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There are three areas set to challenge business leaders in the rise of digitalisation, according to a new report.
Global law firm Ashurst has just released its Future Forces 2023 report, highlighting the biggest challenges business leaders are forecasting in the coming decade off the back of building resilient cities and from digitalisation.
The findings show a skills gaps, the demographics of a rapidly ageing society, and rising levels of protectionism are hindering business leaders’ potential to fully capitalise on digitalisation.
The vast majority of respondents said investment automation, augmented reality and artificial intelligence are the key technology capabilities likely to make the biggest positive difference to their business. However, two-thirds of respondents said their businesses have yet to give these megatrends sufficient attention.
“They are also deeply concerned about skills gaps, with 97 per cent saying their technology skills are insufficient to take advantage of opportunities and 80 per cent seeing large gaps in their employees’ skills,” the report explained.
“Linked to this, more executives (39 per cent) expect their organisations to struggle with shifting population demographics compared with any other megatrend. Concerns revolve around the impacts of an ageing population and the ability of businesses to meet the increasingly diverse needs of customers.
“The biggest geopolitical concern for business in the next 10 years is the spectre of protectionism, with a majority of respondents fearful of new regulations that favour domestic over foreign investment in their key markets. Leaders working in the financial services, digital economy and infrastructure sectors were most concerned about this. Businesses are improving risk management and reworking their supply chains in response to these concerns.”
Elsewhere, the report found 28 per cent of executives say a transition towards net zero is both their business’s biggest threat and biggest opportunity.
“Respondents deem more financial climate disclosure, supply-chain transparency, and other ESG-related rules, which have already risen in volume fivefold in the past decade, as more likely than other regulatory developments to impact their business over the next decade,” the report noted.
Commenting on the findings, Etay Katz, co-chair of the Bank Industry Group and member of the Financial Conduct Authority’s innovation advisory group, said: “Digitalisation requires banks to radically reinvent themselves, and we expect them to greatly accelerate the pace of acquisitions of complementary businesses and technologies over the next 10 years as a component of their strategy.
“However, a more prudent strategy to maintain a competitive edge must also focus on the following building blocks: investing in and deploying emerging technologies such as AI and synthetic data; redefining their business model to focus where banks can realistically expect to have the resource and appetite to compete; and implementing organisational structures to facilitate quicker strategic and technological change.
“We predict that those banks unable to step up to these challenges will be acquired or, worst, fail at great costs to shareholders, customers and ultimately states themselves.”
Rachel Sexton, head of Ashurst Risk Advisory UK, echoed a similar sentiment, noting the survey showed that a large majority of respondents believe that the technical capabilities and employee skills in their businesses fall well short of what is needed to take advantage of future opportunities.
“On the other side of this is the need to have risk professionals in the business who understand the digitalisation trends and risks that they create and are able to advise on processes and controls that will protect the business. This risk awareness is not meant to slow down business and innovation but to ensure businesses can thrive as they evolve in this new digital world,” she said.
Paul Jenkins, Ashurst’s global chief executive, added: “The key message from our research is that businesses need to think beyond the immediate issues they face, and look out over the horizon when developing their strategic planning. Some of these megatrends are not yet well understood by business – particularly in relation to resilient cities, building skills for the future and managing demographic shifts. It is only by understanding the deeper, underlying currents that are driving change that we can make informed decisions and decide how to meet the needs of our stakeholders.”
