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Even If It Eats Their Own Lunch, Companies Must Invest In New Technologies, Say Experts

Even If It Eats Their Own Lunch, Companies Must Invest In New Technologies, Say Experts
A panel of experts say that even if they cannibalize their legacy operations, companies looking to grow should not shy away from adopting new, emerging technologies.
Sometimes spurring the decline or demise of traditional businesses and changing the way users today interact with technology is the rapid adoption of smartphones and improved Internet connectivity around the world.
"There's a clear accelerated adaption of digital lifestyle by consumers," said B.G. Srinivas, group managing director at Hong Kong-based telecommunication services provider PCCW. "On the other hand, in the enterprise sector, we're seeing enterprises going through massive amounts of digital transformation."
In sectors as diverse as media, banks and transport services, companies have been forced to reconsider their existing business models over the past few years.
The legacy media businesses has been forced to reconsider how they approach their customers by the emergence of Netflix and a host of other online and mobile streaming services, for example.
"We've seen over the years, over the many years of media, this trade off or this contest between content and distribution, back and forth — it's the history of media," said Catherine Wood, chief executive officer of ARK Investment Management.
"Any platform that understands its customer and tailors media for each customer, understands not only what each person likes, but can formulate new programs, new media, because of what it sees in demand from existing customers is going to continue to pull ahead," she said.
What happens when companies don't embrace new technologies, even when they cannibalize existing businesses is showcase by Video-rental chain Blockbuster's demise in the wake of the introduction of streaming services. by offering high-quality video-streaming options on mobile devices, even in regions where internet connectivity is spotty at best, players such as Netflix have extended their reach.
Mobile technologies and services generated 5.2 percent of gross domestic product (GDP) in Asia Pacific, said a recent report from GSMA, the trade body representing interests of mobile operators worldwide. About $1.3 trillion of economic value was the total amount. This would increase to $1.6 trillion, or 5.4 percent of GDP in the region by 2020, GSMA predicted.
"Mobile is where everything is going. We're going to carry our content with us, when we want it and anytime we want it," said Wood.
Demonstrating why established businesses need to adopt new technologies to keep up with disruptors is the sector of financial technology, or fintech.
Monopoly over how people conducted financial transactions have bene enjoyed by banks for years.
But new ways of sending and receiving payments through the internet are being provided by disruptors.
Today, the likes of Alipay and WeChat Pay have changed the way users pay for goods and services, start-ups such as Toast allow remittances to be sent over the Internet and collected in person and companies such as TransferWise let users swap money in various currencies with each other on its platform.
But Sergey Solonin, chief executive officer of Qiwi says that without the presence of banks, the fintech industry will not be able to continue developing at its current rapid pace.
Investment in new technologies, including blockchain and cryptocurrencies, as well as fintech start-ups, have been made by banks over the last several years.
"We see that without banks being good platform for fintechs, for newcomers, it will be difficult to develop at the pace we see right now," he said. "Banks do invest a lot of money into fintechs right now. And also because of some regulatory issues that we face, I think we'll still see some disruption on the market, but the weight now, it moves towards collaborative forms for fintechs with banks, instead of being just disruptive."

Christopher J. Mitchell

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