players are stuck in a rut and, for the most part, don't recognize these chances. If I were invested in such companies I would reduce my investments and instead invest in companies that are looking to conquer these markets with new technology. This seems risky at first glance, but midterm it's worthwhile by comparison because the traditional players will continue to lose in value. So place your bets on the right horse at the right time.
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