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The Problem with Digital Transformation



Daren Rudd, Head of Business, Technology and Innovation Consulting, Insurance, CGI UK


The pressure on business leaders to digitally transform their businesses is unrelenting. However, I think the term itself creates confusion and switches off the very people who need to buy into the goals we are trying to achieve. The phrase might seem a straightforward way to group up change projects, so why does it matter what we call it? The teams involved know what they are doing right? If you are involved in a digital transformation programme, ask yourself how often you find yourself explaining what it is actually achieving.

In my experience words matter. When we get them wrong, it sows confusion. We waste time explaining what we mean, making things harder than they need to be. Digital transformation in the insurance industry is already hard enough, without making things more difficult.

The Project Phoenix Problem

In my early career, I worked on “Project Phoenix”. Honestly, to this day I could not tell you what it was meant to deliver. What I heard constantly though, from both technical and business teams was “don’t worry Project Phoenix will solve that”. In the end, it failed, as it became bloated with additional scope and a lack of focus on a specific problem. The name obscured the purpose. It became a dumping ground for problems, hopes, expectations and broken dreams. Ultimately no one was happy as everyone had a different view of what it was meant to achieve.

Words aid or obscure intent and meaning. They align or disperse the direction of a team’s energy. And change programmes need a lot of focused energy to succeed.

What we really mean by digital.

By using the word digital, a change programme immediately sets the expectation that this is a technology-led activity. While technology is of course involved, when you dissect digital transformation, it is really a people-focused activity. The outcomes are about changing the way business works to make life easier for people, whether that is customers, clients, patients, staff, or suppliers.

We spend much of our time explaining to business stakeholders that digital transformation is really about people, processes, and product. This tells me we are using the wrong words. This risks teams losing focus on their purpose, becoming too wrapped up with the technology, rather than the people and their why. It is why we end up with voice activated toasters.

We need to talk about Transformation.

Transformation suggests there is a fixed endpoint, like a caterpillar transforming into a butterfly. Unfortunately, in this analogy, after it transforms it is stuck as a butterfly until it dies. It cannot continue to adapt. While a change project needs direction to be successful, the endpoint isn’t fixed. Your market, customers and competitors will continue to change, so a fixed endpoint 3-5 years away is going to be an issue. What our transformation programmes should be doing is creating a business that can adapt more easily to a world that changes at an ever-increasing pace.

Do you know your why?

We need to understand why we are doing all this digital transformation. A recent survey suggested that 92% of companies struggle to understand and define the benefits of their change projects – that figure still blows my mind.

To be successful it is important to explain simply and clearly how we are making people’s lives better. It isn’t always about the financial results, the softer side of why we do things is just as important. Making something a joy to use is hard to define, but it has made Apple the most valuable company in the world.

If this is about business change, then change the business.

Too often “digital transformation” just adds a layer of new technology over existing products and processes or in other words digital lipstick on legacy pigs. That isn’t transforming, that’s just putting roller skates on the caterpillar. And as an industry, we have been doing that for too long now.

Those original products and processes were constrained by what we could do with the technology at the time (often still relying on a lot of paper and brains). They were also designed at a time when changing slowly was good enough. It isn’t anymore. Organisations need to really question if they are thinking hard enough about reimaging their customer propositions.

Be like water, keep it fluid.

We also run into problems when using the term “digital transformation” as the board is likely to hear this as an IT project which will finish and then they are “digital ready”. Today business and technology are intrinsically linked. The ability to change and shift (and the ongoing investment required to support that) is going to be a constant – not a one-off transformation project.

The reality is what we are doing is a much more fundamental change to business principles and ways of operating and thinking. We can see with the recent noise around the potential impact of GPT4 and other Large Language Models, it is hard to predict how that change will emerge, so being an adaptable organisation will be the key competitive advantage.

Let’s talk business, not digital business.

By using the word digital, which sounds like an “IT” word, it puts a technical focus on the change discussion when we will actually be discussing people, products and processes. All business of scale relies on technology, even if it is a legacy built back in the 70s. Fundamentally technology exists to deliver value for the business, and today the two are symbiotic.

Technology is now implicit in business. An adaptable business which is fit for the future is one that understands there is no separation between business and technology, and there is no separate discussion about business strategy and technology strategy. So, let’s just talk business.

So, if not digital transformation, then what?

Ultimately this is not really about the phrase we use, but the intent we put behind the phrase and the importance of avoiding the “Project Phoenix” trap of your digital change programme becoming a bucket for anything and everything we wish was better.

Taking a nod from the Jobs to Be Done framework, the job in many cases is to create a constantly adaptable business. At CGI we call it being #fitforthefuture – which will mean something different for each business. My perspective is we should use less catchy terms and use more words. We should use terms that talk about the problem we are looking to solve in a way that the whole business understands. Then use more words and descriptions when we move on to the next problem to solve.

Not as slick as digital transformation, but in my view definitely more effective.


Building towards an inclusive financial future



By Catharina Eklof, CCO of IDEX Biometrics


From the visually impaired to displaced migrants, the unbanked, and people living with dementia – a burgeoning financial gap exists across many areas of society. In fact, as of late 2021, almost one-third of adults around the world were reported as unbanked according to the World Bank Group. That’s around 1.7 billion people – with half coming from the poorest 40% of the world’s population. Being financially excluded in this way means not having access to common financial services including savings accounts, loans, a credit rating, or even a bank account. Those who are awaiting clearance to join a country’s financial ecosystem, such as migrants, are also finding themselves left behind by the modern financial infrastructure.

As societies reliance on digital and contactless transactions over cash continues to grow, this financial gap is only set to widen. In less than 10 years, the share of Americans not using cash for payments has increased by double digits, reaching 41%. By 2031, cash payments are expected to make up only 6% of all transactions.

Fortunately, biometric smart cards can bridge this gap for people in the Global South, migrant populations, as well as those with visual or cognitive disabilities worldwide, who deserve to feel secure, included, and independent.


The challenges surrounding passwords

 COVID accelerated the transition from cash to contactless payments and the use of digital wallets, creating a challenge for many. By 2024, it is expected that digital wallets and cards will account for 84.5% of all e-commerce spend.

Digital transactions traditionally rely on the use of PINs that can easily be forgotten, as studies have found that we manage 100 passwords on average across various sites and services. In the US alone, consumers report relationships with more than three financial institutions and have more than four accounts per household. The challenge of password recollection is only growing. To counter rising cybersecurity threats, several countries now mandate two-factor authentication for retailers and service providers, creating further complexity.
However, organizations are responding to financial exclusion. Card provider Mastercard introduced its contactless PayPass offering, as well its Touch Card developed alongside Amjan Bank which enables the visually impaired to distinguish between their cards. Both look to provide a better customer experience for people struggling with the digital changeover. For those living with dementia, Mastercard has also partnered with Sibstar and the Alzheimer’s Society to create a specific card where limits, transactions, top-ups and notifications can be viewed and managed via a complementing app. Likewise, Turkish neo bank Papara introduced a Bluetooth debit card that provides visually impaired users with audio prompts when making payments.


Protecting the visually impaired

There are at least 2.2 billion visually impaired people globally. In 2019, it was found that 89% of visually impaired have been victims of fraud or have made errors when paying for goods and services. This figure comes prior to the pandemic, and the proliferation of digital transactions, suggesting an even bigger concern today.

PINs present an obvious security issue for this demographic, with others able to oversee their inputs and then manipulate them. Contactless payments go some way to solving that problem but pose the risk of fraud as there is no PIN verification below the increasing threshold amount, now at £100 in the UK, where the average annual wage is £27,756. In India, where the average annual wage is 9,45,489 rupees (roughly £9000), contactless limits are set to 5000 rupees (£48). Many accounts also require visual-based inputs to prove identity, such as CAPTCHA, proving as a barrier for the visually impaired.

Enhancing awareness on a regulatory level is key for driving change and reassuring vulnerable groups. The EU Accessibility Act is an example of how payment service providers are obliged to comply with accessibility standards. This includes making interfaces perceivable, operable, understandable, and robust, to ensure that individuals with disabilities can effectively navigate payment interfaces.


Paving the way with biometrics

 Including braille on cards for easy identification is a crucial step for the visually impaired. This can also be used on biometrics smart cards, with sensor textures to confirm the user has selected the correct method of transacting. Not only do these cards provide convenience and inclusivity, but they also promote ultimate security by linking a person’s identity directly to their fingerprints. This data is encrypted within the card itself, reducing any concerns surrounding fraudulent behaviour or of data being lost via a centralized breach or large-scale hack.

In this context, biometrics can be used to serve the unbanked and those currently unrecognized within national infrastructures. South America is an example of an early adopter of biometrics, turning to the solution to cope with swelling population sizes, and the challenges associated with accessing proof of identity when setting up traditional bank accounts. Meanwhile in India, pension payment fraud has dropped by 47% thanks to bypassing the need for prior credit ratings or credentials.

Liveness detection, however, which ensures the biometric sensor is reading a true biometric source (rather than a false or recreated image of one), is vital to the success of financial aid programs globally. Securing remittances through biometric authentication ensures transparency and better fund control. Directing funds to cold wallets or biometrically authenticated cards can also improve program efficiency, safeguarding the interests of individuals and communities.

Overall, the biometrics market is expected to grow to US$87.4 billion by 2028, at a CAGR of 17%. Whilst its value as a simple and secure method of transacting is growing substantially, you can’t put a price on its impact on those who have so-far fallen through the gaps of finance’s digital revolution.

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Euro deep tech M&A deal value expected to reach $20bn+ in the next 15 months



Written by Oliver Warren, Associate at DAI Magister


Investment in European deep tech has mirrored the broader decline in the technology sector; it has halved since the peak of 2021’s boom, reflecting investor preferences for ventures with lower capital expenditures and associated risks. Start-ups within the following verticals: Health and Bio, Transportation, Energy, and SaaS and AI experienced the most significant drops.

However, Dealroom data shows stark differences in funding for deep tech start-ups at the early, breakout (Series B & C), and late stages. After experiencing a modest deceleration between 2021 and 2022, early-stage deep-tech fundraisings have been surprisingly healthy, bucking the market trend, due in part to the hype surrounding Generative-AI and in Q1 2023 they received the highest infusion of capital for over a year.

However, this positive trend conceals a sharp decline in B and C round fundraises, which have seen investment activity plummet to $1 billion in Q1 2023 from a peak of $3 billion in Q1 2022. Late-stage rounds (>$100M) have also experienced massive declines, falling almost 70% from $2 billion in Q1 2022 to $634 million in Q1 2023.


$20bn+ worth of deep tech M&A in the next 15 months alone

While venture capital continues to show interest in the sector, the retreat of growth investors and the genuine prospect of a prolonged down cycle ahead has left growth-stage deep tech companies needing to implement stringent cost-cutting strategies to curtail expenses and extend their runways. But even those fortunate enough to have secured inflated funding rounds during the exuberant market conditions of 2021 will soon need additional investment.

Deep tech companies typically have high burn rates due to their heavy focus on research and development, requiring funding approximately every two years on average. With dwindling access to VC cheques, a non-existent IPO market, and practical limits to self-sufficiency, M&A is already emerging as a valid route to realising substantial profits for investors and founders, even if it doesn’t deliver the lofty $1bn+ valuations seen in 2021.

We’re already seeing more companies take this route. European deep tech M&A activity has rebounded to levels not seen for years and across our focus verticals, spanning Advanced Materials, Space, AI & ML, Cybersecurity, and Robotics, European M&A transactions have already rebounded to surpass 2020 levels (183 this year, annualised versus 176 in 2020), with some notable exits such as InstaDeep’s sale to BioNTech and SLM Solutions metal 3D printing business being acquired by Nikon.

In 2024, we forecast 250+ M&A deals in European deep tech, with at least 20 above $100m, making it the strongest M&A year since 2016. A key driver of this resurgence is the substantial increase in established deep tech companies across Europe, with many more companies fielding 100+ employees and sizeable, valuable engineering teams. The funding-driven growth in the size of European deep tech companies now makes many more sizeable, more strategic targets for international acquirers.

Overall, we anticipate the remainder of 2023 and 2024 will be banner years for European deep tech M&A, with potential deal value reaching $20 billion or more in the next 15 months alone.



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