Economic growth, by its very nature, doesn’t stand still. The start-up world has grown and changed considerably since the dot-com crash in that late 90s – the risk of hyper-inflation and a ‘tech bubble’ is much smaller. Investors are more particular with their money and companies require more robust and tangible business plans in order to secure investment.
But, one underlying factor has undeniably changed the landscape forever: the advancement of digital technology.
At the end of the 1990s, advanced computer systems were expensive for businesses to own and operate, and their complexity and size meant that only the biggest, wealthiest companies could afford to run them. Interconnectivity with smaller businesses and startups, as well as wide-spread innovation, was simply not possible.
Fast-forward to today and many companies, whether they have one employee or 100,000, can run on a foundation of digital technology, cloud computing or Big Data systems. Take the cost of a sensor vital to an IoT application. The price point of this technology has fallen tenfold or more in just a few years, allowing more people to gain access to the most innovative and transformative technology available.
In addition, the way in which businesses operate has completely changed – we have the likes of manufacturers and financial services firms using AI, IoT and robotics to manage many of the repetitive and more mundane tasks within the company. A vast digital infrastructure now supports the global economy, and we’re entirely dependent on it.
With this shift, the opportunity for startups to drive innovation and develop game-changing ideas to solve some of the world’s most pressing challenges is greater than ever before.
These initiatives are a catalyst for change, designed to encourage a mindset and mentality of innovation in an environment that may not have traditionally had this in place.
This exponential growth in technology and its capabilities is primarily being driven by consumer demand, alongside an increasing number of young people entering the global workforce, who have grown up with technology embedded in their everyday lives. In fact, more than a third of the world’s population will have a smartphone by 2020 and Millennials will comprise around 75% of the workforce by 2025.
FinTech leading the charge
Right now, fintech is headlining the European start-up community’s biggest growth and development opportunities. Following the financial crash in 2008, the banking sector needed to change. There was a strong appetite for modernisation within the banking world, stemming from a need to regain customer trust. Banks needed to re-think their approach, especially with customer-centric challenger banks such as Fidor and Metrobank growing their influence across Europe, and startups like Transferwise taking market share away from the big banks. This momentum continues today, with mainland Europe investing more than $212 million into UK fintech in the first quarter of 2017 – a two-year high.
Now, the banking sector is heavily invested in trying to incorporate and develop some of that innovation. We’re seeing some of the world’s largest financial institutions explore technologies like blockchain and machine learning to help tackle fraud, money laundering and identity issues. Many are also hosting – either external or internal – startup accelerators to help scale ideas and concepts in the hope of finding the next golden solution for their business.
The pattern is for FinTech startups to be embedded in the solutions that larger enterprises are pursuing. Take DNB for instance – the largest financial services group in Norway. We worked with them in 2016 to launch a new peer-to-peer mobile payments service, which is now used by more than half of the Norwegian population. Banks in Norway have now stopped developing their own payments apps, as Vipps has been so successful. This innovation was made possible using tools and approaches that borrow heavily from the Fintech world.
These initiatives are a catalyst for change, designed to encourage a mindset and mentality of innovation in an environment that may not have traditionally had this in place. They are also an excellent brand play, since banks need to be seen to be innovative.
It’s certainly a powerful step in the right direction to continue stimulating digital and economic growth.
To COIN a phrase: Finding a way forward
At TCS, we’ve had an exciting initiative in place since 2009 that helps us drive innovation across the world. Through our Co-Innovation Network (COIN), we partner with more than 1,500 startups, VCs and academic institutions to crowdsource the best minds and products, that help solve some of the world’s most complex conundrums. Looking into the likes of biotech and genomics, as well as AI and robotics, the COIN allows us to harness the full power of digital technology and drive business growth.
The importance of ‘co’ in ‘co-innovation’ is vital. Nobody can survive alone, and developing a strong network of connections and partnerships within Europe is vital to the future success of innovation on the continent, propelling the future economy.