Technology is now the new Wall Street or Financial Services. Interestingly enough, there used to be global financial break downs, and now there are technology scandals – the 3G, 4G scam, the Y2K bug and technology driven recession, Facebook Cambridge Analyticala data scandal where it was revealed that Cambridge Analytica had harvested the personal data of millions of people’s Facebook profiles without their consent and used it for political purposes – just shows on the scale, potential and outreach of technology.
Various facets of technology are already fundamentally transforming several different industries and ways of working. From a consumer perspective, technology has left its mark on every facet of our life—from how we socialize and interact, to how we travel, how we earn, and how we pay for groceries (for that matter even how groceries are delivered).
In India specifically, on many dimensions, the country is well on its way to becoming a digitally tech-enabled advanced country. From daily consumer impacting actions – the surge of PayTM users (300M registered and 120M active users in 2018) and transactions (gross transaction value quadrupled to $20B between 2017 and 2018) due to demonetization, the use of data and analytics to drive targeted outreach during the 2019 National elections. To bigger government mandated/funded growth platforms – where the number of bank accounts linked to Aadhaar grew from 60 million in 2014, to 400 million in 2017, to more than double YoY growth in 2018 to 900+ million. Another example is the Goods and Services Tax Network, established in 2013, that brings 10+ million indirect transactions of tax-paying businesses onto a single digital platform, a “digital powerhouse”, creating a huge incentive for businesses to digitize their operations. The growth across all dimensions has been spectacular. From a consumer perspective, the “tech savviness”, further propelled by the falling cost and rising availability of smartphones is a big driving factor. Having the second largest digital consumer base, large millennial population willing to experiment and try new things, high-speed connectivity further helps.
Everyone would agree that scale and impact from technology in the Indian economy is massive, and the opportunities that lie ahead are impressive. Businesses, both local and global, are quickly recognizing these opportunities and the future potential thereof, and creating custom tailored services for the consumers, taking advantage of the opportunity, and launching unique operating models to be successful. Companies leveraging technology are using in one of the two ways:
A technology driven transformation to transform the core or build digital capabilities – where companies are leveraging technology to fundamentally rethink their digital offerings. Certain trends are interesting to highlight driven by the technology, smart phone and mobile revolution. Google recently posted an analysis, that the internet is clogged up early at 8am in the mornings because millions of Indians are logging on for the first time to greet their loved ones, family and friend a very good morning. Other platforms quickly took advantage of the phenomenon. Online picture-sharing site Pinterest added a new “good morning” quotes section, which saw a nine-fold increase in a year’s time in the number of Indians downloading the snaps. WhatsApp itself added a status message last year so users could say good morning to all their contacts at once. These are examples of companies, and others in the ecosystem taking advantage of understanding user behavior, taking advantage and adapting services quickly to meet demand. Another bolder example is private companies changing the entire ecosystem of services offered. Innovations in the private sector have enabled internet services to millions of consumers and made online usage more accessible. Reliance Jio adopted tried and tested American strategy of bundling virtually free smartphones with mobile-service subscriptions to spur competitive pricing. As a result, mobile data consumption per user grew by 152 percent annually and data costs have plummeted by more than 95 percent since 2013. As a result data, mobile, internet are now a lot more accessible in not only cities in India, but also rural towns. Even the rickshaw-walas, now carry cell phones, video chat with family, take payments via PayTM. While Indians are now reading newspaper online, ordering food through the food delivery services, video calling their friends and streamlining movies online. At the same time, Jio is riding the next wave of digital momentum by further strengthening its strong technology foundation by launching IoT products and solutions, for both consumers and enterprises.
A technology led transformation to identifying a whitespace, change the way of doing business and changing the industry landscape – some organizations, large and small, are tapping into existing customer pain points and thinking of new ways to revolutionize that customer experience leveraging technology. The prime example of this is the new category of services called as Taxi, Bike, Bicycle Aggregators. What was a non-existent market at $0 few years ago is now a whopping $35B+ market in India alone, with not just one many different players in the domain – Lyft, Meru, Ola, Uber to just name a few. These so-called ride-sharing start-ups identified that hailing (and availability of) a cab through the traditional channels is quite painful and there was a better opportunity for technology driven aggregators to create a marketplace driver (on the demand side) and customers (on the supply side) to order a cab on the click of a button, and to take it further even make the payment seamless and online. These companies identified an opportunity, identified a business model, revenue stream and quickly leveraged technology to create a digital platform to test and learn from user behavior. What started out as a car sharing service leveraging technology has now expanded into motorcycle, bicycle, auto, food delivery and bigger forays of logistics now.
Being digital also means being channel agnostic, in this era where most millennials and Gen X own multiple devices. And thus, critical for content and experience to adapt as a customer shifts from a mobile phone to a laptop or from evaluating a brand to making a purchasing decision – the customer journey is in continuum as the customer shifts from one device to the other. The rising number of customer interactions generates a stream of intelligence that allows brands to make better decisions about what their customers want.
We are now in the fourth industrial revolution driven by technology. There is no one right answer on which of these pathways would work for a company. Any and all of these pathways to a digitally enabled transformation are correct, as long as the leadership team has a clear goal and vision of what they are hoping to accomplish from technology. Even as CEOs push forward with their digital agendas, it’s worth pausing to clarify vocabulary and sharpen language.
Despite these advances, there is plenty of room for India’s digital revolution to grow. Digital spend for large institutions in developing nations such as India is still a small percentage of that in developed nation (there is atleast 5-10x gap to close). Despite the WhatsApp and Facebook success stories, still only 40% of the population has internet subscription. Despite access to digital banks, online accounts, Fintech payments, PayTMs, greater than 80% of transactions are in still in cash. Online sales are increasing and growing fast, however still constitute less than 5% of overall retail sales. Looking ahead, India’s digital consumers are poised for robust growth.
Technology is about leveraging the lever to unlock growth now. Indian technology revolution is at an interesting juxtaposition of technology, business and human behavior response. The scale and potential of expansion is huge. How companies might interpret or act on it will vary but having a clear understanding of how technology will transform businesses will allow leaders to drive progress and value to innovate, learn and grow rapidly. The big question for India remains though, which companies and services will emerge as leaders as the next phase of this transformation shapes up. Also, importantly, what areas are ripe for the next S-curve areas for India’s digital transformation? Stay tuned for the next update here.
Khushpreet Kaur is partner in Mckinsey and Company New York, and focuses her work in helping clients large scale technology and digital transformations