Business

Web3’s impact on the global economy

Published

9 months ago

September 8, 2022

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Richard Shearer, CEO of Tintra

The difficulty in discussing web3, sometimes known as Web 3.0, is that it doesn’t exist yet. However, while the concepts involved may not be fully formed, and the technology infrastructure of the web’s next iteration complex, the potential economic impacts of web3 are likely to be tangible – and worth taking seriously.

What is web3?

In brief, the term ‘web3’ refers to a predicted third iteration of the internet. The internet we currently use is considered the second version, characterised largely by e-commerce and interactions with online platforms through various forms of social media. Some describe our current phase as a ‘user-generated web.’

Though we may not pay for all the services we consume on the internet, there’s still a toll involved – often in the form of personal data and other information about our preferences, which fuels intensely targeted advertising. Most of this data lines the pockets of enormous companies like Meta, Google, and Amazon: tech giants that are sometimes described as feudal lords reigning over their digital domains.

In the eyes of web3’s supporters, a new iteration of the internet could put an end to the tech giants’ overwhelming influence over personal data through blockchain-based technology. In the era of web3, the internet’s data would be recorded on the blockchain -a public ledger which would keep track of any data movement – and allow for a decentralised approach that would forgo the middlemen and permissions that limit current internet use.

These terms aren’t necessarily familiar or easy to grasp at this stage. Thinking about the practical outcomes for this kind of technology, however, is a good way to establish some possible economic outcomes as we edge closer to something resembling web3.

Economic uncertainties

There’s no consensus as to whether web3’s economic impact will be positive, negative, or some mixture.

Economics Observatory, an initiative run by UK research economists, captured the uncertainties here in a recent discussion of the cryptocurrency adoption that comes hand-in-hand with web3. As University of Cambridge researcher Sam Gilbert points out, “A collapse in crypto asset prices could force investors to sell off other assets to cover losses, reducing liquidity in the financial system and affecting investor sentiment. This could then have potential knock-on consequences for the real economy.”

On the other hand, the researcher points out that a Bank of England endorsed central bank digital currency might bolster monetary policies used to stimulate economic activity in the event of a downturn.

Despite these uncertainties, however, it’s possible to draw some conclusions on web3’s economic impact by thinking about how a blockchain-based internet (and its associated digital currencies) may allow for changes in terms of global payments.

Reduced friction for global transactions

These changes were hinted at in questions asked as part of the recent World Economic Forum Annual Meeting: “In the future, will we still send cross-border payments? Or will we be able to freely engage (in a compliant, trusted, and privacy-preserving manner) in the frictionless exchange of economic value?”

The prospect of freely exchanging currency isn’t just a minor aspect of web3, but one that animates discussions of the topic.

As early as 2018, Gavin Wood – co-founder of Ethereum – pointed to payments as a crucial element of web3. He pointed out that, currently, we don’t directly make our own online payments: “In reality, you must contact your financial institution to do it on your behalf. You are not trusted to do something as innocuous as pay your water bill. You are treated like a child appealing to a parent.”

By contrast, payments in a web3 setting would cut out the middleman altogether, with decentralised payment apps finalising transactions by recording them in the blockchain.

This proposed future of payments via open-sourced protocols could have profound economic impacts – not only by widening financial inclusion for those who are currently unbanked or underbanked, who can use e-wallets instead of bank accounts, but also by introducing a means of conducting international transactions between entire countries which are currently penalised by financial middlemen for transacting with their Western counterparts.

New levels of inclusion for emerging markets

Emerging market countries suffer most from the friction of international transactions – so, assuming that web3 could usher in new and frictionless payment methods, we can assess its economic impact by thinking about the implications of developing countries being given the freedom to transact without barriers or prejudice.

In this light, the potential economic benefits are hard to ignore. There is, after all, widespread agreement that cross-border payments – according to a report from the Financial Stability Board (FSB) – “sit at the heart of international trade and economic activity.”

The FSB goes on to point out that “faster, cheaper, more transparent and inclusive cross-border payments” – which web3 potentially offers – “would have widespread benefits for supporting economic growth, international trade, global development, and financial inclusion.”

In fact, inclusive cross-border payment systems are widely acknowledged to be economically beneficial: the Bank of England has made near-identical claims about the “widespread benefits” of faster and cheaper international payments, with an emphasis on emerging markets. As the Bank points out, payments like remittances are essential for low and middle-income economies as a form of development finance, while the IMF points to cross-border payment reforms as a means of unlocking economic growth.

In short: there’s universal agreement that easy cross-border payments are economically powerful.

If web3 can drive a future which sees emerging market economies free from the stringent regulatory restrictions that currently hamper their abilities to transact and trade, they will be in a position to bolster what the Bank of England predicts to be the $250 trillion worth of value that cross-border payments will represent by 2027.

Principles over practicalities

Nobody can say whether web3 will come to fruition, or whether it will look like the vision described by futurists.

What we can say, however, is that there’s clearly an appetite for change in the way we act and transact in online settings. There’s no question that people want to cut out the middleman and enjoy seamless web-based and financial infrastructure, whether for the controlled exchange of data or for cross-border remittances.

There’s also a clear economic benefit to making these payments as affordable and transparent as possible, with consensus among a range of financial organisations and thought leaders on that score.

As such, despite web3’s unpredictability, this kind of thought exercise can certainly point us towards the kinds of seamless, friction-free payment technologies that – whatever web3 may ultimately look like – the global economy will clearly benefit from.

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Unlocking the Power of Data: Revolutionising Business Success in the Financial Services Sector

Published

18 hours ago

June 8, 2023

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Suki Dhuphar, Head of EMEA, Tamr

The financial services (FS) sector operates within an immensely data-abundant landscape. But it’s well-known that many organisations in the sector struggle to make data-driven decisions because they lack access to the right data to make decisions at the right time.

As the sector strives for a data-driven approach, companies focus on democratising data, granting non-technical users the ability to work with and leverage data for informed decision-making. However, dirty data, riddled with errors and inconsistencies, can lead to flawed analytics and decision-making. Siloed data across departments like Marketing, Sales, Operations, or R&D exacerbates this issue. Breaking down these barriers is essential for effective data democratisation and achieving accurate insights for decision-making.

An antidote to dirty, disconnected data

Overcoming the challenges presented by dirty, disconnected data is not a new problem. But, there are new solutions – such as shifting strategies to focus on data products – which are proven to deliver great results. But, what is a data product?

Data products are high-quality, accessible datasets that organisations use to solve business challenges. Data products are comprehensive, clean, and continuously updated. They make data tangible to serve specific purposes defined by consumers and provide value because they are easy to find and use. For example, an investment firm can benefit from data products to gain insights into market trends and attract more capital. These offer a scalable solution for connecting alternative data sources, providing accurate and continuously updated views of portfolio companies. Using machine learning (ML) based technology enables the data product to adapt to new data sources, giving a firm’s partners confidence in their investment decisions.

Suki Dhuphar

But, before companies can reap the benefits of data products, the development of a robust data product strategy is a must.

Where to begin?

Prior to embarking on a data product strategy, it is imperative to establish clear-cut objectives that align with your organisation’s overarching business goals. Taking an incremental approach enables you to make a real impact against a specific objective – such as streamlining operations to enhance cost efficiency or reshaping business portfolios to drive growth – by starting with a more manageable goal and then building upon it as the use case is proved. For companies that find themselves uncertain about where to begin their move to data products, tackling your customer data is a good place to start for some quick wins to increase the success of the customer experience programmes.

Getting a good grasp on data

Once an objective is in place, it’s time for an organisation to assess its capabilities for executing the data product strategy. To do this, you need to dig into the nitty-gritty details like where the data is, how accurate and complete it is, how often it gets updated, and how well it’s integrated across different departments. This will give a solid grasp of the actual quality of the data and help allocate resources more efficiently. At this stage, you should also think about which stakeholders from across the business from leadership to IT will need to be involved in the process and how.

Once that’s covered, you can start putting together a skilled team and assigning responsibilities to kick-off the creation and management of a comprehensive data platform that spans all relevant departments. This process also helps spot any gaps early on, so you can focus on targeted initiatives.

Identifying the problem you will solve

Now let’s move on to the next step in our data product strategy. Here we need to identify a specific problem or challenge that is commonly faced in your organisation. It’s likely that leaders in different departments, like R&D or procurement, encounter obstacles that hinder their objectives that could be overcome with better insight and information. By defining a clear use case, you will build a real solution to a challenge they are facing rather than a data product for the sake of having data. This will be an impactful case study for your entire organisation to understand the potential benefits of data products and increase appetite for future projects.

Getting buy-in from the business

Once you have identified the problem you want to solve, you need to secure the funding, support, and resources to move the project ahead. To do that, you must present a practical roadmap that shows how you will quickly deliver value. You should also showcase how to improve it over time once the initial use case is proven.

The plan should map how you will measure success effectively with specific indicators (such as KPIs) that are closely tied to business goals. These indicators will give you a benchmark of what success looks like so you can clearly show when you’ve delivered it.

Getting the most out of your data product

Once you’ve got the green light – and the funds – it’s time to put your plan into action by creating a basic version of your data product, also known as a minimum viable data product (MVDP). By starting small and gradually enhancing with each new release you are putting yourself in the best stead to encourage adoption and also (coming back to our iterative approach) help you secure more resources and funding down the line.

To make the most of your data product, it’s essential to tap into the knowledge and experience of business partners as they know how to make the most of the data product and integrate it into existing workflows. Additionally, collecting feedback and using it to improve future releases will bring even more value to end users in the business and, in turn, your customers.

Unlocking the power of data (products)

It’s crucial for companies in FS to make the most of the huge amount of data they have at their disposal. It simply doesn’t make sense to leave this data tapped and not use it to solve real challenges for end users in the business and, in turn, improve the customer experience! By adopting effective strategies for data products, FS organisations can start to maximise the incredible value of their data.

Business

Making the Maths Work: Addressing Inflation Challenges through Measuring and Managing Risk

Published

1 day ago

June 8, 2023

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Matt Clementson, Head of Enterprise UK&I

Persistent inflation is highly troublesome for every business – with or without a recession. In addition to causing unexpected expenses, it complicates decision-making around stabilising wages, setting product prices, and investing in new areas for growth. Meanwhile, stock and bond prices plummet when alarming inflation data arrives and interest rates increase. It’s time to run leaner, making the reassessment of the strategic objectives highly urgent.

With a seat in the boardroom, CFOs can guide thoughtful discussions covering everything from procurement, resource allocation, and manufacturing to the alignment of business purpose with operational tactics and goals. CFOs must also rethink how their business measure and mitigate risk. Understanding the business’ vulnerability, they can add considerable value to their business by identifying risks early and making organisations accountable for mitigating them.

When the economy becomes uncomfortable, the mathematics behind business operations no longer work seamlessly. During more comfortable times businesses have the luxury to accept some degree of inefficiency and low productivity – but in times like these that’s no longer the case.

So now it’s more important that ever for CFOs to use the right tools and technology to manage and mitigate risk and build business resilience.

Enhancing visibility to measure and manage risk:

To navigate through periods of high inflation, CFOs need technologies that provide comprehensive visibility, and enable informed decision-making, in order to optimising cash flow, minimise costs and manage risk in a transparent and efficient way.

1. Simplify confusing processes to gain moments of clarity

Effective risk management starts with integrating data from various sources within the organisation. By consolidating data from finance, operations, procurement, and sales, CFOs can gain a holistic view of the business landscape. This integration enables them to identify potential risks associated with inflation, such as rising costs, supply chain disruptions, or changes in customer demand patterns. With access to comprehensive and real-time data, CFOs can make informed decisions that mitigate the impact of inflation on the organisation.

A good first step is to unify travel, expense, and invoice solutions, so that finance teams can integrate and streamline operations and scale spend processes without adding additional resources.

2. Make spending decisions with data-driven accuracy

Once data is integrated, CFOs can leverage advanced analytics techniques to identify patterns, trends, and potential risks. Predictive analytics can help identify inflationary pressures, allowing businesses to proactively adjust pricing strategies or negotiate favourable terms with suppliers. Additionally, scenario modelling can simulate the impact of different inflation rates on the organisation’s financials, enabling CFOs to devise appropriate strategies for managing risk. By harnessing the power of analytics, CFOs can navigate inflation challenges with greater confidence and precision.

3.Driving business agility through automation

Facing a myriad of disruptors, companies in every industry are making strategic decisions aimed at remaining competitive in the market and with their people. Digitisation, standardisation, and automation will be critical as businesses focus on solving problems for their customers in innovative, lasting ways

AI technologies, such as machine learning algorithms, can analyse vast amounts of data to uncover hidden insights and patterns. And with automated, customisable controls, CFOs can keep their firm agile – re-adjusting spend controls to match the corporate travel and expense (T&E) policy whenever their business needs to adapt or pivot. Only then will spending insights allow them to review how policies impact business performance and continue to optimise cash management.

Making the maths work

In a business environment plagued by persistent inflation, CFOs play a crucial role in addressing the associated challenges. By rethinking how their organisations measure and manage risk, CFOs can enhance their decision-making capabilities and add significant value. The integration of data, advanced analytics, and AI technologies enables CFOs to build resilience, standardise processes, ensure compliance, and deliver insights to the entire enterprise. By making the maths work in the face of inflation, businesses can navigate uncertain economic times with confidence and stay on the path of sustainable growth.