Five Trends to Watch in Digital Disruption

U.S. Advisory Council sheds light on the digitization of finance, media and policy-making

04/03/2016 Barcelona

IESE U.S. Advisory Council

Digitization transforming industry beyond recognition – IESE U.S. Advisory Council / Photo: Jordi Estruch

Global digital penetration currently stands at 46 percent. In the U.S. alone that figure rises to 88 percent. We are living in times where there are an estimated 1.5 billion digital applications, with the average U.S. citizen deploying as many as 27 apps every day.

The digitization of the world – the so-called Fourth Industrial Revolution – is set to transform industry beyond recognition.

Key members of the IESE U.S. Advisory Council, distinguished business leaders and decision-makers from different sectors, addressed an audience of IESE MBAs in Barcelona this week, to shed light on the emerging trends that they are seeing at the forefront of their sectors – disruption that is transforming the global business landscape.


Board Member at Scottrade, Claire Huang kicked off the debate by identifying trends that she sees disrupting the financial sector.

Huang, who has held senior positions in banking, including CMO at JPMorgan Chase and Global Head of Marketing at Bank of America Merrill Lynch, cited the world of assets management – a subsector worth 35.5 trillion dollars that “companies are vying for.”

Here, she said, we are seeing the traditional model of one-to-one advice based on risk tolerance and asset re-balancing being disrupted by technology.

“We’re in a new era of robo-advising,” says Huang. “Computers are starting to cut out the traditional human interactions. Robo-advising uses algorithms to assess your risk tolerance and rebalance your portfolio.”

And although the trend is still in its relative infancy – accounting today for some 19 billion dollars – the projected growth, says Huang, is exponential, with projections of 46 percent.

Touchless Payment

With an estimated 122.8 billion transactions in 2012 worth more than $79.0 trillion in the U.S., an emerging subsector is that of touchless payment. Apple, says Huang, is leading the field here.

Though another emerging trend to watch is Merchant Customer Exchange – or the MCX Platform – which is seeing companies like Walmart or Target attempt to cut out the costs associated with payments using American Express or MasterCard.

“People still prefer to make their transactions face to face in general,” says Huang, “And these sorts of digital innovations are still only accounting for around 7 percent of transactions. But the transformation is happening, and it’s being driven by mobile.”

The fight is now on, says Huang, “And it will be very interesting to see who wins.”

Hyper-transparency, Hyper-connectivity

U.S. Council member Alan Glazen, founder of GlazenUrban, has had leadership roles in media relations and advertising spanning more than three decades.

With the advent of digitization, he said, it’s incumbent on firms today to change the focus from branding, however, and divert more investment into the development of products and services.

“In today’s market, where customers are hyper-informed and looking for hyper-transparency, more than 80 percent of your customers are making purchasing decisions influenced by what they find online about you.”

Your customer knows more about you, says Glazen, than you can tell them.

“We should be moving money away from branding exercises and taking more a leaf out of China and Korea’s book where R&D spend has doubled in the last decades.”

Spending on research and development in the States has not increased significantly in years, and this is a mistake, says Glazen.

“In a hyper-informed market it’s our products and services that brand us, not vice versa. The farmer used to brand the cow, now it’s the cow branding the farmer.”

Policy-Making Lagging Behind Technology

Microsoft’s Kate O’Sullivan warned that existing laws and policies governing cloud computing and privacy issues were “not fit for purpose.”

O’Sullivan is General Manager of Industry Affairs, Office of the General Counsel, Legal and Corporate Affairs at Microsoft.

The big issue, she said, is our “failure to anticipate that our lives would be lived in the cloud.”

The exponential growth of cloud is presenting highly complicated issues touching on privacy and security, that industry and government now have to grapple with. Added to which, says O’Sullivan, there are tough geo-political tensions in today’s climate that are forcing the debate.

Referring to the current encryption dispute between Apple and the U.S. Government over the right to hack into an iPhone, O’Sullivan said that while Microsoft and most of the industry supported Apple’s decision, the debate has highlighted the need for new systems and treaties to be put into place to help guide how government can lawfully access information.

“The future of technology is in the cloud,” she says, “and part of that is the right legal framework.”

Bursting the Filter Bubble

All of the panelists agreed that in the age of digital marketing and the so-called “filter bubble,” it is incumbent on users to make an effort to stay curious.

“Big companies are controlling what you see and read online with algorithms that discourage exploration, and encourage isolation,” said O’Sullivan.

The risk of reinforcing personal prejudice is real, agreed Huang. “But we don’t have to become robots. The key thing is to make the choice to diversify what you read and where you source your information.”

“Never stop learning or asking why.”