{"id":633751,"date":"2017-09-12T00:00:00","date_gmt":"2017-09-11T22:00:00","guid":{"rendered":"https:\/\/www.ie.edu\/insights\/latest-news\/articles\/digital-transformation-an-opportunity-for-emerging-markets\/"},"modified":"2019-02-06T12:52:47","modified_gmt":"2019-02-06T11:52:47","slug":"digital-transformation-an-opportunity-for-emerging-markets","status":"publish","type":"articles","link":"https:\/\/www.ie.edu\/insights\/articles\/digital-transformation-an-opportunity-for-emerging-markets\/","title":{"rendered":"Digital Transformation: An Opportunity for Emerging Markets"},"featured_media":636393,"template":"","meta":{"_has_post_settings":[]},"schools":[],"areas":[16,17,18,21],"subjects":[],"class_list":["post-633751","articles","type-articles","status-publish","has-post-thumbnail","hentry","areas-competitiveness-growth","areas-entrepreneurship","areas-finance-control","areas-innovation"],"custom-fields":{"wpcf-article-leadin":["Digital transformation is having a decisive impact across the globe, although the pace of change varies depending on the geographic region and sector of activity. Shailendra Kumar Rai, PhD, ICCR Chair of Corporate Responsibility and Governance at HHL Leipzig Graduate School of Management and an expert on the financial sector, explains how technological innovations are changing the ways in which financial institutions evolve and impact society, giving rise to opportunities that require new skills."],"wpcf-article-body":["What are the main challenges that the financial sector must face worldwide?<\/strong>\r\n\r\nBesides the aging of technological<\/a> infrastructure, the biggest challenge for the global<\/a> financial<\/a> sector is the steady decline in interest rates. As the population ages, the level of savings has to rise in order to cover medical and retirement expenses and insurance companies have to mobilize more money to meet their obligations. This tendency to save more also has an impact on consumption.\r\n\r\n \r\n\r\nAnd what role are new technologies playing in the transformation of the financial sector?<\/strong>\r\n\r\nWe are at the doorstep of the fourth industrial revolution, witnessing the convergence of digital and physical assets, as well as biological science. More and more businesses are going digital. Digital labor robots are being used in white-collar jobs, sensors are being integrated into clothing, 3D printing is being used for digital-to-physical transfer, the car-sharing economy is becoming a reality, big data and artificial intelligence (AI) are being used in a big way\u2014in fact, AI will soon be a part of corporate boards\u2014and blockchain is increasing our ability to store information.\r\n\r\nAll these changes will have a considerable impact on the financial<\/a> industry. Alternative digital-based financing<\/a> such as crowdfunding, peer-to-peer lending, and community sharing are also growing in popularity and are going to put pressure on the entire industry. The digital business requires less investment in tangible assets and more investment in intangible assets. However, banks prefer to provide loans to firms and individuals that can provide tangible assets as collateral. Banks and other financial service providers will have to change not only their business model but also the way they offer their services by using big data, AI, or other approaches.\r\n
The digital business requires less investment in tangible assets and more investment in intangible assets. However, banks prefer to provide loans to firms and individuals that can provide tangible assets as collateral.<\/blockquote>\r\nYou know the Indian market well. How is India embracing the digital transformation?<\/strong>\r\n\r\nI\u00a0would like to mention two examples. First, a government demonetization decision which took high denomination banknotes out of circulation actually played a significant role in raising people\u2019s awareness about digitalization. I am not saying whether the demonetization decision was good or bad for the economy. But it did force people\u2014rich and poor, literate and illiterate\u2014to learn to use debit and credit cards. Even people who didn\u2019t have a bank account could understand the power of digitalization.\r\n\r\nSecond, a private mobile company offered free Internet service to everyone for a few months. This was a boon not only to people who couldn\u2019t afford Internet access but also to people who didn\u2019t know how to use the Internet.\r\n\r\nThe other day, at my hairdresser\u2019s in India, I ran into an elderly man whom I\u2019ve known for a couple decades. This gentleman started telling me how much information had been downloaded from the Internet in the last week. I politely asked about megabytes and gigabytes, and he replied that he didn\u2019t know. However, he told me, \u201cNow I know how to use the Internet. I\u2019ve started using it to pay my mobile bills. Today, for the first time, I bought clothes online for my granddaughter. It\u2019s so easy! I want to learn about mobile banking.\u201d Curiously, he also told me: \u201cDemonetization has taught us that it is high time for us to use technology<\/a> in a big way.\u201d\r\n\r\n \r\n\r\nThis economic revolution in India: How could it transform the country\u2019s future?<\/strong>\r\n\r\nIndia has been growing at an impressive rate since 1991 and has pulled millions of people out of poverty. However, if you look at the per capita income of developed countries, or even China, we are far behind. But we are the youngest country in the world: more than 65% of the population is less than 35 years old. Like young people everywhere, young Indians have dreams and aspirations, and the country has to transform itself in order to provide jobs for everyone. India has to become rich before it becomes old.\r\n\r\nThe digital transformation is going to bring about a revolution not only in business but also in people\u2019s personal lives. Good-quality products will be available at lower prices and the cost of funds will decrease as the use of alternative financing<\/a> becomes more commonplace. The cost of production will also fall thanks to robots and other new and advanced technologies<\/a>.\r\n\r\nAs the \u201cgrey economy\u201d is reduced to nearly zero, government income will increase. It will then be possible to spend more on developing infrastructure such as roads, ports, and airports, and also on education, health, and social security. Digitalization will bring millions of people into the tax net, and the government\u2019s direct and indirect tax revenue will increase.\r\n
We need to create an education system that will help students develop a sixth sense to foresee changes in business activity.<\/blockquote>\r\nThis digital transformation is favoring the emergence of new professional profiles. What are the challenges for education?<\/strong>\r\n\r\nThe changing business landscape requires different skill sets. Our education system was good at supporting the businesses of the 19th<\/sup> and 20th<\/sup> centuries, but 21st<\/sup>-century businesses require new skills. Although technology<\/a> is important, it is not going to be the only differentiator, since everyone has access. We have to develop an education system that emphasizes entrepreneurial<\/a> thinking.\r\n\r\nThis doesn\u2019t mean creating entrepreneurs but working from more advanced stages. We have to get rid of the \u201cparrot syndrome\u201d in today\u2019s education system and progress to entrepreneurial thinking. Today, most Indian start-ups fail after three years. Why? Because they try to replicate the business model that has been successful in the United States or Europe. It was a good model a decade ago, when the Internet had not penetrated the Indian market and foreign players were not interested in it. Nowadays, no business can survive and thrive without a global<\/a> perspective.\u00a0Thus, we need to create an education system that will help students develop a sixth sense to foresee changes in business activity.\r\n\r\n \r\n\r\nWhere are we going to see more business opportunities in the future? What will be the keys to success?<\/strong>\r\n\r\nIn a changing business, cultural, and geopolitical environment, the key to success is innovation<\/a>. Companies will have to reinvest continuously, people will have to be in learning mode constantly, and governments will have to be very attentive to the environment, as it will require changes in rules and regulations.\r\n\r\nI see enormous potential for businesses in general but for small businesses in particular in the areas of health, education, and agriculture in Asia and Africa. We are moving towards inclusive globalization<\/a>. Earlier globalization was driven by a few thousand multinational companies. The time has come for millions of small businesses to do business globally. This is inclusive globalization, and it will lead to a prosperous and connected world.\r\n\r\n \r\n\r\n\u00a9IE Insights.\r\n\r\n "],"wpcf-article-extract-enable":["1"],"wpcf-article-extract":["Shailendra Kumar Rai<\/strong> discusses the challenges, opportunities, and economic and social impact of digital transformation."],"wpcf-article-summary-enable":["1"],"wpcf-article-summary":["Digital transformation is having an impact on the global financial industry. Industry expert Shailendra Kumar Rai, PhD, explains how technological innovations are forcing financial institutions to change not only their business model but also the ways in which they offer their services, for example by using big data and artificial intelligence. In India, he explains, digital transformation will bring about a revolution in both business and society, increasing the country\u2019s wealth. In parallel with this change, the education system must emphasize the development of entrepreneurial thinking and the capacity for lifelong learning. We must move towards inclusive globalization\u2014and the key to success is innovation."]},"_links":{"self":[{"href":"https:\/\/www.ie.edu\/insights\/wp-json\/wp\/v2\/articles\/633751","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.ie.edu\/insights\/wp-json\/wp\/v2\/articles"}],"about":[{"href":"https:\/\/www.ie.edu\/insights\/wp-json\/wp\/v2\/types\/articles"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.ie.edu\/insights\/wp-json\/wp\/v2\/media\/636393"}],"wp:attachment":[{"href":"https:\/\/www.ie.edu\/insights\/wp-json\/wp\/v2\/media?parent=633751"}],"wp:term":[{"taxonomy":"schools","embeddable":true,"href":"https:\/\/www.ie.edu\/insights\/wp-json\/wp\/v2\/schools?post=633751"},{"taxonomy":"areas","embeddable":true,"href":"https:\/\/www.ie.edu\/insights\/wp-json\/wp\/v2\/areas?post=633751"},{"taxonomy":"subjects","embeddable":true,"href":"https:\/\/www.ie.edu\/insights\/wp-json\/wp\/v2\/subjects?post=633751"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}