During the year, 2020, the novel coronavirus (COVID-19) pandemic dramatically altered the way in which millions of Americans live their daily lives. While many hope for some aspects of pandemic life, such as travel restrictions and mask mandates, are temporary, other changes made last year are here to stay.
Working from home is bound to stick around for large segments of the workforce, digital security will only rise in importance, and the future of subscription services should be to continue to improve on consumer retention. Let’s explore how business during pandemic can continue to grow:
The Proliferation of Remote Work
Amidst the COVID-19 pandemic, 88% of companies around the globe either encouraged or required employees to work remotely. Of those companies, 67% expect remote working to become a permanent fixture of business operations.
Remote work has exposed unexpected cost savings to be had by both the firm and the employee. Firms save on property and overhead by holding fewer people in office buildings, and workers save on transportation expenses by forgoing a daily commute. Technologies such as Zoom and Microsoft Teams have become a lifeboat and incredible opportunity for so many.
In the long run, both firms and workers will migrate from higher cost markets like New York, San Francisco, and Washington DC to more affordable areas.
Between 14 and 23 million Americans are already expected to move, some living as much as four hours away from the company’s headquarters. In the coming years, that number has the potential to increase 3 or 4 times over.
While some companies do intend to cut the pay of workers living in more affordable areas, the worker is still likely to save money to the tune of anywhere from $2500 to $4000 a year. Location-based pay differences are a natural consequence of business during the pandemic, but they’re one in which the worker can still out ahead.
Even though remote work brings wonderful benefits, it offers no solution to several long standing inequalities present in the American workplace.
On the subject of more well known wage gaps, such as those based on gender and race, 2020 did not show significant gains for women or racial minorities. Though some predict that the prevalence of remote work will decrease hiring and management biases, women still make less than men when both are working in a remote position.
Furthermore, women and racial minorities are less likely to have the option of working from home in their jobs, meaning the cost savings discussed above will not apply to them. As with any new system, the shift to permanent remote work creates both winners and losers.
Cybersecurity Attacks Have Increased
Remote work has shown a compelling need for cybersecurity. The large scale growth of work-from-home technologies, customer-facing networks, and online cloud services have all been exploited by cyberattacks in the recent past.
Between February and March 2020, hacking and phishing activity increased by 37%. In March and April, over 192,000 coronavirus-related cyber attacks were reported each week, a 30% increase compared to pre-coronavirus numbers.
Three lessons can be learned from these alarming cyber-attack numbers in the post-pandemic world.
To start, a cyberattack could spread just as fast or faster than a biological virus, lying dormant in some servers for months at a time while it spreads. Furthermore, in an economy with ever-greater digitization, the economic impact of a digital shutdown could be immense.
If a digital virus had the same virulence as COVID-19, it could brick or wipe information off 20 million infected devices. Finally, recovering from digital destruction presents serious challenges as tech companies would struggle to meet demand surges in the aftermath of an attack, grinding other industries in the economy to a halt.
Our dependency on the internet is staggering: global loss of the internet would cost $50 billion per day.
Cybersecurity needs to be strong enough to prevent that from happening; in the case of a digital virus outbreak, cybersecurity experts are the frontline warriors. Right now, IoT and cloud email security are the places in need of attention.
Phishing remains the #1 vector in cyberattacks, serving often as the first step. For workers at home, reliance on public clouds increases risk of outages. On the side of IoT, 67% of enterprises have experienced a related security incident, many of which occurred due to out-of-the-box security flaws.
As long as these issues go unresolved, attacks will continue to use IoT as a point of entry.
Aligning OT and IT will do a great deal in improving cybersecurity.
In addition, businesses must reevaluate their security policies and procedures to reflect shifts to remote work. That means making changes to recovery plans, adjusting insurance coverage, and creating new policies for mobile security and devices brought into the business by an employee.
Logical next steps include increasing a company’s bandwidth to better handle teleconferencing, establishing secure VPN access for their employees, and requiring a network-level authentication for remote desktop protocols.
Cybersecurity is more necessary than ever before. Companies everywhere need to stay ahead of hackers in order to maintain business as usual.
Fixing the Holes in Your Recurring Payments
Both the changes discussed above think about how the way companies do work will change as a result of the pandemic. One final consideration is what kind of businesses will rise to prominence in the post-pandemic economy. While everyone was stuck at home, subscription services like on-demand streaming saw increased usage.
Companies who offer monthly subscription services are excited for and know their top line revenue numbers very well. The companies who will do well going forward take themselves to the next level by paying attention to what so many have come to ignore: existing customers.
In the US, customer churn (when consumers cancel their subscription) costs businesses $136 billion per year. A third of that number occurs due to involuntary churn and failed payments.
Companies who fix failed payments and keep their customers have the best chance of keeping customers long after pandemic concerns are alleviated.
When it comes to payment failure, the main causes of involuntary churn are insufficient funds, credit card limits, and credit card changes. While companies cannot see into every customer’s personal budget, the last issue of changed payment information is one they should be aware of.
This is especially an issue with auto-renew subscriptions. 35% of subscriptions automatically renew, but 47% of businesses lose auto-renewals due to change in payment data.
Not only do failed payments prevent companies from earning revenue, but they raise costs as well. 48% of businesses say chargeback rates cut into forecasted revenue, but 43% also say increased customer service contacts from failed payments make it cost more to keep customers.
Customer Loyalty is Key
Of course, it’s natural for businesses during the pandemic to pay for customer loyalty. 65% of a company’s business comes from customers it already has. Unfortunately, it’s easy to lose a customer; 32% of people will stop doing business with a brand/company after one bad experience.
Payment failures naturally lead to angry customers because they often only learn of the issue when their service stops.
How does one tackle the issue of failed payments? Automatic emails rarely help; they lack empathy, they put the onus on customers to take action, and they can’t replace customer service. Ways to decrease credit declines include direct debit, the use of digital wallets, and having a payment processor who accept a wide variety of card brands.
Personalization and applying logic to retrying a transaction can prevent failed payments from occurring in the first place.
Business During the Pandemic and Post-Pandemic Must Prevail
The year 2021 is primed to bring a lot of changes to the economy. Millions of people can work from anywhere, allowing both great opportunities and great risks.
The growing digitization of the economy gives more power to hackers and more potential for companies to forget the humans they have at the end of the line as customers. Despite great technological strides, computers can’t do it all in business.
Especially on the consumer facing side, it’s still necessary for companies to have people working to retain customers.
Fintech Kennek raises $12.5M seed round to digitize lending
London-based fintech startup Kennek has raised $12.5 million in seed funding to expand its lending operating system.
According to an Oct. 10 tech.eu report, the round was led by HV Capital and included participation from Dutch Founders Fund, AlbionVC, FFVC, Plug & Play Ventures, and Syndicate One. Kennek offers software-as-a-service tools to help non-bank lenders streamline their operations using open banking, open finance, and payments.
The platform aims to automate time-consuming manual tasks and consolidate fragmented data to simplify lending. Xavier De Pauw, founder of Kennek said:
“Until kennek, lenders had to devote countless hours to menial operational tasks and deal with jumbled and hard-coded data – which makes every other part of lending a headache. As former lenders ourselves, we lived and breathed these frustrations, and built kennek to make them a thing of the past.”
The company said the latest funding round was oversubscribed and closed quickly despite the challenging fundraising environment. The new capital will be used to expand Kennek’s engineering team and strengthen its market position in the UK while exploring expansion into other European markets. Barbod Namini, Partner at lead investor HV Capital, commented on the investment:
“Kennek has developed an ambitious and genuinely unique proposition which we think can be the foundation of the entire alternative lending space. […] It is a complicated market and a solution that brings together all information and stakeholders onto a single platform is highly compelling for both lenders & the ecosystem as a whole.”
The fintech lending space has grown rapidly in recent years, but many lenders still rely on legacy systems and manual processes that limit efficiency and scalability. Kennek aims to leverage open banking and data integration to provide lenders with a more streamlined, automated lending experience.
The seed funding will allow the London-based startup to continue developing its platform and expanding its team to meet demand from non-bank lenders looking to digitize operations. Kennek’s focus on the UK and Europe also comes amid rising adoption of open banking and open finance in the regions.
Featured Image Credit: Photo from Kennek.io; Thank you!
Fortune 500’s race for generative AI breakthroughs
As excitement around generative AI grows, Fortune 500 companies, including Goldman Sachs, are carefully examining the possible applications of this technology. A recent survey of U.S. executives indicated that 60% believe generative AI will substantially impact their businesses in the long term. However, they anticipate a one to two-year timeframe before implementing their initial solutions. This optimism stems from the potential of generative AI to revolutionize various aspects of businesses, from enhancing customer experiences to optimizing internal processes. In the short term, companies will likely focus on pilot projects and experimentation, gradually integrating generative AI into their operations as they witness its positive influence on efficiency and profitability.
Goldman Sachs’ Cautious Approach to Implementing Generative AI
In a recent interview, Goldman Sachs CIO Marco Argenti revealed that the firm has not yet implemented any generative AI use cases. Instead, the company focuses on experimentation and setting high standards before adopting the technology. Argenti recognized the desire for outcomes in areas like developer and operational efficiency but emphasized ensuring precision before putting experimental AI use cases into production.
According to Argenti, striking the right balance between driving innovation and maintaining accuracy is crucial for successfully integrating generative AI within the firm. Goldman Sachs intends to continue exploring this emerging technology’s potential benefits and applications while diligently assessing risks to ensure it meets the company’s stringent quality standards.
One possible application for Goldman Sachs is in software development, where the company has observed a 20-40% productivity increase during its trials. The goal is for 1,000 developers to utilize generative AI tools by year’s end. However, Argenti emphasized that a well-defined expectation of return on investment is necessary before fully integrating generative AI into production.
To achieve this, the company plans to implement a systematic and strategic approach to adopting generative AI, ensuring that it complements and enhances the skills of its developers. Additionally, Goldman Sachs intends to evaluate the long-term impact of generative AI on their software development processes and the overall quality of the applications being developed.
Goldman Sachs’ approach to AI implementation goes beyond merely executing models. The firm has created a platform encompassing technical, legal, and compliance assessments to filter out improper content and keep track of all interactions. This comprehensive system ensures seamless integration of artificial intelligence in operations while adhering to regulatory standards and maintaining client confidentiality. Moreover, the platform continuously improves and adapts its algorithms, allowing Goldman Sachs to stay at the forefront of technology and offer its clients the most efficient and secure services.
Featured Image Credit: Photo by Google DeepMind; Pexels; Thank you!
UK seizes web3 opportunity simplifying crypto regulations
As Web3 companies increasingly consider leaving the United States due to regulatory ambiguity, the United Kingdom must simplify its cryptocurrency regulations to attract these businesses. The conservative think tank Policy Exchange recently released a report detailing ten suggestions for improving Web3 regulation in the country. Among the recommendations are reducing liability for token holders in decentralized autonomous organizations (DAOs) and encouraging the Financial Conduct Authority (FCA) to adopt alternative Know Your Customer (KYC) methodologies, such as digital identities and blockchain analytics tools. These suggestions aim to position the UK as a hub for Web3 innovation and attract blockchain-based businesses looking for a more conducive regulatory environment.
Streamlining Cryptocurrency Regulations for Innovation
To make it easier for emerging Web3 companies to navigate existing legal frameworks and contribute to the UK’s digital economy growth, the government must streamline cryptocurrency regulations and adopt forward-looking approaches. By making the regulatory landscape clear and straightforward, the UK can create an environment that fosters innovation, growth, and competitiveness in the global fintech industry.
The Policy Exchange report also recommends not weakening self-hosted wallets or treating proof-of-stake (PoS) services as financial services. This approach aims to protect the fundamental principles of decentralization and user autonomy while strongly emphasizing security and regulatory compliance. By doing so, the UK can nurture an environment that encourages innovation and the continued growth of blockchain technology.
Despite recent strict measures by UK authorities, such as His Majesty’s Treasury and the FCA, toward the digital assets sector, the proposed changes in the Policy Exchange report strive to make the UK a more attractive location for Web3 enterprises. By adopting these suggestions, the UK can demonstrate its commitment to fostering innovation in the rapidly evolving blockchain and cryptocurrency industries while ensuring a robust and transparent regulatory environment.
The ongoing uncertainty surrounding cryptocurrency regulations in various countries has prompted Web3 companies to explore alternative jurisdictions with more precise legal frameworks. As the United States grapples with regulatory ambiguity, the United Kingdom can position itself as a hub for Web3 innovation by simplifying and streamlining its cryptocurrency regulations.
Featured Image Credit: Photo by Jonathan Borba; Pexels; Thank you!