Implementing New Technologies

By Kelly B Lampman

May 4, 2023

The world is constantly evolving, and with the rise of technology, the financial landscape has seen a significant transformation. New technologies have the potential to revolutionize and/or impact every industry. As we continue to navigate this ever evolving digital landscape, it is crucial to weigh the benefits and risks carefully to ensure safe and equitable use. Companies should responsibly embrace the inevitability of digital transformation following a prescribed step-by-step digital transformation strategy. Embracing digital transformation has the potential to help companies provide greater security and transparency, increase inclusion and efficiency, as well as reduce costs. However, potential risks and drawbacks such as security breaches, financial crimes, and exacerbation of income inequality should also be taken into account.

Implementing new technologies can bring both risks and benefits to businesses.

Here are some examples:

Benefits: Increased efficiency and productivity

New technologies can automate tasks, eliminate manual processes, and improve the speed and accuracy of operations. For instance, the implementation of robotic process automation (RPA) in banking can automate back-office operations, such as data entry, customer onboarding, and compliance monitoring, leading to a reduction in costs and errors.

Risks: Increased dependence on technology and potential job displacement

Over-reliance on technology can increase the risk of system failures and cyber attacks. Also, automation can lead to job displacement, especially for low-skilled workers. For example, the implementation of self-checkout machines in retail stores has led to a reduction in the number of cashiers needed.

Benefits: Improved customer experience

New technologies can provide customers with a more personalized and convenient experience. For example, the implementation of chatbots in customer service can provide 24/7 support and reduce customer waiting times. Also, the use of digital channels, such as mobile apps and online platforms, can allow customers to access financial services anytime, anywhere.

Risks: Privacy and security concerns

The use of digital technologies can increase the risk of data breaches and identity theft. For example, the implementation of online banking can expose customers to phishing scams and fraudsters. Therefore, businesses need to invest in robust security measures to protect customer data and prevent cyber attacks.

Benefits: Cost savings and revenue growth

New technologies can reduce costs by eliminating manual processes, optimizing resource utilization, and improving decision-making. For instance, the implementation of artificial intelligence (AI) in insurance can help underwriters make more accurate risk assessments and reduce claims costs. Also, the use of blockchain in trade finance can reduce transaction costs and improve liquidity.

Risks: Implementation costs and resistance to change

The implementation of new technologies can be costly and require significant investment in hardware, software, and training. Also, employees may resist the adoption of new technologies, leading to a slower implementation and reduced benefits realization. For example, the implementation of digital transformation in healthcare may face resistance from healthcare professionals who are used to paper-based records.

Benefits: Competitive advantage and innovation

New technologies can help businesses gain a competitive advantage by differentiating themselves from rivals and creating new revenue streams. For example, the implementation of virtual and augmented reality (VR/AR) in retail can provide customers with immersive shopping experiences and increase sales. Also, the use of big data analytics can help businesses identify new market opportunities and improve customer targeting.

Risks: Uncertainty and disruption

New technologies can disrupt established business models and create uncertainty about the future. For example, the implementation of autonomous vehicles in transportation can lead to job displacement and regulatory challenges. Also, the use of cryptocurrencies and decentralized finance (DeFi) can disrupt traditional banking and financial services, leading to regulatory scrutiny and market volatility.

Implementing new technologies can bring significant benefits to businesses, such as increased efficiency, improved customer experience, cost savings, and innovation. However, it also involves risks, such as increased dependence on technology, privacy and security concerns, implementation costs, resistance to change, uncertainty, and disruption. Therefore, businesses need to weigh the potential risks and benefits carefully and develop a robust strategy for digital transformation.

Build vs Aquire

In making the decision to build versus acquiring new technologies, companies must consider several factors. A full cost benefit analysis should be completed prior to getting started to determine whether to build a platform in-house, outsource the platform to a third-party provider or acquire one. Ultimately, the decision to build versus acquiring new technologies will depend on the specific needs and goals of the company. If a company has unique requirements that cannot be met by existing technologies, building may be the best option. However, if a company needs to quickly enter a new market, acquiring an existing technology may be more appropriate.

Cost

Cost is a critical consideration as building a new technology from scratch can be more expensive than acquiring an existing one. A company should carefully evaluate the total cost of ownership, including development costs, maintenance costs, and ongoing support costs. For example, a software development company might decide to acquire an existing software development tool instead of developing one from scratch to avoid incurring significant costs.

Time-to-Market

Time-to-market is another key consideration. Building a new technology can take longer than acquiring an existing one. Companies must consider the time it will take to develop the technology and the time it will take to get it to market. For example, a mobile phone manufacturer might decide to acquire an existing mobile operating system to quickly release a new product.

Expertise

Expertise is crucial when considering whether to build or acquire a new technology. Building a new technology requires specialized skills and expertise. Companies should evaluate whether they have the necessary expertise in-house or whether they will need to hire new talent. For example, a biotech firm may decide to build a new technology in-house if they have the necessary expertise in genetic engineering.

Competitive Advantage

The competitive advantage of building versus acquiring new technology must be considered. Building a new technology can provide a competitive advantage if the technology is unique or difficult to replicate. On the other hand, acquiring an existing technology may not provide the same level of competitive advantage. For instance, a social media company may decide to acquire a smaller social media platform with a unique feature to gain a competitive edge.

Ease of Integration

Companies must evaluate how well the new technology will integrate with their existing systems and processes. Building a new technology can provide greater flexibility and customization but may require more integration effort. For example, a manufacturing company may decide to build a new production system in-house to ensure it seamlessly integrates with their existing supply chain management system. A full cost benefit analysis should be completed prior to getting started to determine whether to build a platform in-house, outsource the platform to a third-party provider or acquire one.

Digital Transformation Practices

To successfully create and implement transformative technologies, companies must adopt digital transformation techniques, approaches, and methodologies. The following are some of the most widely used approaches in the industry:

Agile

Agile methodology involves a flexible and iterative approach to software development, which allows teams to quickly adapt to changing business needs and deliver high-quality products faster. Agile methods, such as Scrum and Kanban, are widely used in the software industry.

Waterfall

A traditional linear approach to software development in which each phase of the project is completed before moving on to the next. Waterfall is less flexible than Agile, but can be useful for projects with well-defined requirements.

Lean

A methodology that emphasizes the elimination of waste and maximization of value by prioritizing the flow of work and continuous improvement. This approach can be utilized across various industries, including software development, to enhance customer value and satisfaction.

Design Think

Design thinking is a customer-centric approach to problem-solving that involves empathy, ideation, prototyping, and testing. It is a problem-solving approach that can be used to develop technology solutions that are more user-centered and effective.

DevOps

DevOps is a software development methodology that emphasizes collaboration, communication, and automation between development and operations teams in order to improve the speed and quality of software delivery.

Six Sigma

Six Sigma is a data-driven approach to process improvement that aims to eliminate defects and reduce variability in order to achieve high levels of quality and customer satisfaction.

Business Process Reengineering

Business process reengineering involves a complete overhaul of an organization's business processes in order to improve efficiency, reduce costs, and increase customer satisfaction.

Customer Journey Mapping

Customer journey mapping is a technique that helps organizations understand the customer's experience by visualizing the touchpoints and interactions that customers have with a product or service.

General Outline

Design

Expertise & Resources - The first step should be to acquire the necessary expertise and resources to design and develop the digital currency platform.

This could involve hiring new talent or partnering with third-party providers.

Develop

Prototyping - Build a prototype of the platform and test it in a controlled environment.

This will help companies to identify issues and make necessary improvements before deploying the platform.

Implement

Pilot the platform with a small group of customers.

This helps companies obtain valuable feedback from customers and make necessary adjustments before scaling the platform.

Deploy

Scaled Launch - Launch the platform on a larger scale.

Companies should work closely with industry specific and other related regulators and security partners (i.e. data privacy regulations, data security, etc.) to ensure that the platform is compliant and secure.

Performance & Improvements

Monitor the performance of the digital currency platform and make necessary improvements.

Companies should work with other stakeholders in their industry to promote the adoption of new technologies to increase its success.