Wow. What a great experience. I was invited to attend the incredible Macquarie 2021 Australia conference, which is one of the most innovative financial services organizations in the world. After the event, Macquarie’s team shared the insights of the meeting, and I would like to share it with you here.
Survived “Digital Darwinism” and thrived in subversion
source: Macquarie View
COVID-19 has indelibly shaped the way we connect and consume, and has therefore accelerated the digital trend for many years.
In the high-risk era of “digital Darwinism” as Brian Solis calls it, when consumer behavior, society, and technology develop faster than some companies can adapt, it is those who further promote this evolution. The company is expected to be a winner.
The destruction caused by the complete cessation of immigration, scattered urban and rural immigration, remote work, online learning, shopping at home, and the “online by default” large-scale transformation provides plenty of opportunities for new disruptive technologies. But it also makes it harder for laggards to catch up.
Lebby’s new face
Although consumer behavior in Australia and New Zealand changed overnight in early 2020, the shift from physical retail to e-commerce and digital payments is a long-term structural shift. Brian Solis, the keynote speaker of the Macquarie Australia Conference and Salesforce’s global innovation evangelist, reflected on the accelerating development of this trend.
“Now, digital Darwinism is more of a factor in every industry than ever before. Every great change changes the way people-not just customers and employees-but what people operate, connect and communicate with. Way. Due to the way of thinking, operating procedures and self-imposed restrictions, the company as a whole has not kept up with this pace of development.”
Although the pandemic did not create digital Darwinism, the companies and industries that are pushing digital forward—such as providers of buy-first-pay-later (BNPL) services—are now taking advantage of it to accelerate quickly and take advantage of consumer behavior.
BNPL is one of the major disruptive payment methods that have experienced explosive growth in the past few years. With the increase in unnecessary stimulus spending and commodity inventories during the first wave of lockdown, it is more attractive to rural areas during the COVID-19 pandemic. Remote and self-isolated consumers. For the lucrative BNPL, the expected growth trajectory is positive, but as a tailwind of the industry, this will bring more and more competitors to compete for market share.
Wei Sim, a research analyst at Macquarie, believes that there will be an oversupply for several years before supply and demand reach a balance and lead to industry consolidation for BNPL services.
“If we look at other industries with this boom-bust cycle, we will eventually see that the strong get stronger and the weak lose. Players who are ready to survive and develop are well-capitalized and have a wider network of merchants and users on both sides. It will enable them to consolidate their position as the preferred BNPL payment method. As merchants become more and more critical of their BNPL products, those who do not have the capital and network will lose market share,” Sim said.
In the context of this competitive landscape, the introduction of new digital infrastructure such as Australia’s New Payment Platform (NPP) and Open Banking is a positive step towards promoting further innovation in the fintech sector, enabling participants to identify gaps in the market And encourage new consumer-centric innovations.
The death of physical wallets
The biggest loser of digital acceleration will be the humble physical wallet.
In order to limit the contraction and spread of COVID-19, the use of ATMs worldwide has declined last year, while the number of merchants accepting pure digital payments has increased. This shift away from the use of cash has resulted in the retirement of 2,150 ATMs in Australia alone between June and August 2020.
It also led consumers to try new shopping and payment methods in most major countries in the world, including Australia, and 57% of them gave up their loyalty to a retail brand or shopping method in favor of other methods.
However, in sharp contrast with China, digital wallets have been China’s preferred payment method for some time. They are now used in 80% to 90% of daily transactions.
As Australia is still in the early stages of adopting digital wallets, Sim reflects on the challenges that businesses and emerging technology companies need to overcome to encourage further adoption by consumers and retailers in the country.
“China is a different market because they have largely surpassed the physical card market and moved directly from cash payments to digital payments. The obstacle to widespread adoption of digital wallets in Australia is that we are accustomed to using cards, but after COVID-19 And in an increasingly digital world, this situation is changing.”
Although there is still uncertainty about Australia’s preferred payment method, one thing is certain: digital payment is and will continue to be a beneficiary of digital Darwinism.
Migrate to the cloud at scale
Another key consequence of the decentralization and decentralization of the workforce, education, and healthcare systems in the past year has been the large-scale migration to cloud-based platforms. The industry’s 26% annual growth rate (CAGR) and infrastructure-as-a-service (IaaS) spending is expected to increase from A$907 million in 2019 to A$2 billion in 2024, which proves this. Approximately seven out of ten Australian companies are expected to invest more in data analytics (72%) and cloud-based software (68%) in the next 12 months, and two-thirds (66%) will invest in higher networks Safety.
How long will the data increase at this rate? The consensus of the technology community is that the amount of data generated by consumers and businesses will grow at a rate of 20-25% every year,7 driving the demand for network security, data centers, and software providers to easily create and manage network connections and New technologies such as 5G to maintain a competitive advantage.
The destruction caused by the pandemic has created opportunities for traditional analog-dependent companies and industries to narrow the digital divide. Participants who commit to long-term investment in digital infrastructure to support this permanent growth of data will be best able to bridge the gap while making products and processes future-proof for the next acceleration or disruption.
The most destructive survival
According to Solis, victims of digital Darwinism tend to make two common mistakes.
The first is to confuse iteration with innovation. Innovation does not turn into “new”, but into “net new value.” The truest definition of disruption is the release of new value by new things, thereby making old processes or products obsolete.
The second is that companies need to recognize that their consumers are people in the pandemic, and they are changing every day. Therefore, the prerequisites for survival in the era of digital Darwinism are agility, adapting to a consumer-led pace, and acknowledging the impact of the pandemic on consumer needs and inner beliefs.
Solis delivered a prophetic message to attendees at the 2021 Macquarie Australia conference.
“These times are by no means a’new normal’. This is not a race to normal. This is a moment of transition and reflection to build the future we really want. If we return to’normal’, we will miss the lessons of this interruption And opportunity.”