Technology Building Business Models

Suvrata Acharya, VP and Vertical Delivery Head, NIIT Technologies | Monday, 06 February 2017, 05:27 IST

The digitalization journey that started its journey from the electronic thing has taken a faster pace to autonomous thing. Evolvement of new smart technology such as IOT, cloud, robotics, machine learning, block chain etc. are diminishing the scope of human intervention. New business models are emerging in every area where smart technology is going to be the core of the business model. In the past decade, enterprises were primarily focusing on improving the human productivity through usage of platforms and tools. At present, the new business models are being developed with minimum or no human intervention but yet generating more customized services for the consumers.

The best proof of the changing business models is the rise of Unicorns like Uber, Airbnb, Pintrest and Flipkart. Last year, there were 75 Unicorns, whereas this year it has already crossed 150. These unicorns are able to leverage on the social networks to understand the desired customer experience and design the services that are unique for each consumer. Let’s go through a few industries and how technology helped in transforming the business models.

Mobile fueling digital banking
The connected planet fueled by mobile and contactless technologies, has pushed banks to adopt technologies into their existing business models and develop new banking business models such as SMS Banking, mobile banking, video banking, social banking, digital banking etc. Most of the banking transactions like account opening, payment have already become mobile only transactions. New digital banks are able to leverage on social networks to offer contextual products to customers at their preferred touch points. One challenge banks face today is that they are primarily focused on improving transaction experience for the customer. They are not able to get rid of their business model that is incapable of offering a fully integrated money management capability. In future, new technologies like machine learning and the distributed ledger technology (DLT) are expected to make a lot of banking transactions irrelevant. New digital banking models will be developed that will provide more holistic money management services to consumers. 

Investment advisor industry transformed by advanced algorithm and automation
There are new Fintech players such as Wealthfront, Betterment, Truewealth who have developed new business models based on automation technologies known as Robo Advisor. Robo Advisor enables end consumer to develop and manage their own portfolios without paying fee to professional advisors. Today, Robo Advisor are controlling 0.5 percent of investment assets in US. According to Bloomberg, this figure will change to 5.6 percent by year 2020 and there will be a 68 percent increase in its AUM. In this business model, robots make investment decisions based on advanced algorithms. They do more rigorous processing of the market information and are programmed to ignore short-term market fluctuations.

Customer Data is the core of Retail and Consumer Goods Industry
We saw how e-commerce reshaped the entire business model of retail and consumer goods industry in the past decade. Now, what we can see in the models adopted by iTune and Amazon kindle, is that service based business model is becoming more successful. The core of this business model is the customer data and how the firm is able to build a strong customer relationship by offering customized products and services to consumer based on the data. Nespresso from Nestle was started as a service provider through coffee machines. Today they have further upgraded the service by offering personalized services due to integrating customer data in their business model. One more example is App based meal kit delivery service model that brings the concept of freshly prepped meal-in-a-box for working couples who would still like to have home cooked food. Some of the leaders in this market are Plated, Blue Apron, PeachDish etc. Dollar Shave Club delivers razors and other personal grooming products straight to consumers by mail. It delivers razor blades on a monthly basis and offers additional grooming products for home delivery. There is a long list of other innovative models which are transforming retail and consumer goods industry.

API speeding up new innovation in the Travel Industry
Uber and Airbnb allows peer-to-peer sharing and match making among consumers. More and more companies are moving towards p2p market. With travelers requiring increasingly personalized services which includes local experiences, there are new aggregated models being developed that are enabled by APIs. New mobile apps and web experiences are popping up to enable consumers to create travel itineraries, view reviews, book travel and activities all from one place. More and more companies have realized that consumer experience is key to being successful in travel and this is leading to aggregated services from a single mobile app or portal. More and more players in the travel space are opening up their data and services to allow innovators to innovate. While managing the trip is the core feature of the mobile app offered by the airlines, they are already including additional features such as providing special hotel deals and other special offers customized for the consumer.

The competition to reach at the heart of the customer’s micro-moment will bring new models in next decade and the technologies like Block Chain, Quantum Computing and Cognitive Computing are expected to play at the center in the future business models.

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