How the Digital Transformation Will Make or Break Your Future

Could you, could you bring that over over here for me? Thank you. I mean, walk on music. It's the most important thing, right? It's pretty, that was pretty awesome. Um, thank you guys for having me here today.

And what a tough act to follow. But I will say that I agree with Brent that we have much more in common as humans than what other, what otherwise might meet the eye. I'm a 22-year cancer survivor and I know what it's like to immediately, thank you, to immediately understand, you know, with the phone call, what it means to have your life change. I also was my own advocate. I mean, I'm impressed by that diagram that mapped all the different options.

I had one of my own, I'm a consultant by, by background in professional training, and I went all over the country to talk to doctors with my two by two matrix, and I said, I wanna be in the upper right hand quadrant. I know you can't guarantee a hundred percent, um, efficacy with the treatments, but I want to line up all the different protocols and I wanna get as close to that as possible. So I interviewed my doctors as I would be interviewing, um, clients for, for work, and I ended up with a doctor in Boston. It's one of the reasons I moved to Boston to, uh, to get my treatment and the, uh, the rest is history. So 22 years, uh, is, uh, an interesting, is an interesting experience. It also taught me to never take no for an answer.

So what I'm gonna talk to you about today is something that I want you to think about. Never take no for an answer as you think about the journey that all of you are on in something called the digital transformation. When Tom asked me to speak to all of you today, he said, come with something different. Be a little provocative, a little bit of shock and awe. Well, for those of you who may know me, you know that that's pretty much my DNA.

So rather than talk to you about some of the things that you've probably talked to your friends about, colleagues, about, partners, about, maybe even talked about over, uh, over drinks and cocktails last night, I'm going to talk to you about five key things that are going to force change in every single business or the businesses will be changed as a result of not taking the, the thematics that I'm going to walk you through as something that will in fact drive your business.

This is because consumers are living their very best lives in a digital-first world, and the businesses who want to have them as their customers are following their lead and payments data and new tech, which is everyone sitting in this room, have the potential to be the cornerstones of what I believe is the most powerful and amazing journey of digital transformation that we've seen in our lifetimes.

So I'm gonna start to talk about the dirty little secret of digital transformation. So I read a statistic recently that I thought was very interesting. 70% of digital transformation projects fail. So say the consultants that have probably driven a lot of those projects.So why is that? Um, I think I'm gonna explain some of the reasons that I think digital transformation projects go awry, but I think it's given digital transformation, a little bit of a bad rap. Uh, it's become maybe industry jargon, a little bit of a buzzword. Um, maybe something that people don't take very seriously, but it is in fact challenging the status quo, and it is in fact challenging every single person in business that is embracing the status quo in an effort not to really drive change. So here's, here are the five ways I'm gonna count them down one by one.

No. 1, can we all agree that digital is not just a channel? Please say yes. Yes. Okay, great. Digital is, it is amazing how many businesses, how many executives still think of digital as a checkbox. Yes, I need to do digital. I need to go digital. No, you need to be digital, which means that physical, the physical world is an extension of the digital experience because that is where consumers are living their lives today, and it's where they are increasingly initiating the activities that they are fulfilling in the physical world. I mean, think about the evolution of digital and how we are transacting in the world.

Cars are just the latest evolution of an experience where a connected device, now, a car, anything connected to the internet is capable of processing data, is capable of enabling commerce and is capable of creating the competition among now car manufacturers, fintechs, big techs and banks, that all wanna be a piece of the action when the driver gets behind the wheel. But, but even before the driver gets behind the wheel at the moment that individual decides they want to go shopping for a car, but that's not where it's going to end.

The future is exciting because I believe the future will take us to a point where connected devices are, are everywhere. There will be sensors that will enable the transmission of data and the initiation of activities that will be triggered by the most ubiquitous method of engagement we have, which is our voice. This ambient always-on commerce experience will be transformative because it will change the who and the where brands and businesses and consumers interact.

We're already starting to see that happen in healthcare where the idea of ambient AI, as it's called in healthcare, is transforming the patient doctor experience in the exam room where the patient and the doctor can talk without the doctor having to type notes into the medical record. It's all being, being transmitted for them using sensors and the electronic medical record system that they're attached to. This is a future that millennials and high income earners say they want. 70% of millennials say they believe that this is possible in five years or less, and they're willing to pay for the privilege of having a smart assistant to help them navigate the complexities and the opportunities that this always-on ambient world powered by digital will deliver. So that's, that's No. 1.

No. 2, for those of you who have followed mem read some of the things that I've written in 2019, I said the transfer of the 2010s to the 2020s was going to be amazing just as the, the smartphone and apps transitioned us from a world of connected devices or, or smartphones in an app, in the app economy, the 2020s would be about connected devices and ecosystems that would create activities around the kinds of things that consumers do, not necessarily what companies produced.

I think that that's a powerful way of thinking about how consumers, brands and these new digital intermediaries are changing the economics and the dynamics of those experiences take eating. So consumers buy their food from many different places, and they always had, consumers have always had the choice of going to the grocery store and buying food and preparing it to eat at home or going to a restaurant and eating it in the restaurant or picking it up for carry out and bringing it back. But what has happened with digital platforms is that consumers now have more options to do that without getting in the car and driving to the store or driving to the restaurant. That creates competition within the grocery sector, within the restaurant sector, as aggregators now make the access to those endpoints easy and convenient and on demand so consumers don't have to always rely on doing the weekly grocery shopping to feed themselves and their families.

What then happens is competition crosses those traditional lines as consumers think about eating, even though grocery stores think about people going inside or now online and buying food to prepare at home to feed their families.

That's the exciting part about the digital transformation that is reclassifying industry, old traditional industry classifications and norms and creating new competition and new opportunities for payments, financial services, and all of you in this room to serve customers who want to have those opportunities on demand.

We also see that incumbents are taking their actions into their own hands and taking, um, the, the ability that they have with digital and payments and new ways of distributing their products into the market by turning their products into platforms themselves. I love to use Mars as an example because they have taken, um, their products Oreos and M&Ms for those of you who know them well, and they've created platforms into those, uh, around those products. That means that, um, they are going direct to consumer. They're getting first-party data, they're understanding better how consumers engage with their product, but they're also taking their products into other digital experiences and physical experiences to meet the consumer where they are.

Digital and payments makes that possible, and incumbents are becoming their own digital intermediaries and allowing the customer to take advantage of those opportunities whenever they happen to experience the need for an Oreo or an M&M. Um, we're also finding that digital challengers, and this is the interesting thing about what's happening across the business to business landscape where we see digital challengers really embolden now to break industry norms.

It used to be that buyers and suppliers were pretty much relegated to the old way of doing business with the suppliers and the buying groups that really represented the way business was done.

What we're seeing, and I think COVID was a great catalyst about this, is that digital intermediaries are displacing the old ways of doing business and creating disruption across the $200 trillion of volume that passes between buyers and suppliers every year. Um, we're seeing the industrial economy get on board as new intermediaries are using buy and service using one particular platform. You're seeing players like ChemDirect and Bryzos and ABInBev really take the opportunity to bring what was once a pretty recalcitrant piece of the industry on board to create more options for buyers. And with options for buyers, suppliers are motivated to get on board and, and participate, um, in those new flows.

Four, uh, this is perhaps one of my favorite where you see platforms are using the opportunity of digital to turn what was always thought of as loyalty, which was really incumbent, um, inertia into their, into their business opportunity. So you see that AI and the access of of, of publicly available data is eliminating the need to do one of the hardest things in business, which is getting buyers and suppliers to onboard a platform.

I can speak to that through experience. I've been doing that with payments for the last 14 years and have helped many platforms established and emerging take their own platform journeys as they have moved through, um, the various stages of what we call ignition, getting their platform flywheels off the ground. Um, here's an example of a company that I spoke to recently who did one of the hardest things that, that I think, um, uh, it, it ha has prevented more of these platforms from being successful in the B2B space. It's a company called, uh, WellSpaece. It's not a typo. That's the way they spell their business. Um, but, and I think it's an interesting way to get the, the play on words, um, with, uh, with, with, with the misspelling in the URL. Um, but here's what they did. They wanted to reinvent the buying experience for dental offices, not just independent dental offices, but the large, um, dental services, um, um, affiliations and, and buying groups, but they didn't need to get the supplier on board because what they did was they used AI and public data to scrape the web, to standardize product descriptions and to give buyers a way to buy from any supplier they wanted to, uh, based on quantity, availability, quality, whatever met their needs.

The interesting dynamic here is that the buyer wasn't buying from the supplier. The platform became the buyer. The, the leverage, the economics, the data flow accrues to the platform and suppliers have no choice but to get on board and then think about how they're going to differentiate themselves through advertising and other special products and features to win more of the business from the supply, from, from the buyers that they always thought would, would, would order from them.

It's an interesting way to use available data and embed payments, embed financing to really disrupt a traditional industry for everyone in this room. Perhaps a little more relevant, the everyday app is coming for you or coming at you depending upon where you are.

We did a study in the spring, um, a global study actually of, um, of seven different different countries but it's unanimous in the U.S. --- 80% of consumers say they want a single digital front door to manage the complexity of their banking payments and shopping experience. What form that takes, what that happens to be, who happens to deliver that really is up to those who understand the need for consumers to streamline the complexity of the many different inflows and outflows today that represent their everyday lives. Now, this is not the super app, it's not everything because consumers don't want everything in a single app, but they do want something that simplifies the everyday blocking and tackling of their daily lives. And this is an a, a concept that I think a lot of people are pursuing. You see big tech, you see fintech, you see bankers whom consumers say that they really trust all vying for the hearts and minds of those consumers. Who wins? We'll see.

Who wins though will be the player that eliminates the friction, delivers the intelligence and the simplicity and the security that consumers crave when they say they want that, that opportunity for that single digital front door to manage their every day, their every day.

I guess no conversation about digital transformation is complete without talking about generative AI. It is in fact a phenomenon. You've heard so many people talk about it being the most transformative technology since the Internet. I do, I do believe that we've seen it evolve.

AI is not new, but the accessibility of the technology is what makes it such a game changer. I mean, clearly we're already seeing how it's being put to work within organizations and the, the capability that it delivers for internal efficiencies. We're using it at PYMNTS.com in, in new and really interesting ways, but that's not really the game changer from my perspective.

I think the power of generative AI is the ability and the accessibility for companies big and small to have access to that technology. It will level the playing field and give players who are not necessarily giants the ability to step in and, and offer services and capabilities that they would never be able to do before. That means that your competitive advantage has to be one, it has to be competitive and it has to be an advantage, and it has to be sustainable because technology and simply accessing technology is no longer going to be good enough.

So we like to talk about moats a lot in the world of consulting, and I'm sure you do in your own war rooms and discussions back home. But, but the thing about moats that you need to think about now is whether generative AI is, is giving companies the ability to build a bridge over yours or whether generative AI can be the bridge that you build over someone else's. But it is really a fundamental game changing technology because the access to the technology will in fact force everyone to get sharper and better about what they do. Okay, I'm almost to the end.

I know I'm a little bit over time, but I've got three things that I want to leave you with because some of you may be saying, okay, this is great. So what, this all sounds great, but what does this really mean for me and my business? Well,I think there's an opportunity for everyone sitting in this room to collapse and consolidate the things that today represent points of failure and points of friction for consumers and businesses and financial institutions as they try to navigate the, the transmission of data, the movement of money, the movement of of, of data between connected endpoints, the many connected endpoints that are now capable of generating data and generating action against the data and the commerce that can come as a result of that. I think that's the opportunity.

There is a downside. I mean, digital transformation, 70% of those, those projects fail for a reason. I think we get enamored with technology and we think that technology is in fact the fix that technology in fact will do everything we needed to do. But I have a framework that I call the FIT framework. You know, does your idea pass the fit test?

Is the friction that your customers experience big enough, significant enough, and for enough people to build a business around that you can monetize and not just monetize, but derive profits from? And is that alternative something that is compelling enough for people to wanna give up what they do today in order to move to something new?

And is it available to them in a timeframe that is relevant to them and your business? We see this time and time again where it's a great idea. Technology can make anything possible, but without really knowing who has to get on board, who has to buy in, you end up creating something that creates too much friction for the people who move the needle or bring in the people who move the needle for your business.

And then time does the solution save consumers time and money. You know, in a, in a world where there are so many possibilities where digital provides so many opportunities for consumers and businesses, does what you do save consumers the time of navigating what they used to have to go through in order to get the answer, complete a transaction, move money? Does it, does it create a time saving and efficient way for consumers to do that?

And does the technology fix for those who need to fix it create a return on investment for that business? It sounds like a very simplified framework, but it is something that I think a lot of people overlook.

You know, really digging deep into the ideas that you have and want to bring to market. Make sure that they do in fact address all of these issues so that your, your opportunity to serve customers in this new digital world is successful. And then finally, you know, digital transformation's journey is really profound, but we're in the very, very, very early days. We're just getting started.

75% of transactions still happen in the physical world. We see consumers though gravitating to more and more experiences where they stage their activities in a digital, in a digital way and fulfill them in the physical world that will continue to drive the behavior of digital that will continue to drive the evolution of business, the evolution of platforms, the evolution of solutions that make that easier for consumers.

We see that the more consumers engage, the more they engage in things that are like that. A 10% lift in shopping online for a consumer also drives a 10% lift in their use of telemedicine services because they're comfortable with the online, um, experience and they're willing to take the leap because it saves them the time and the physical trip to the doctor to have, um, to have something diagnosed that may be simple enough to do over over that channel. Um, we find that consumers see the connection and wanna make the connection.

We see digital shopping and payments and banking are highly correlated in terms of activities where people are checking their bank accounts, going online to shop and looking for deals and, and opportunities to save money. Consolidating that is an opportunity across activities that consumers already do today and will continue to do more of as those experiences mature.

But perhaps the most exciting opportunity is to embed data and payments and transactional activities in the places where consumers have their attention, where businesses have the opportunity to reach them, but there's not the opportunity yet just yet to create a, a transaction of some kind, either a purchase or a staging of something that in fact can relate or result in a, in an experience that is satisfying for the business and that and that consumer.

So I guess in closing, um, the digital transformation is real. Hopefully I have convinced you of that. The journey is, has already begun. Consumers and businesses are on that journey. The decision now for you is what is your path? Are you in the passenger seat? Are you on the sidelines? Are you the engine that powers it or are you the navigator that is helping to show the way, to show the way for consumers and businesses, financial institutions to really embrace the potential that the connected economy, these digital experiences can, can accrue? The time is now to make that decision.

The time is now to get busy before someone else makes the decision for you. Thank you so much for your attention. Thank you.