Unleashing finance: banks’ response in a changing ecosystem

It is suggested by Harvard Business Review that the coming phase of technological disruption is set to change banking more than the Great Recession did[i]. At the core of the issue is that ‘… strategic success now requires a structural response. A company can’t adapt to 21st-century conditions without modernizing its 20th-century structures[ii].


Indeed, only 19 percent suggest their organisation has market leading digital capabilities[iii]. This should be conceived as a systemic issue; leadership, technology, organisation (and business models) and future skills and talent all impact each other to such a degree that, from a strategic sense, you cannot look at technology in isolation. This has been well documented with regards to digital transformation and being data driven.

By 2025, around 160 zettabytes of data are forecast to emerge every year. For context, if all the words ever spoken over the last 3000 years were converted to audio files, the overall size would approach 40 zettabytes of data[iv].  By this date, nearly a fifth of all data generated worldwide is forecast to be marked as ‘critical’ to daily life, and nearly a tenth forecast as ‘hypercritical[v].’

Being data driven does not equate to using plug and play technology, however. 54 percent of executives say that having a corporate culture unable to embrace digital technologies is one of their biggest barriers[vi]. 68 percent of executives say that their organisation needs new leadership to compete in the digital age[vii] and only 7 percent to 18 percent of organisations possess the digital dexterity to adopt new ways of work solutions, such as virtual collaboration and mobile work[viii].

Legacy systems simply won’t cut it with fifty years of digital transformation happening in the next five years[ix], whether from a technical, cultural, organisational or managerial perspective. Gartner’s suggestion that 80 percent of incumbents will expire by 2030 might well be an exaggeration or evidence of unwarranted hype, as has been widely noted. Yet the fact remains that banks have no right of place in the new economy and if they themselves do not enact systemic change, their Kodak moment could imminently arrive. Those unwilling to adapt their business model to the emerging ecosystem will miss the bulk of opportunities inherent in a new era of increasingly decentralized, distributed and ambient finance.

[i] https://hbr.org/2017/10/how-the-great-recession-changed-banking

[ii] https://www.strategy-business.com/article/The-Insurance-Industry-Needs-an-Intervention?gko=edb5b&sf192099736=1

[iii] https://www.bcg.com/en-us/publications/2018/global-corporate-banking-2018-unlocking-success-through-digital.aspx

[iv] https://www.forbes.com/sites/quora/2017/12/20/which-areas-in-investment-banking-are-experiencing-talent-gaps/#2a9b6a0b5450

[v] http://www.itpro.co.uk/big-data/30541/smart-cities-to-become-the-norm-by-2025

[vi] https://www.cmo.com/features/articles/2017/12/25/the-times-are-achangin-for-change-management.html#gs.vAewvis

[vii] https://sloanreview.mit.edu/article/common-traits-of-the-best-digital-leaders/

[viii] https://idm.net.au/article/0012055-gartner-says-digital-dexterity-missing-ingredient

[ix] https://www.cognizant.com/perspectives/the-future-of-it-infrastructure


Ambient CX

Global consumer patterns are being permanently rewritten along the lines of influence, personalisation and trust. Indeed, personalisation is reckoned by Boston Consulting Group to drive a revenue shift of $800bn by 2022 for the companies that get it right[i]. The most obvious conduit for addressing these levers is technology. Engagement technologies such as virtual reality and augmented reality that give rise to immersive retail will help create new and increasingly personalised consumer experiences. However, the gap between promise and execution will be a treacherous one for many organisations. In a Pew study (2018), 47 percent of respondents predicted that individuals’ well-being will be more helped than harmed by digital life in the next decade. Interestingly 32 percent say people’s well-being will be more harmed than helped[ii]. Despite the advantages of digital, there is clearly a degree of mistrust, resistance and antipathy towards processes seen as ‘impersonal.’ Perhaps nowhere is this clearer than with customer service.


It has been suggested that by 2020, 85 percent of all customer interactions will be handled without a human agent[iii]. Chatbots could account for a full quarter of all customer service operations[iv] and 90 percent of retailers believe A.I infused virtual assistants will improve customer service[v]. However, PwC data suggests that 75 percent of consumers say they want more human interaction in the future, not less. Indeed, around two thirds of consumer feel that companies have lost touch with the human element of customer engagement[vi]. Whilst emotionally intelligent applications of artificial intelligence can undoubtedly improve overall service – whether through advanced natural language processing or cognitive systems/ machine learning, only 3 percent of U.S, consumers say they want fully automated experiences[vii].

The answer will in part, lie in empowering frontline workers with precise and accurate technological tools, as well as augmenting backend systems to work as seamlessly as possible. Indeed, a fully human system is unlikely to satisfy consumer demands at scale since it cannot match the efficiency provided by expectation setting companies such as Amazon. Those who find how to balance ever spiraling expectations and a desire for ‘connection’ will likely be tomorrow’s winners. To succeed at scale will require close attention to design principles and crafting truly consumer-centric business models that incorporate technology ‘invisibly’ and unobtrusively as well as significant investment in change management and human skills and preparedness. Some 83 percent of shoppers currently believe they’re more knowledgeable than retail store associates[viii]; such perceptions are simply unsustainable. Firms need to ‘…adopt a customer-based approach that considers value within the broader context of a customer’s lifeworld[ix].’

[i] https://www.bcg.com/publications/2017/retail-marketing-sales-profiting-personalization.aspx?linkId=41155830

[ii] http://www.pewinternet.org/2018/04/17/the-future-of-well-being-in-a-tech-saturated-world/

[iii] https://www.ibm.com/blogs/watson/2017/10/10-reasons-ai-powered-automated-customer-service-future/

[iv] https://www.computing.co.uk/ctg/news/3026950/chatbots-to-make-up-a-quarter-of-customer-service-operations-by-2020

[v] https://www.letslinc.com/wp-content/uploads/2017/07/Linc_Brand-Garage_Customer-Service-and-AI-Report.pdf

[vi] https://www.pwc.com/us/en/press-releases/2018/experience-is-everything-heres-how-to-get-it-right.html

[vii] https://www.pwc.com/us/en/services/consulting/library/consumer-intelligence-series/future-of-customer-experience.html

[viii] https://www.retaildive.com/news/survey-83-of-shoppers-think-they-know-more-than-store-associates/438307/

[ix] https://www.researchgate.net/publication/264429263_Interpreting_value_in_the_customer_service_experience_using_customer-dominant_logic

The agile airport

Despite lower middle class growth, Europe is expected to add the most passengers of any region, other than Asia-Pacific to 2036. Indeed, just four years later could mark a doubling from 2017’s figures as 4.5 billion in total fly into and around the continent[i]. The nature of such growth is not without challenges for airports however. Since it is low cost carriers (LCCs) that are primarily driving European passenger growth, growth models will need to be carefully considered – even on an airport by airport basis. Low cost carrier growth implies, as ACI Europe notes, ‘…significant pressure on aeronautical revenues, [ii]’ since 90 percent of European airports offer discounts to attract, retain and grow air traffic. The shift towards LCC’s also provides airports opportunities for the provision of services not met by airlines – whether in terms of food, lounges or other ancillary services. Within Europe alone, not to mention other faster growing markets, there is likely to be significant bifurcation of airport models, airline-airport relations and perhaps even financing. All of these factors have significant implications for the environment in which aviation players will be able to make future decisions.


Underlying this is a need for a new infrastructure paradigm: on a global scale, air traffic could grow at 4.4 percent annually to 2037, requiring some 37,400 new passenger and freighter aircraft totaling $4.8 trillion in value[iii]. Since every region is likely to see a doubling or more of passenger aircraft between 2018 and 2037, the implications for the need for new infrastructure is clear.

Between $1.2 and 1.5 trillion is expected to be spent on global airport infrastructure development up to 2030, according to IATA[iv]. China alone, plans to build 136 new airports by 2025[v]. Additionally, all of London’s major airports are forecast to be at capacity by 2030, India’s to exceed capacity by 2022 while the United States needs $75 billion invested by the early 2020’s[vi].  Despite the significant increase in capital spending this would represent, there are reasons to suggest it may still prove insufficient if middle class livelihoods enjoyed in the West go global.

Putting aside physical space, apron capacity, runway development and other ‘hard’ infrastructure issues for a moment, a report from the World Economic Forum states that the entire underlying travel system will need an overhaul. The rationale is simple enough; the current network of passports, border control points and customs checks is not able to be both highly secure as well as efficient enough to cope with a 50 percent increase in worldwide travel[vii]. Technology could undoubtedly help mitigate this, but it is not clear whether infrastructure projections include root and branch reform of airport operations in addition to the necessary hard infrastructure needs.

Technological progress, in the wider sense, could also present direct challenges to current business models. The diffusion of sharing economy practices and eventually autonomous vehicles could create a financial issue for many airports – parking revenue typically represents a quarter of annual airport budgets[viii]. Such revenue typically averages 40 percent in North America and 20 percent in Europe. Similar challenges and opportunities abound in the wider smart city environment – indeed it has been noted that airports will increasingly resemble smart cities in microcosm[ix] and share many of the issues relating to data flows and consumer centrism.

With future growth likely significant but the extent unknowable, future proofing airports is a significant challenge – especially given long lead times for construction[x]. Agility, in design, business model and even use of space will be central to this, since the future remains fundamentally unknowable. If, for example recent trends evident in the United States and elsewhere, such as trade protectionism or forms of travel restrictions, proliferate, up to 1.1 billion fewer passenger journeys could occur annually in 2036. Conversely, an increased push for liberalisation of trade and travel could result in a tripling of passengers by this date[xi]. Making calls now, for a future where these margins have vastly different outcomes, will require a new sense of business agility, the use of futures methods such as scenario planning and an increasingly multi-sided business model.

Airports in key strategic locations are already placing their bets. Future megahubs like Istanbul New Airport, Dubai World Central and Beijing Daxing International, ‘…have each been designed to accommodate upward of 150 million travelers a year[xii].’ All are built on a relatively traditional hard infrastructure however and future possibilities may force the current mental models on which they are built to undergo reassessment. For example, it has been suggested that ‘…by 2050, runways could become circular, double-decker or be built remotely in the sea. Circular runways will tackle weather restrictions such as wind and allow planes to take off from any direction. Remote runways in the sea are also expected to exist as well as double-deck runways so no added space is used[xiii].’ Whether this becomes standard, proves a point of competitive differentiation or even appears at all, it is unlikely that huge current investments or existing infrastructure will be able to adopt to such practices seamlessly. The question then becomes ‘…what role do we see (current) airports fulfilling in the future?’

[i] Source: Independent (Ireland), 2018 https://www.independent.ie/business/world/airport-traffic-in-europe-tipped-to-double-by-2040-37029090.html

[ii] Source: Independent (Ireland), 2018 https://www.independent.ie/business/world/airport-traffic-in-europe-tipped-to-double-by-2040-37029090.html

[iii]Source: Airbus, 2018  https://www.airbus.com/aircraft/market/global-market-forecast.html

[iv] Source: IATA, retrieved 2018  https://www.iata.org/whatwedo/ops-infra/airport-infrastructure/Pages/index.aspx

[v] Source: CNN, 2018 https://www.cnn.com/travel/article/asia-airports-worlds-best/index.html

[vi] Source: Virgin Hyperloop One, 2018 https://hyperloop-one.com/blog/five-realities-shaping-future-airports

[vii] Source: WEF, via CSO Online, 2018 https://www.csoonline.com/article/3259889/biometrics/self-sovereign-biometrics-and-the-future-of-digital-identity.html

[viii] Source: Bloomberg, 2017 https://www.bloomberg.com/news/articles/2017-07-21/the-airports-of-the-future-are-here

[ix] Source: Apex, 2018  https://apex.aero/2018/1/25/smart-connected-airports

[x] Source: International Organization for Standardization, 2017 https://www.iso.org/news/2017/01/Ref2154.html

[xi] Source: IATA, 2017 https://www.iata.org/pressroom/pr/Pages/2017-10-24-01.aspx

[xii] Source: Apex, 2018  https://apex.aero/2018/1/25/smart-connected-airports

[xiii] Source: Vero Solutions, retrieved 2018 https://vero.solutions/future-airports-can-expect/

Aviation in the Asian century

Aviation is a core platform for economic development around the world, supporting some 63 million jobs and around $2.7 trillion in economic development[i].  This is largely dependent on the 10 million passengers who embark on aircraft every day, a number that could increase to 21 million in around 15 years’ time[ii].


Not only does this growth necessitate new infrastructure, it compels a new mindset since the future ‘destination’ is continuously evolving. For example, from close to 4 billion today, almost 6 billion annual international air passengers are expected by 2030[iii], some 7.2 billion in 2035[iv] and 7.8 billion by 2036[v]. This carries implications for infrastructure (including technology), sustainability, design, capacity, and even pricing.

Each of these issues will have regional expressions. Indeed, given the relative aviation infrastructure gaps in say Africa and Latin America, to say nothing of Asia, we would expect exciting new development concepts to appear there unencumbered by legacy systems and driven by strong middle class growth.

While the growth of the middle class is not the sole driver of passenger growth, earning between $4,000 and $40,000 has been proven as a key driver of international mobility. Certainly, in many emerging markets the coincidence of rising middle class and passenger growth is evident. Regions with strong middle class growth to 2037 also see strong passenger growth.

Despite the significant growth in Asia-Pacific, both in terms of middle class numbers and passenger growth, it is plausible that forecast Asia-Pacific passenger numbers are overly conservative in the long term.

This is because, while the ratio of passengers to middle class numbers in Asia is set to rise from 1:1 in 2017 to 1.25:1 in 2036/7, this remains far below ratios seen in Europe and North America. Respectively, these ratios are forecast to grow from 2.09:1 to 3.13:1 and from 2.87:1 to 4.54:1, while the highest growth is set to occur in the Middle East which almost doubles from 1.04:1 to 1.99:1. If anything the growth of extra passengers in Asia Pacific appears relatively ‘weak,’ given its strong middle class growth and when in comparison to Latin America and the Middle East, where each new middle class consumer correlates with around a doubling in demand for international movement. This is not the case in Asia. This relative ‘weakness,’ can also be seen in overall ratios.

Indeed, were Asian ratios to approach forecast North American or European levels, travels per middle class resident would almost triple. With lead times approaching 20 years for some forms of airport infrastructure, there is a need for planners to assess technologies that enable for more flexible construction as well as create new financing models quickly able to scale.

These figures do not account for domestic travel, which will naturally skew high in large countries such as India and China, and do not account for travel by High-Net-Worth-Individuals. They do however, suggest that even higher growth than is currently predicted is possible, with longer term growth in Asia, and indeed Africa, plausible beyond the forecast range.

[i] Source: International Organization for Standardization, 2017


[ii] Source: CNBC, 2018 https://www.cnbc.com/2018/05/03/worlds-airports-need-investment-to-cope-with-massive-growth-in-the-future-ceo-says.html

[iii] Source: ICAO, 2017 https://www.icao.int/SAM/Documents/2018-USAPCMA/Global_Aviation_Security_Plan_November_2017_en.pdf

[iv] Source: ABC News, 2018 http://www.abc.net.au/news/2018-02-01/flight-of-the-future/9380290

[v] Source: IATA, 2017 https://www.iata.org/pressroom/pr/Pages/2017-10-24-01.aspx

[vi] Source: Airbus, 2018 https://www.airbus.com/aircraft/market/global-market-forecast.html

[vii] Source: IATA, 2017 https://www.iata.org/pressroom/pr/Pages/2017-10-24-01.aspx

Airports: towards a customer centric future

Future airports will need to be data-centric, given the real need for adapting on the fly to accommodate future opportunities and volume. Centralised airport ecosystems and data flows will increasingly allow for forecasting that goes beyond current airport windows. Technology, in the wider sense, should thus be seen as an enabler of future strategies as well as a strategy in and of itself. With prediction becoming a science as opposed to an art, the future airport will need to become an adaptive and responsive ecosystem – both for its passengers and for planners. Those who find how to balance ever spiraling expectations and a desire for ‘connection’ will likely be tomorrow’s winners. To succeed at scale will require close attention to design principles and crafting truly consumer-centric business models that incorporate technology ‘invisibly’ and unobtrusively as well as significant investment in change management and human skills and preparedness.


Some of the more important changes will occur in the back-end of aviation industries, but the visible technology change will likely occur with consumer facing technologies and even spaces. There is already a trend towards incorporating outdoor and green spaces into airport spaces, providing benefits that can extend beyond direct passenger wellness or experience. For example, Chicago O’Hare uses such spaces for growing food that then supplies terminal located restaurants such as the Aeroponic Urban Garden[i].

Consumer centrism will likely spread throughout the ecosystem. For example, a new ticket-selling technology called NDC (New Distribution Capability), has the ability to analyse significant volumes of data that airlines routinely collect but do not act on. This will imminently enable airlines to ‘…provide every travel shopper a unique, customized price for any given trip about which they may inquire. Plus, it could soon include additional services like ground transportation and hotel rooms or, eventually, services like dinner reservations and concert tickets and retail goods ranging from travel accessories to clothing[ii].’

Greater data gathering and analysis will also allow airlines to personalise the on-board experience, with airplane cabins potentially configured by function, such as family, senior and group zones and booths[iii]. However, achieving such changes will require a new degree of consumer trust and an ability to add value to consumer propositions, in the likely event that data regulation further empowers consumers. Outlined by the World Economic Forum, it is suggested that a ‘…person’s data should reside in an account where it would be controlled, managed, exchanged and accounted for[iv],’ by around 2028. If data does indeed become a bankable commodity then airlines will need to develop attractive consumer propositions that enable them access to such data. This could either be in the form of various discounts or perhaps supplying value elsewhere in the travel ecosystem.

A shift towards providing value will require airlines and airports to rethink any presumptions they may have about either engaging or ‘owning’ the consumer and customer journey. It is likely that passengers will be selective about their communications and data choices in the absence of extra value provision. Airports, as increasingly intelligent, predictive and ‘pre-emptive,’ environments may be best placed to drive this change, although ecosystem involvement – and synergies – will be required to provide a seamless experience.

Few airports would dispute that they need transition away from a process driven focus and towards a passenger centric model. This concept needs to reach throughout the ecosystem, including airlines, tech providers, airports, other interested parties and increasingly passengers themselves. Interesting new sources of value are likely to appear as ecosystem partners strive to deliver new experiences and competencies. Passenger data may become the most important variable in the aviation industry. Establishing trust could require blockchain technology or some other medium that gives passenger control over their data, dealing with privacy concerns and helping break down silos within the aviation sector itself. The latter issue – sometimes overlooked in the face of a plethora of consumer facing technologies – is a key starting point in achieving success.

[i] Source: RE Journal, 2018 https://www.rejournals.com/five-transformations-shaping-airports-of-the-future-20180705

[ii] Source: Forbes, 2018 https://www.forbes.com/sites/danielreed/2018/06/07/airline-fares-ndc/#4858f5295977

[iii] Source: ABC News, 2018 http://www.abc.net.au/news/2018-02-01/flight-of-the-future/9380290

[iv] Source: The Economist, 2017 https://www.economist.com/news/briefing/21721634-how-it-shaping-up-data-giving-rise-new-economy

An era of new learning and talent paradigms

For many companies, labour will remain both its biggest cost and source of potential competitive advantage, even in an increasingly digital and automated world. A given organization’s ability to compete and execute strategy is increasingly dependent on its ability to manage its workforce strategically. Indeed, matching resources with shifting and often temporary business requirements will require whole new talent paradigms – in terms of recruiting in-demand and scarce talent, in terms of management and in terms of developing talent further.


Current practices would seem inadequate for the future. 85 percent of employees worldwide are reckoned to be performing below their potential due to engagement issues[i]. Furthermore, more than 50 percent of employees in digitally immature companies state they are planning to leave within three years, yet only six percent identify recruiting and retaining digital talent as their first-priority[ii].

Whilst HR has seen some recent changes, it has largely avoided the pressure to change in recent times as much as the numerous functions it supports. With pressure on the old system emerging at the organizational level, change is no longer an option. Evidence of this is already emerging; ‘…with many companies now organising their work project by project, their management and talent systems are becoming more team focused[iii].’  if HR heads – and the companies they inhabit – are to survive and thrive, ongoing renewal must become a reality rather than one-off or episodic change.

If as is reckoned the half-life of the average skill is now around five years, many companies are primed for disruption whether they accept it or not. Desired skill sets are set to change at an increasing rate for a range of jobs, ensuring that organisations could change dramatically within a decade or so. Profound changes in customer taste and needs, new markets emerging at the intersection of old ones together with the push to digitize and automate ‘…will impact current and future employees in terms of the required speed to adapt to the changing business climate[iv].’

Nearly two-thirds of employers expect leader and manager activities to change over the next three years[v], let alone ten. Planning for this within HR and by the CEO and Board, will have long term implications. What kind of skills and capabilities do you need to execute on your strategy and differentiate yourself[vi]? How do you assess these needs and on what basis? As noted by McKinsey, those organisations ‘…that are able to identify the critical 2 percent of the organisation, the people that generate most of the value (now and in the future) are the ones that are going to see extraordinary returns[vii],’ when appropriate structures are built around, and to support, it.

[i] http://www.digitalistmag.com/future-of-work/2018/05/16/hr-in-age-of-digital-transformation-06167140

[ii] https://www.burning-glass.com/blog/if-talent-is-ready-to-flee-then-maybe-its-time-to-plan/

[iii] https://hbr.org/2018/03/the-new-rules-of-talent-management

[iv] https://workforceinstitute.org/the-future-of-talent/

[v] https://blog.willis.com/2018/04/shaping-the-future-of-talent-rewards-and-work/

[vi] http://www.ey.com/Publication/vwLUAssets/ey-talent-strategy-designing-a-workforce-for-the-future-of-insurance/$File/ey-talent-strategy-designing-a-workforce-for-the-future-of-insurance.pdf

[vii] https://work.qz.com/1259950/mckinsey-co-chief-dominic-barton-on-talent-management-and-the-future-of-hr/

The future of analytics: Geospatial targeting and situals

One of the next big trends in analytics, notes Wharton[i], is the emergence of geospatial targeting. Establishing someone’s physical location and targeting offers accordingly could open up whole new business models, redefine consumer relationships and supply trustworthy firms with swathes of insight rich data.


The emergence of the quantified customer will blur the difference between existing market boundaries further, yet offer an infinitely richer picture of real-time consumer indicators by including contextual and situal information. Harvard Business Review correctly notes that ‘…the next generation of smart assistants and connected devices will learn from user habits and pick up on behavioural and environmental patterns in order to make these experiences more predictive[ii].’ This changing nature of engagement fundamentally shifts the product and services insurers are able to offer. For example, Buy+, a Chinese virtual reality shopping experience backed by Alibaba, engaged over 8 million users within a week of launching[iii]. Imagine if this experience could be tailored to your whereabouts, your purpose in that given location and your transaction history.

The changing nature of engagement changes the product, and since the IoT provides an expansion of quantifiable parts, we will have ever more data at which to shape price points. Of equal import is that there are more points at which we can engage consumers, especially with forthcoming micro-GPS that can better contextualise data to within mere feet of our position, and the ambient passivity with which we will ‘interact,’ with technology. Emerging data sources and personalisation will ultimately spawn new industries and enable businesses to add value in entirely new ways.

Care will need to be taken given GDPR and its likely successors. What data we hold and how we use it will be the life and death of our companies; this data could prove poisonous if mis-selling or similar can be proven using situal and contextual data. The risk of retroactive judgement for misusing data, whether reputational or legally, allied to sheer volume will likely create a need for regulated third party data aggregation, dissemination and marketplace formation. New data architectures will likely be required; customers, first and foremost, want problems solved – something that may go beyond an app or individual business silos. Real-time, multidirectional data will deliver situal information and insight, requiring new data strategies and even organisational set-up.

[i] whr.tn/2KTzfKc

[ii] https://hbr.org/2016/11/how-predictive-ai-will-change-shopping

[iii] https://venturebeat.com/2017/09/08/vr-will-be-an-essential-part-of-the-future-of-retail/