For the last 5 years, big tech companies like Adobe, Microsoft, Salesforce, and Google have talked about the term “digital transformation.” The idea being, moving old systems into the digital and virtual world. At the large company level, those changes were accelerated with the events of 2020.
“We have crammed 2 years of digital transformation talk into 2 months,” said Satya Nadella, CEO of Microsoft. The shift has predominantly been led by big business, but what about small businesses that make up 99.9% of all businesses in the U.S.?
A survey of 1000 small business owners from the SMB group showed that overall, 54% of SMBs plan to spend more on technology in the short term future. In addition, 70% of businesses with 100+ employees are planning to invest more in technology.
Why are small businesses investing in technology and digital transformation?
With the increased demand for talent and keeping people, small businesses are most focused on keeping their employees productive and happy. As a result, 36% of small businesses said that they intend to invest in digital transformation to improve employee productivity.
Customers are first in digital transformation.
Beyond employee care, businesses are focused on improving customer relations. For example, 35% of them said increased customer demands, and 34% said seeking to collaborate more externally with customers is the reason for pushing toward digital transformation.
The need to connect with customers and keep employees happy will continue even more in a remote work environment. Jobs in their geographic area no longer limits these people. The careers related to remote work are most definitely related to tech and other office-related work, but there could come a shift more towards those roles being in trades as well. For example, a plumbing company might offer a “remote” video interaction to diagnose a problem before sending a technician. We already see this with doctors and lawyers doing meetings or exams over Zoom.
What are the biggest challenges with technology and digital transformation investment?
Investing in digital transformation will definitely help a business. It isn’t always easy, though. It can take time to make sure you get it right and that it improves your business. Small businesses also have several concerns.
Security is a big concern.
According to the same survey, 40% of businesses are concerned with security issues. As a result, these businesses will have to familiarize themselves with the security options available with technology investment by housing customer data on the cloud, collaborating more externally, and with less direct control.
Over one-third of those surveyed mentioned “hard to figure out” as their primary concern. Many of these businesses, even tech-related ones, may not have the direct experience in setting up the operations and specific products that could lead to success.
What is the value people expect from investing in technology?
If you invest in something, there is an expectation that it will make your life easier, improve the quality of your product, connect you better with customers, and improve your bottom line. In addition, the small businesses surveyed want to “attract new customers” and “improve financial management and forecasting.”
Improving your company can start with digital transformation. It can help with forecasting revenue, reducing costs, and improving salesforce and marketing. This is done with tools like automation, cloud computing, programmatic ad buying, and others.
How can small businesses take the leap?
Companies that invested in digital transformation and technology outperformed their peers by 58% in revenue, according to SMB. These businesses were also able to reduce costs.
With companies jumping on the trend, these tips can help with the transformation journey of a small business.
Create Goals – What do you hope to accomplish with becoming more digital-focused? It can help to start with 1-2 driving forces. Those could be higher customer satisfaction, reducing costs, increasing revenue, etc. These goals will help push through the harder upfront time and investment it can take
Be Customer-led – Even if customers aren’t a part of your “goals,” you should involve a few as a sounding board. In the tech space, these are called “customer advisory boards,” built up of loyal customers who can provide feedback on changes to help hone the process.
Work with someone to help – There are many companies out there who support small businesses and help with the transition. Whether you are a dentist, lawyer, owner of a home services company, or other general leaders of a small business. You can find someone to help with marketing, automation, IT, and other ways to improve your business.
Identify tools – After you have identified your goals, what customers you trust for feedback, and if you want to work with someone for implementation, you will want to identify the tools you want to invest in.
It could be an automation platform to help connect you with your customers more, or a digital platform to manage your contacts and show you revenue growth or move your customer data from the filing cabinet or program to the cloud for easier access and connection other tools.
Tools are going to be a key component of growth with digital transformation. They will help you move faster toward your ultimate goal.
- Feedback loop – Add more people to your feedback loop, customers, or other close contacts in the business. The more support you have, the easier it will be to manage the load of moving toward the digital world.
- Optimize and improve continually – Once you have your 1-2 systems initiated, make sure to analyze and improve upon continually. You should look to see if it has the impact you want it to. Suppose it does not determine how you want to change.
What’s next for digital transformation?
Digital transformation is such a crucial piece in the future of work and business. It extends beyond just large size companies.
Small businesses will continue to invest in technology. Adding automation, cloud storage, and other digital-first options will improve business. It will create a better connection with customers, reduce costs, and improved revenue efficiency.
It can be a long road toward complete digital transformation. But, by now, we know we can all do hard things and operate in a growing digital world.
Just don’t forget to include your customers and others to support your business in your digital transformation journey.
Image Credit: eren li; pexels; thank you!
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!