Other parts of this series:
The surge in new trade and business restrictions around the world threatens to put the brakes on digital transformation at multinational insurers.
Insurance providers around the world are embarking on extensive digital transformation programs. They’re deploying artificial intelligence, the Internet of Things, data analytics and extended reality, as well as a host of other technologies, to develop powerful data-driven businesses. Many of these companies are already reaping the benefits of these changes. They’ve become more effective, agile and innovative.
Now, digital transformation is set to become increasingly complex, challenging and costly. The reason? Geopolitics.
Digital transformation requires organizations to gather, send, store, analyze and apply information as efficiently as possible. Multinationals, in particular, have thrived by being able to move data quickly across their organizations to locations throughout the world. However, a growing list of restrictions on the transfer of data is threatening to put the brakes on these advances.
Countries across the globe are introducing more and more controls on the movement of data within and across their borders. It’s not just data that’s being affected. The sourcing of IT products and services as well as the hiring of technology specialists is being more regulated.
Some of these new laws were undoubtedly created with good intentions. Governments have to combat cyber-crime and identity theft, for example. Nonetheless, these restrictions on the use of technology are part of a growing resistance to globalization that’s occurring in many countries. The number of trade regulations adopted by the nations in the G20 forum, for instance, jumped almost four-fold from 324 in 2010 to 1,263 in 2016.
Whereas globalization allows organizations to consolidate their digital resources and services, the increase in barriers between countries is causing digital fragmentation. Efficiency and productivity benefits gained through greater use of digital technology are now at risk. What’s more, many new business opportunities that digital transformation could have delivered may now vanish.
Senior executives at multinationals are starting to realize the dangers of digital fragmentation. Eighty-six percent of the 400 CIOs and CTOs we canvassed believe their IT strategies and systems are vulnerable. New digital business models, they say, are particularly at risk.
More than half the executives we contacted believe increasing barriers to globalization will compromise their organization’s ability to use or provide cloud services. A similar proportion think these restrictions will hinder their use or provision of data and analytics services across national markets.
Digital fragmentation is clearly much more than a technology problem. Insurers need to recognize that it’s a business problem. In my next blog post, I’ll discuss how digital fragmentation is forcing multinationals to pay more for their digital services. Until then, have a look at this link. I think you’ll find it useful.