What is the connected economy and why does it matter?
The World Economic Forum
has stated that we are on “the brink” of the Fourth Industrial Revolution. This transformation will be driven by the confluence of technology, data and ubiquitous connectivity. And it will lead to the rapid adoption of an inter-connected delivery of goods and services along customer journeys, also known as the Connected Economy (CE).
CE is a concept of creating new value through technological connection between people, companies, and machines. And it has a significant impact on your business. According to a Harvard Business Review survey,
48% of connected economy leaders see revenue growth of 10% or more. On the flip side, 43% of leaders see their revenue flat or declining.
So, CE models do perform better, and it is something you cannot ignore in today’s world.
How telcos are driving connected economy
It is during major shifts in the economy that good companies are separated from average ones, and the significant impact
of the COVID pandemic is no different. Telcos have proven to be both resilient and imperative during this time, where, the more people, organizations, and the traditional ways of doing things are heavily restricted, the more there is dependence on becoming digitally connected. Simply put – the more that physical interactions for both individuals and companies are restricted, the more digital connectivity becomes a normal way of life. Whoever claims to have a clear-cut role in providing this capability – the telcos are well positioned for this – gets to drive the hypergrowth of this new digital economy.
generally have the first touch to understanding customers’ behaviours that create trends and patterns which can be used to intelligently predict the next best offers and actions. Today, there are around 8 billion mobile subscriptions in the world, which means that there is one mobile device per every living person in the world today, including infants and the elderly. Each of these mobile devices, whether a phone, a wearable, health gadget, or sensor – can collect raw data about a person or machine’s actions and transactions, a history of which creates a pattern that can be turned to insight, intelligence, and can be used to provide a statistical probability of what happens next. This can be used to show multiple scenarios and prescribe the best outcome possible. It becomes an immensely powerful analytics tool to provide business answers and outcomes.
The telco-derived data goldmine of actions and transactions include patterns of mobility (where and how much time is spent in which locations, at which speed), browsing behavior (web, media, topics, and time share), purchase and payments (window-shopper vs buyer), opinions and associations, health status, financial standing, socio-political views, and many other demographic insights.
Two major business predictors (also refer to the figure below) that can be derived from all these are:
- Propensity to be interested (great for targeted advertising push campaigns); and
- Ability to spend (credit rating or scoring - useful for financial and credit institutions).
These two predictors alone are what a lot of other digital companies are willing to pay for. There are many technology companies that thrive from understanding customer (both personal and organizational) behavioural patterns and insights. They then turn this insight into sellable products and services that appeal to consumer excellence (not just experience). What telcos must realize is that all this data – before reaching the servers of these tech and customer experience (CX) companies -- flow through the telcos veins and arteries before they are exported to external parties. Hence, telcos have almost always had the first touch to insights. If other technology companies are monetizing from telco-derived consumer data and insights, why not the telcos themselves?
There is so much to learn from real time data as well as historical patterns and trends created from properly leveraging and orchestrating information coming from subscriber's actions and interactions, network intelligence and statistics, and especially when combined with publicly available social data. This gives the telco a superset of data that enables better understanding of the customers and enables them to produce timely and relevant business recommendations. Now we will dive deeper into one specific data type which is payment data.
Using payment data to understand customers
The digital payments industry will be especially affected by CE transformation due to its reliance on technology. Such transformation will be brought about by rapid improvement in the quality, speed, or price at which value is delivered. On the supply side, existing players will see the industry value chain reshaped by new innovative products and services to meet increasingly changing consumer demands. We will witness the rise of many new innovative players riding on easy access to global digital platforms for development, analytics, and distribution. While on the demand side, growing transparency and rapidly changing consumer behavior powered by technology, an ever more connected world and faster and easier access to global communication (thanks to proliferation of mobile and cheap data) will force incumbents to adapt the way they design, market, and deliver products and services.
In the world of Big Data & Analytics, granularity is essential. The most incredible value is derived from the ability to expose patterns in data at the lowest level. And in the case of financial services, the lowest level is a customer’s payment transactions.
Such transaction data is key to pre-empt a customer’s needs and tie their values to their spending habits. Imagine how much more effective your marketing campaigns could be if you understood your customers according to their life journey — rather than through limited data captured during a few points in time.
Successful execution requires two critical ingredients:
- A comprehensive data repository that includes payment data;
- A data analytics capability that consumes all data into one view and gains insights.
The table below lists typical data sources used for understanding your customers. If you are not leveraging digital payment data (highlighted in orange), then you are missing a rich trove of information that can build a deeper understanding of your customer’s life journey and create contextualized customer experiences to drive the connected economy.
For example, an online lender in Kenya has a proprietary algorithm that scrapes approximately 10,000 data points
from the phone (including SMS, call records, locational data, etc.) to analyze and score customers. By offering customers’ transaction data to banks, they do not only ensure themselves a new source of income (commissions) but impact the lives of millions by helping them secure a loan.
Similarly, a telco with a rich source of customer data can use it to build new value-added services.
What business value can you drive?
Digital payment data, among other transaction-derived information, is a good foundation for defining the behavioural pattern of an individual or an organization. It can be used to predict and promote suggested next best steps, leading to preferred business outcomes.
For example, a telco in Pakistan is utilizing payment data to customize marketing campaigns for Youtube, Facebook, and packaged bundles for voice, SMS and mobile Internet that is right-priced and timely, based on usage, demographics, and affordability rating. They then combine payment data with other insights that define topic interests, personalized app offerings, streaming video, discount bazaars, sporting events, music, and more. This also considers the pre-paid market but is done differently for postpaid customers. Personalization is the critical factor, as people and organizations hate spam from generic and non-contextualized offerings.
Telcos can use payment data to derive deep insights along the customer lifecycle.
Indeed, telcos are well positioned to play the vital role of digitization enabler for many organizations (and individuals as well). Having first access to customer data and insights as well as network and social information gives them business predictors to deliver customer experience excellence, as well as preferred business outcomes. Digital payment transactions and all tributary data and insights are among some of the many ways telcos
can hyper-personalize the next best offers and actions, making personal and business lives better. The connected economy is no longer an alternative, it has become the default way of life.