Innovation

The concept of granting digital access to users based on proper identification has been the very core of how people access online services since the emergence of the public internet in the 1980s. The power of confirming an identity and being granted access to services of value has attracted billions of users to the internet, and as society moved to this parallel universe, so have other parts of it, namely fraudsters, con men and organized crime. In the past six years, USD 112 billion has been stolen through identity fraud, equating to USD 35,600 lost every minute. The more services are offered to the general public—with additional features for convenience and usability that rely on the internet—the wider the window of opportunity for attackers. Javelin Strategy Research expects fraud related to the creation of new online accounts to rise as much as 44 percent by 2018, increasing losses from USD 5 billion to USD 8 billion in a matter of four years. While consumer personal information has been compromised on an ongoing basis for years, the massive data breaches of 2017 removed all doubt: Criminals clearly have access to the very information that many banks, companies and other businesses use to grant their users remote access to services. Even social security numbers, which are considered highly private and sensitive personal information, were exposed for hundreds of millions of consumers in 2017. Recent data breaches have been a resounding wake-up call to the fact that new methods are needed to validate our identities online. In an era where personal information is no longer private, and passwords are commonly reused, stolen or cracked with various tools, the traditional scheme of accessing data and services by username and password has repeatedly shown to be inadequate.

This report is based on a series of insurance and CxO studies conducted by the IBM Institute for Business Value over the past few years, in combination with a number of informal conversations and discussions with subject matter experts and insurance executives. We look at two key technology waves — cognitive computing and systems decentralization — that will have significant impact on the future of business across industries and that will affect insurance companies and their customers. However, considerable uncertainty surrounds their adoption pattern, and so we will consider scenario planning regarding the various potential outcomes of these two waves:
1.How will cognitive technologies be deployed — as utilities or as proprietary tools?
2.Will operations and decision-making happen on “the edge” in distributed models, or centrally in common processes?

2025 may seem like a long way off. The pressing issues of today necessarily preoccupy European leaderships. But consider this reality: youngsters who are 10 years old today (2009) will be entering the prime of life by 2025. Many millions of 10-year-olds in Europe and around the world are already “digital natives” – born and raised in a world of digital communications. Behind them will come wave upon wave of youngsters, particularly in today’s young emerging societies and economies, with increasing numbers growing up with ever-more powerful digital tools. Indeed, given current trends any distinction between “the digital world” and any other worlds will have become largely academic by 2025. Over the past 15 years digital communications have already transformed the way ever-increasing numbers of us behave individually and collectively in our working and social lives. But this is just the beginning as the pace of change itself accelerates.

Accelerating digital transformation on both sides of the Atlantic and around the world has unquestionably become the single most powerful underlying driver of change across our societies and economies. No community, no sector, no sphere of human endeavour is immune, and there is no opting out. Moreover, we are just at the beginning of the real-world digital revolution. There can therefore be no decisive progress toward a fully functioning XXIst century partnership between the United States and Europe (of the sort first envisioned by TPN 25 years ago) without a common - or at least interoperable - “digital transformation” policy framework.

Using large scale EIB Investment Survey evidence for 2016 covering 8,900 non-financial firms from all size and age classes across all sectors and all EU Member States, we identify different innovation profiles based on a firm’s R&D investment and/or innovation activities. We find that “basic” firms – i.e. firms that do not engage in any type of R&D or innovation – are more common among young SMEs, while innovators –i.e. firms that do R&D and introduce new products, processes or services- are more often old and large firms. This hold particularly for “leading innovators”, ie those introducing innovations new to the market. To further explore why young SMEs are not more active in innovation, we explore their access to finance. We confirm that young small leading innovators are the most likely to be credit constrained. Grants seem to at least partly addressing the external financing access problem for leading innovators, but not for young SMEs.

While enormous resources are being spent on digital transformation programs by the private sector, the results are underwhelming. According to estimates, this year over $1.2 trillion will be spent by companies worldwide on their digital transformation efforts and yet analysis suggests that only 1% of these efforts will actually achieve or exceed their expectations. The Digital Enterprise: Moving from experimentation to transformation is a practical guide on how to envision, structure, and sequence successful digital transformation efforts. It is an effort by the World Economic Forum, in collaboration with Bain & Company, to help senior executives avoid common patterns of failure and ask the right questions.

The platform economy is revolutionizing the banking sector – technology providers and FinTechs are increasingly occupying the customer interface. Retail banks must reposition themselves: Instead of the mostly universal business model they operate now, they need to decide where their future focus will lie. Will they be relationship expert, product expert or technology provider?
Online platforms reach millions of people, enabling more and more products and services to find their way to the customer. This also applies increasingly to financial products, where platform operators are becoming serious competition for retail banks. Thus, banks face a fundamental decision: Do they position themselves in the future at the customer interface and actively design platforms or should they focus on primarily being product providers? Currently most banks are busy digitalizing their existing business model – without any sign of real innovation.

In tandem with the diffusion of computer technologies, labour markets across the OECD have undergone rapid structural transformation. In this paper, we examine i) the impact of technological change on labour market outcomes since the computer revolution of the 1980s, and ii) recent developments in digital technology – including machine learning and robotics – and their potential impacts on the future of work. While it is evident that the composition of the workforce has shifted dramatically over recent decades, in part as a result of technological change, the impacts of digitalisation on the future of jobs are far from certain. On the one hand, accumulating anecdotal evidence shows that the potential scope of automation has expanded beyond routine work, making technological change potentially increasingly labour-saving: according to recent estimates 47 percent of US jobs are susceptible to automation over the forthcoming decades. On the other hand, there is evidence suggesting that digital technologies have not created many new jobs to replace old ones: an upper bound estimate is that around 0.5 percent of the US workforce is employed in digital industries that emerged throughout the 2000s. Nevertheless, at first approximation, there is no evidence to suggest that the computer revolution so far has reduced overall demand for jobs as technologically stagnant sectors of the economy – including health care, government and personal services – continue to create vast employment opportunities. Looking forward, however, we argue that as the potential scope of automation is expanding, many sectors that have been technologically stagnant in the past are likely to become technologically progressive in the future. While we should expect a future surge in productivity as a result, the question of whether gains from increases in productivity will be widely shared depends on policy responses.

This report presents evidence on the expanding scope of automation. After three decades of a secular decline in middle-income jobs, the bulk of low-skilled and low-income workers are now for the first time susceptible to computerization. Meanwhile, skilled jobs remain relatively resilient to recent trends in technology. In particular, workers with extraordinary social and creative skills will still remain in the workforce in 2030.

The rapid technological progress in automation, robotisation and artificial intelligence is raising fears, but also hopes, that in the future the nature of work will change significantly. There will be changes in what we do, how we form workplace relations, how we find work and the role of work in a society. Some believe that these changes will be for the better: we will need to work less and thus will have more free time. Others think that the changes will be for the worse: there will be fewer ways to earn a living. The central question of this paper is this: will adages such as ‘By the sweat of your brow you will eat your food’ and ‘No bees, no honey, no work, no money’ become obsolete? Will work disappear and with it the societal relations and inequalities that result from differing success in work? If this is going to happen, what policy options do we have to address the issue?