Sunday, April 23, 2017

CSR initiative – the never-ending buzzword for companies

There is little doubt that the objective of corporate enterprises is to walk down the ‘growth path’ or scale up or improve profitability. But one is tempted to ask: is staying profitable the be-all and end-all for companies? The answer is a big ‘No’ as enterprises are straining every nerve to think beyond ‘profitability’. Corporate enterprises are showing a ‘real intent’ to make their presence felt, in terms of engaging in societal engagement programs, which bodes well for the future.

There is a pressing need for the corporate world to embrace corporate social responsibility (CSR) initiatives. Over the past two decades or so, enterprises have taken to CSR activities in a big way. According to an iamwire report, global software giant Microsoft has been pumping billions of dollars in CSR activities. The IT bellwether has worked closely with many non-profit organizations – what’s more, it even asks its employees to spend a certain number hours each month on volunteering activities for issues that are close to their heart. Search giant Google’s ‘green program’ is another robust CSR initiative aimed at making businesses more reliant on renewable sources of energy.

Of course, there is also a line of thought that companies tend to carry out CSR programs sans any ‘real focus’. This could be true in some cases, but it will be unjust to suggest that a large chunk of companies are not taking CSR with any kind of seriousness.

CSR initiatives are of crucial interest for companies because there is a strong feeling that they must shoulder ‘some sense of responsibility’ in addressing social issues largely dealt with by government agencies, NGOs, etc across the globe. There are broadly two types of corporate social responsibility – one is related to providing funding and resources for social causes (such as donating money to charities etc), while the other is drawing up a comprehensive plan to produce products/services that are in the best interests of society, corporate environment-friendly initiatives, etc.

CSR initiatives are emerging as a ‘must-have’ for enterprises as prospective clients look beyond price, quality and reputation of a service/product. Clients are showing ‘increasing interest’ in knowing how ‘much community engagement presence’ firms are having before they actually avail their product/service.

Realization has probably dawned on companies that CSR can be a ‘strong selling point’ before prospective clients – a strong CSR portfolio can surely help enterprises showcase before clients how much they yearn to ‘do something for the society’. The dynamics of business are such that clients look at companies having a robust CSR background with an ‘extra interest’. A company may a strong reputation, reputed workforce, solid infrastructure, vibrant work environment, etc – but if it has a solid CSR portfolio it lends that ‘X factor’ – thus, a highly effective community engagement program paves the way for companies to come up with new client wins.
Community engagement is something clients want to know

CSR initiatives are seen as an integral part of a company’s business strategy as well as in shoring up its ‘already-built reputation’. A study conducted by New York-based private global consulting firm Reputation Institute revealed that reputation is increasingly playing a major role in how companies are bagging client wins. The study says that willingness to buy, recommend, work for, and invest in a company is driven 60% by the company’s reputation and only 40% by the reputation of its products or services. The bottom-line is that CSR activities enhance the feel-good factor about the company.

CSR activities will have its share of challenges. And the biggest of them is ‘execution’ – any CSR initiative without a proper strategy is bound to come a cropper. The effective implementation of a CSR drive is significant as its success lies in the active involvement of all its stakeholders. This is where employee engagement comes into play. The active involvement of the employees is a big factor in shaping up the success of a company’s CSR activity. Such initiatives cannot be termed a ‘success story’ unless it enjoys unstinted support of all employees or at least a bulk of it. It is also not a bad idea at all if existing clients/customers can be a part of such CSR initiatives as this would provide them a helicopter view of how the CSR initiative is conducted.

CSR initiatives must exude a feeling that companies are delivering CSR programs that has a ‘strong community feeling’ ingrained in them and not suggest anything close to being just ‘going through the motions’. Companies must refrain from any half measures and look to generate the right kind of ‘buzz’. The very purpose of conducting CSR initiatives could get defeated if there is no adequate publicity. Enterprises would be well served if they value the essence of creating a buzz about such initiatives – optimizing various social media platforms as well as ensuring such initiatives are published in newspapers, news portals, magazines, etc so that a larger audience is in the know. Media publicity of CSR activities is one aspect, which at times, is ignored by firms and Clearly, CSR initiatives would only get bigger in intensity going forward. Such initiatives are no longer confined to large or mid-sized companies. Even startups have quickly realized the importance of CSR drives and have readily chosen to wear the ‘CSR’ hat. The coming years are poised to see CSR emerge as an indispensable feature of companies.

How poor managers can cause serious reputational damage to a brand!

In a fiercely competitive marketplace, companies always have one goal in mind – how it can be ‘best heard’. Companies are increasingly ‘taking extra care’ to ensure they do not suffer any reputational damage, which can go a long way in them losing customers/clients.

It is clear that managers play a ‘crucial’ role in ensuring companies do not suffer from serious reputational damage. It is an open secret that no brand wants anyone to talk ‘bad’ about a company as it can translate into negative word-of-mouth. But why then managers have a big role in ensuring a brand is not at risk of any reputational damage? Well, it is easy to understand that companies expect managers to run the their day-to-day affairs. However, in pursuit of ‘driving the day-to-day operations managers at times, operate in such a way that it causes serious harm to the reputation of a company.

Every manager will be different but a common goal of all managers is to get the best out of their teams. The problem is that a lot of times, managers do exceed their brief (if not at all times) and resort to uncalled-for measures as they believe that those are the best ways to raise the performance of their underlings. Of course, the corporate world will have numerous instances of managers ill-treating their underlings. To put it bluntly, some managers are ‘more demanding than necessary’ and put extra pressure on their team members. They believe that this is the best recipe to scale up productivity. Many Managers at times are known to act as ‘control freaks’ and want to carve out a dominating presence. No wonder, there is a saying in the corporate world that ‘people leave managers, not companies’.

A survey conducted by American research company Gallup, only reinforces the fragile worker-manager relationships. As per Gallup’s 2015 survey, 50% of employees (among the 7,200 adults surveyed) ‘leave their company to get away from their bosses’. This survey is a true reflection of how managers operate in the corporate world. It also throws light on the prevalent, undesired worker-manager relationships.

So why then managers cut a sorry picture in workplaces? Well, people get promotions into managerial roles not always because they are really ‘good at managing people’. More often people ascend the career ladder because of outstanding performance in their earlier position.

The Gallup survey on the worker-manager relationships brings a few things in focus. How does an employee cope with a bad manager? An underling rarely questions his manager or gets into an argument bout for the fear of either losing his job or getting a bad appraisal. On many occasions, these underlings silently put up with ‘whatever these so-called bad managers throw at them’. They seemingly resign to their fate. Quitting the job to ‘escape a bad manager’ seems the only realistic option for these underlings. More importantly, these bunch of employees turn disgruntled and ‘generously badmouth’ the company in front of all and sundry when they leave the company.

What is significant here is that these employees probably have ‘nothing against the company’. They end up castigating the company purely based on their bad experience with their managers – something brands are looking to take cognisance of. It is only bad managers, who ruin the reputation of a company – it is their modus operandi that drives employees to exit the firm. It is seldom that managers across the globe face ramifications for poor treatment of their underlings.

Of course, there are companies that keep a close watch on how managers conduct themselves. They grill employees when they want to put in their papers. The objective is to know if these employees are quitting due to personal issues or better prospects or because of having to deal with bad managers, who brutalise them. But the percentage of such companies is far too small.

Supervisors rate managers often on the results they achieve and not how well they treat the people below them. For example, if managers do not achieve the desired results but treat their underlings well, it is of no help to them in the long run, in terms of securing a promotion.

The bottom-line is that companies must look to put a mechanism in place so that their reputation is not besmirched due to the unbecoming behaviour of managers. They hire managers to ‘ensure smooth running of the day-to-day operations of a company and not ruin them’.

Going forward, we could see a trend of brands keeping a ‘strict watch’ on how managers operate, as brands are striving to protect their reputation against damage by poor working ways of managers.

Monday, April 3, 2017

Steady acceptance of ‘blockchain technology’

The emergence of the ‘blockchain technology’ is poised to transform the way people transact online. No wonder, companies are hopping on to this break-through technology, which was first introduced by an unknown programmer or group of programmers known by Satoshi Nakamoto in 2008. Blockchain can be used to facilitate peer-to-peer exchange of assets, property, contracts, etc using cryptography. It is a distributed ledger which maintains a list of records called blocks, which comprise a time stamp. This time stamp contains information about a certain transaction taking place (its date and time). This information is subsequently linked to the previous block in the blockchain. Blockchain records are visible to all members of a network and can be easily monitored. These transaction records are protected by a groundbreaking peer-to-peer cryptographic validation. It’s important to mention that data once recorded in a block cannot be altered.

So why is blockchain such a big thing for corporate enterprises? This technology drives transparency in transactions and also provides security to people’s money and data. It also ensures speedier and tamper-proof transactions. Blockchain enables companies to be cost-efficient as they can trim down middle man costs. A report published in CB Insights stated that around $20 billion of middle-man costs is expected to be slashed going forward thanks to this technology. The efficacy of the blockchain technology can be best understood by the fact that it is being steadily embraced by global giants. It is true that the immense potential of blockchain is largely exploited by the financial sector. According to a Deloitte University Press report, 30 of the world’s biggest banks have joined a consortium to build blockchain solutions, and Nasdaq is working on a blockchain-powered private market exchange. We know for a fact that cash transfers can take days, often lack a “received” receipt, and come with fees. This blockchain technology can remove all these shortfalls in the banking system.

The significance of this technology is only accentuated by Nasdaq CEO Bob Greifeld. “Blockchain technology will not only redefine how the exchange system operates but also the global financial economy as a whole.” An IBM report only reinforces this thought. The report says 15% of the global banks will use blockchain by 2017 and another 66% will adopt this technology by 2020. A joint survey conducted by Synechron and TABB Group reveals that 55% of bankers expect blockchain to have a huge impact on the financial services industry over the next ten years.

Other industries are steadily adopting blockchain as well. Microsoft has deployed a cloud-based blockchain-as-a-service. IBM offered blockchain-as-a-service in logistics space, tracking food products as they move from farms and factories to store shelves. The blockchain ledger can record a product’s location, temperature, etc using tags and sensors. Blockchain can secure intellectual property and creative digital products like music and images. Further, IBM and Samsung have offered a proof-of-concept built partly using Ethereum, a blockchain-base framework, to demonstrate how blockchain can support Internet of Things (IoT) applications by supporting transaction processing devices. The distributed nature of the ledger can drive coordination among multiple devices. Even the government authorities are excited about this technology – the British government is even mulling incorporating blockchain into their student loan payments.

Interestingly, global players are upbeat about blockchain but investments in this technology have dipped this year. According to CoinDesk’s latest quarterly research report, $376 million were raised this year, which is 17% less than the amount raised in the year-ago period. It is possible that companies are not doubting the effectiveness of this technology but are only adopting a wait-and-watch approach, probably taking their own time to see where this technology can be of help in carrying out their day-to-day transactions.

Blockchain poised to rule the roost

Although the blockchain technology will go a long way in automating peer-to-peer value transfer, it is not free from vulnerabilities. Human fraud, double spending, compromise of wallets, servers, and even the possibility of an attack against the crypto are areas the blockchain application must address.

There is no denying the fact that blockchain is here to stay and will transform the way companies conduct day-to-day transactions. Companies are looking at ways to remain cost-effective and improve performance efficiency, and blockchain is an ideal application to cater to their needs.

Will OTT services play spoilsport to aspirations of telcos?

Most of us have been using Over-The-Top (OTT) services without actually realizing it. Simply put, OTT is a service used via internet through the telecom networks. For instance, users avail Skype or WhatsApp to make cheaper calls and send messages through the 3G network. Additionally, content platforms such as Netflix, Saavn and Hulu have also gained prominence as OTT applications.

The communication industry has undergone significant transformation, in terms of different types of content subscribers consume. This trend will continue in the future with the emergence of OTT services. Such third party OTT communication services are preferred more than the traditional services offered by telcos. Traditionally, voice and messaging (SMS) have been the principal revenue streams of telecom operators. Consequently, telecom operators see OTT service providers posing a new challenge to their revenues.

OTT services have come a long way. Today, all internet connected devices are capable of installing OTT applications. What started off as a minimal calling application a decade ago has emerged as a multi-communication channel for mobile devices. Given the rapid evolution of OTT applications, backed by deep pockets and scalable innovation, pioneering developers are striving to integrate innovative features.
The promises made by tech giants over the years have started translating into reality. The evolution of futuristic OTT applications is shored up by emerging business models, platform & app diffusion, and consumer behavior.
The contemporary media is witnessing increasing digitization across the globe. With a rise in mobile devices coupled with increasing internet speed, users can exercise the option to consume digital content ‘anytime-anywhere’. Internet continues to be the disruptive force for bridging the gap between digital content and devices. Since the dawn of modern communication facilities, OTT have outpaced traditional telecommunication services. Additionally, app-based communication is shrinking the revenues of telecom operators.
With consumers having a penchant for OTT services, the key players of the telecommunication industry are facing twofold challenges. Firstly, telcos need to power a digital world with a fast, reliable and secure network. Secondly, telecommunication service providers are also required to meet the rising customer demands.
As the global economy is turning digital, it is vital for telcos to reinvent their business models to serve the digital age. However, the telecom operators are yet to adapt to the transformative forces of OTT, which are highly disruptive. IDC Saudi Arabia’s senior research analyst – telecoms & digital media, Tolga Yalcin, said the emergence of OTT has dented the messaging revenues of telcos. “We have seen the primary impact of OTT players on telcos' messaging revenues with the high level substitution of national and international SMS services with instant messaging (IM) applications like Whatsapp and iMessage. In 2015, SMS/MMS revenues decreased by 2% in Saudi Arabia and 5% in UAE and we expect this trend to continue at an accelerating rate.”

According to global research firm Ovum, the Middle Eastern subscription is set to grow dramatically compared to other regional markets over the next few years. The video-on-demand revenues will grow by over 25% annually by 2019, accounting for over 70% of OTT revenues in the region. It is difficult to quantify the market share captured by OTT, though its impact on traditional services such as voice and messaging is significant. It is pertinent to mention that OTT applications have also captured the youth segment that prefers social media over traditional communication methods.

The rapid adoption of smartphones has facilitated free calls and messaging, enabling users to communicate directly via internet. Such a disruptive movement by OTT services is eroding the major revenue streams (calls and messages) of telcos. But are telcos geared up to embrace the disruptive technologies? Disruptive OTT services may pose a threat to the telecommunication industry, but it is also throwing up promising opportunities. The opportunity lies in the convergence between telcos and information technology OTT applications. It also indicates the harmonious coexistence of both network providers and content platforms in the digital ecosystem.
Proactive telecom service providers are able to identify the demanding consumer behavior for on-demand OTT services. Such operators have started collaborating with the key players in the OTT industry. Airtel entered into a partnership with Facebook, while Reliance also collaborated with WhatsApp. Another way for telcos to respond to the Mobile Instant Messaging (MIM) transition of OTT is to create a global standard operator-owned messaging service. Such a step needs a hybrid approach of integrating multimedia features like audio-video content support, and group messaging functionality. Telcos in order to capture a share of MIM revenues, need to adopt a strategy of being an all-inclusive content platform.
As telcos try to tap the potential of digital services, it is imperative for them to identify their assets, differentiators, and adopt strategies for the digital ecosystem. To defend the status of being a network gatekeeper, telecom service providers must also focus on OTT services for interactive content. Capping data usage to access certain interactive content applications can help intensify OTT initiatives. For instance, StarHub of Singapore tied up with famous OTT application WeChat to offer unlimited access to its prepaid subscribers at a minimal cost.

Telcos can power a completely new breed of content platforms. However, a major challenge for telcos is to create a roadmap for disruption. Industry leaders are also perplexed about their organizational flexibility undermining their business models to get the most out of the disruptive technology such as OTT. The entrepreneurial vision, capex requirements and operational complexities of telecom providers are significant factors that should be taken into account, while venturing into digital communication services. For telcos to maintain steady growth, it is important to focus on select OTT services over the short-term and expand their complete suite of services over the long-term.

The digital communication platform remains an open space for telecom providers to innovate with the right business model, and position themselves as future brands. The telcos, who have overcome formidable barriers in the past, will surely have an ‘answer’ for disruptive OTT services and are poised to redefine digital communication setting new benchmarks.

Future for FinTech: Collaboration opportunity for banking sector

FinTech has generated a lot of buzz in the financial services industry. FinTech startups are disrupting the traditional finance sector with innovative technologies and business models. As the banking industry looks to jump on the FinTech bandwagon, it is imperative to understand the potential of collaborations, and assess its future. This article highlights how the banking sector can leverage FinTech and drive synergies through strategic partnerships.

The global financial industry is undergoing a transformational phase due to fast-paced technological changes. New technology startups have started focusing on bringing about innovation in the finance space, also referred to as FinTech, following the 2008 financial crisis. The objective of these startups is to revolutionize the finance industry. The FinTech industry comprises a variety of financial businesses such as mobile payments platforms, online Peer-to-Peer lending, SME finance, crowd-funding platforms, money/remittance transfer, wealth management & asset management platforms, crypto currency, trading management, etc.

In the fiercely competitive world, FinTech is up against the traditional finance sector, mainly in the areas of payments, lending, retail banking and SME finance. Although the global finance sector faces stiff competition from the FinTech uprising, there is immense potential for technological innovations in the finance space. Even healthcare and life-sciences industries have utilized this technology to optimize their business processes, prune costs and encourage innovation. Similarly, FinTech platforms enjoy a competitive edge due to cost-effective operations and fewer regulations than the traditional finance sector.

FinTech are emerging as a disruptive force in the banking industry and can draw a parallel between Amazon (it is disrupting the retail industry) Google & Facebook (they are disrupting the telecom sector) and Uber (it is disrupting the transportation sector).

The new financial technology players have created a paradigm shift in the financial sector through digital innovation, thus paving the way for more transparent and efficient operations.

The abundant availability of capital through venture funding in FinTech startups, customers’ preference for digital experience, access to right talent, government backing and the quickly developing digital infrastructure are key drivers behind the growth of the FinTech industry.

In addition, the other key drivers for the FinTech industry are as below:

·        Lack of trust in traditional banking, following the 2008 financial crisis motivated the customers to shift to technology platforms

·        Proliferation of digital technologies such as cloud, social media, analytics, and mobile internet, etc

·        Customers are more engaged with the digital platforms, including mobile devices. Thus, there is a growing demand for better financial products and services

·        Millennial and Generation-Z are early adopters of digital financial products and services

·        Moreover, the demographic shift and technology proliferation globally are enabling the rise of FinTech startups

·        The hype around FinTech is attracting talent from FinTech startups, which use this technology to compete with the incumbents of the financial industry

Given the increasing regulations and pressure from shareholders, banks have found it difficult to develop the necessary risk culture for groundbreaking innovations. Technology-based startups face less systemic risks compared to traditional banks and are also exempt from most of these restrictions. Venture and private investors have poured huge investments in FinTech companies. FinTech is the one of the fastest growing startup spaces with over 5,000 startups globally. The value of global FinTech investment in 2015 grew by 76% to $22.3 billion.

 FinTech activity concentrated in technology hubs –

FinTech are prominently concentrated in tech-hubs such as Silicon Valley, New York, London, Singapore, Berlin, etc. Most of the players in Europe and the US are focused on the payments and marketplace lending segment. These players enjoy support from industry associations, accelerators, incubators and innovation labs.

The total revenue of the UK FinTech sector during 2015 stood at $10.1 billion. The country is surpassing Silicon Valley in the FinTech space, due to the rapidly growing venture investments and government support for new startups. Moreover, the FinTech community in the UK is thriving due to the support from several accelerators and startup incubators such as Techstars, Level 39, etc. In addition, Innovate Finance, a non-profit membership association, seeks to address the barriers to FinTech community and help the UK attain a global leadership position in FinTech.

Furthermore, less restrictions about the licensing & regulation in the UK is spurring the growth of digital challenger banks such as Atom Bank, Tandem, Monzo, etc. Zopa, a peer-to-peer lending platform, plans to launch a challenger bank and offer savings and deposit services. These digital-only banks are offering banking solutions to digital-savvy customers and differentiating through transparent operations, ease of use and faster loan processing at a lower cost.

Several experts in the financial sector believe that FinTech is overrated and mainly driven by the external funding without any sustainable model. However, FinTech companies are serving the unmet customer needs and offer quick & easy processing.

FinTech product/services are not at par with the banks, in terms of size and security. Lending Club, a major online marketplace lending company, has issued total loans of $22.7 billion through its platform, which is small compared to $729 billion of total credit-card debt in the US. FinTech is unlikely to replace traditional banks, but it could influence the operating model of banks to cut costs and improve service quality.

Majority of the global banks view FinTech as a less of a cannibalization and see it as an opportunity to reorganize their business to adapt with digital customers and enhance customer value.

Future of FinTech:

Most FinTech startups are focused on niches and unmet customer needs of banks. FinTech needs to engage at a broader level with established industry players and focus on the customer experience and services to thrive in the digital age.

 The focus on the customer centric (B2C) segment such as retail banking over the near-term will hold the key. The rate of adoption is higher in this space due to low cost of switching and technology acceptance by customers. Moreover, FinTech will benefit from the collaboration with banks, as it will provide an opportunity to expand the customer base and develop a service ecosystem around the core offerings.

Over the medium to long term, FinTech players need to challenge their own business models as regulatory supervision increases and find adjacencies in the B2B space. In addition, mobile will be a most important service distribution channel in the future. Hence, FinTech players should actively engage with customers over the medium-term. Further, FinTech will have to invest in innovation, manage risks and build effective partnerships with big financial industry players. Collaboration is the way to success for both banks and FinTech players.

Bridging the gap –

·        Traditional banks fall short of institutionalizing large-scale innovation due to cultural adaptability, talent shortage and lack of agility

·        Banks can benefit from the knowledge of FinTech companies, and leverage the technology to develop insights about customer needs and engage effectively

·        In addition, traditional finance players can unlock new growth opportunities through new monetization models and business processes

Collaboration is a key for success –

FinTech currently faces limitations in terms of access to a large consumer base, market expertise, brand loyalty, and capital. The incumbents could identify potential opportunities through collaboration with FinTech companies, especially in digital payments, lending and money-transfer. The financial sector players benefit from the collaboration, as there is an impetus to reimagine the capabilities. The most preferred ways to collaborate is to create startup programs to incubate FinTech startups and set up investment funds to fund FinTech startups.

 Several banks realize the potential of forging collaborations with FinTech and are working closely with FinTech startups through different engagement models

Digital payments a precedence: The rise of digital commerce (ex.e-commerce) and sharing economy are shifting the landscape of the payment industry and prompting the latter to go digital. Major banks, in order to benefit from this trend, are collaborating to explore cross-border payments using the Blockchain technology. Bank of America Merrill Lynch, Standard Chartered, Westpac, Royal Bank of Canada and Santander have started working on Blockchain standards and recently formed the Global Payments Steering Group (GPSG). GPSG is the global blockchain bankers’ network with payment rules and standards.

Further, banks are not only collaborating with FinTech players, but also forging cross-industry partnerships to advance the industry. The Hyperledger is an open source collaborative project of leading banks, technology companies, and IoT players to advance the blockchain technology. These players are working closely to find a commercial solution using the blockchain technology, which offers transparency and interoperability.

In addition, other partnership opportunities include online marketplace lending in the SME segment, digital automation of banking processes such as loan origination, customer relationship management, and risk & compliance management, using AI and advanced analytics.