“The modern student expects immediate results and real-time experiences, and if education can’t give them those things, we live in a second-class environment.”
The world will spend $7.3 trillion on education by 2025, and only 5% of that will be allocated toward digital education. This shows that education still has a long way to go before digital technological advancements are considered core strategies or skills.
Even though digital tools have the potential to change how students learn and how teachers teach, many schools and universities still need to use and implement technology well enough.
In this blog post, we’ll talk about why the education industry is still behind in adopting digital technology and what could be done to help it catch up.
#1: Attention Recession
A recent survey showed that up to 70% of Dutch students are unhappy with how lessons are taught now, especially in virtual classrooms. These students have said they would like more personalized lessons, more chances to work together, and more help from their teachers.
While some students have cited technical difficulties as a reason for poor attendance during virtual classes, it is important to note that the underlying issue is a lack of connection between teachers and students.
This disconnect highlights the limitations of a one-size-fits-all approach to education, which fails to consider each student’s unique learning needs. As a result, educational institutions face high dropout rates and increased stress levels for teachers and students. To deal with these problems, schools must use strategies that put personalized instruction first and give teachers and students more help. This will make learning more effective and less stressful.
The Solution? – Personalization and Gamification to Create Habit Loops
Institutions of learning need to prioritize personalized learning methods and offer flexible solutions based on each student’s strengths and weaknesses. This can be achieved by customizing courses to meet the specific needs of each learner.
Another effective strategy is to incorporate the gamification of education into mobile applications, utilizing game-based elements such as points, badges, rewards, and certifications to enhance engagement and retention and allow more adaptive learning. The ultimate objectives of implementing gamification include increased traffic, repeat visits, and higher student engagement.
This helps empower more blended learning, engagingly utilizing digital resources, and student-centered learning. It also helps to identify at-risk learners and provide the most effective support for each person, enabling lifelong learning.
Educational institutions must also implement a streamlined, intuitive platform with a user-friendly interface that guides students step-by-step through tasks and has multiple microservices to support the various disciplines. This type of system would benefit students and faculty and enhance collaboration among them.
#2: Underinvestment in Educator Training
Back in 2013, the Los Angeles Unified School District initiated a program to furnish every student with an iPad to augment technology access and improve the classroom experience. However, the program was beset by various challenges from its inception. One significant challenge was the need for more appropriate iPad content and resources.
Furthermore, many teachers reported needing to be provided with adequate training to utilize the technology in their classrooms effectively. Additionally, students were able to circumvent security features on the iPads, leading to non-educational usage. Another significant challenge was the program’s substantial cost, with a total expenditure of $1.3 billion.
This drew criticism from some who believed the funds could have been allocated to other educational programs. The program also encountered numerous security issues, with the personal data of students being compromised and students accessing inappropriate content.
Due to these challenges, the program was ultimately terminated, resulting in significant financial losses for the district. This case illustrates the importance of thoroughly assessing all training and support aspects before implementing educational technology and keeping up with the digital transformation industry trends.
The Solution? – Advancing the Skills to Utilize Technology
By hiring a full-service digital transformation agency, teachers and faculty can get specific, expert-led professional development to help them use technology better in the classroom. An agency can assist in the implementation process, providing ongoing support to ensure technology is utilized to its full potential. It can also provide the necessary support to overcome any technical difficulties that may arise while using technology in education.
#3: Inability to Keep the Digital Equity
The proliferation of technology has the potential to bridge the digital divide. However, it also highlights existing educational disparities for students from different geographic regions and those from varying socio-economic backgrounds.
The Solution? – Implementing Connected Learning Communities through Digital Transformation
This helps students in faraway places connect with teachers, mentors, and peers from other places to solve this problem. It also provides valuable opportunities for collaboration and learning and facilitates professional development and the sharing of best practices among educators.
Using a mobile app with geo-location tracking technology can help this effort even more by putting students and teachers in touch with the resources and opportunities closest to them and most useful to them.
The platform also has videos that show teachers how to do practical reading activities with children. It also helps local writers and illustrators make culturally relevant and age-appropriate children’s books. This empowers the next generation of change-makers, inspiring hope and creating a better world.
#4: Minimizing Customer Acquisition Costs
With the modern student seeking immediate results and real-time experiences, universities face the challenge of providing assistance outside of traditional business hours. The inability to offer assistance to prospects seeking information during non-business hours could lead to a decrease in engagement on university websites and an increase in customer acquisition costs.
The Solution? – Deploy AI-powered Assistants to Enhance Customer Experience
Deploying automated digital assistants ensures students have access to information whenever they need it. Some tasks, like responding to frequently asked questions, are better suited for digital assistants than humans.
On the other hand, the university staff is better prepared to handle later-stage engagement, such as inviting students to visit the campus. This contributes to shrinking acquisition costs and more meaningful engagement with prospects.
#5: Data Working in Silos
Many organizations need help to utilize the vast amount of data they collect effectively. They tend to categorize this information, with different departments collecting data on various aspects of their operations, such as website engagement and application rates.
However, this lack of data integration results in a lack of comprehensive understanding of their target audience, student engagement, and the institution’s ability to retain students from initial engagement to graduation.
This inability to effectively collect and integrate data puts the organization at a disadvantage. Without a complete and accurate understanding of their operations and audience, decisions regarding marketing, class creation, and other operations may not be based on complete information.
The Solution? – Adopt Data-Driven Technology
Higher education institutions must harness the power of data-driven technology and analytics to stay competitive in today’s data-driven world. By collecting and analyzing data on students, operations, and engagement, institutions can gain valuable insights that can be used to improve student outcomes, optimize resource allocation, and drive better performance.
Predictive analytics can also identify at-risk students early and intervene to improve outcomes. In addition, data-driven technology and analytics can help institutions with their marketing and enrollment efforts by identifying the key factors influencing enrollment decisions and targeting their marketing efforts more effectively.
#6: Absence of a Roadmap
Adopting new technology can be daunting for any organization, especially for large schools undergoing a digital transformation. A lack of strategy can pose a significant challenge, making it difficult to know how to achieve desired outcomes and measure progress.
The Solution? – Define a Set of Clear Objectives and Goals
To ensure a successful transition, it is crucial to establish a clear direction and objectives from the beginning. This includes outlining what the school hopes to accomplish by the end of the transformation and the steps it will take to reach this goal.
Additionally, providing support to educators throughout the process can help ease any anxiety and ensure a smooth transition. By outlining a comprehensive strategy that includes specific objectives, steps, and support, the school can not only keep the process on track but also measure progress and achieve desired outcomes.
How Can Robosoft Assist the Education Industry with a Successful Digital Transformation?
The education industry is facing a critical need for digital transformation to keep pace with the changing needs of students and educators. Robosoft can assist in this process by providing a wide range of solutions that help optimize the educational experience. These solutions include automating repetitive and mundane tasks, using AI-based technologies to personalize learning, providing analytics and insights to make data-driven decisions, implementing virtual and augmented reality technologies to enhance classroom experiences, and providing a secure and reliable infrastructure for online learning.
Robosoft can also assist in integrating new technologies, support the training of educators, and provide ongoing maintenance and support to ensure that the digital transformation in higher education is successful.
Additionally, Robosoft can help education institutions develop a comprehensive digital transformation strategy that aligns with their specific goals and objectives. By utilizing Robosoft’s expertise and solutions, education institutions can ensure they are well-equipped to meet the digital age’s demands and provide their students with the highest quality education. For more information on how to have a seamless transition to digital transformation, contact us.
Wealth management was once the exclusive purview of financial advisors who managed the portfolios of a select, affluent few. Personalized portfolio plans and personal relationships drove such advice. The advent of digital technology has democratized many industries – and wealth management is no exception. As we know, in financial services, digital solutions are at the heart of the consumer experience.
The rise of fintech brands, especially those that help manage investments, is dependent more on technologies than on bespoke human advice, as it is all about scale. This has resulted in redefining wealth management as a service. According to a report by FactSet, investors across the wealth scale—from the mass affluent customer with $100 to invest to the ultra-high net worth (UHNW) client worth $10 million—are already embracing online platforms.
The key to digitalization success is targeting the right business areas, bringing in the right skills, and identifying the key processes to maximize value delivery. A comprehensive hybrid-advisory approach leveraging automation, data analytics, digital, and cloud solutions are the need of the hour.
The Key Pillars of Digital Experience in Wealth Management
Rapid technological advancements, changing investor preferences, and increasing financial awareness are prompting wealth managers to reconsider their customer engagement and business strategies. Digitalization helps modern wealth advisors create and understand their client personas better, moving away from “one size fits all” to a more customized approach. The right technology framework will lower infrastructure costs and improve the efficiency, speed, and scalability of the whole wealth management value chain.
Improving customer prospecting through AI/ML and digital onboarding
Digitalization through AI/ML can help wealth managers identify the right prospects and drive customer acquisitions through data-led personalized marketing. Its ability to combine data from various sources enables it to efficiently classify customer segments based on a variety of criteria, identify prospects using real-time data signals from social media, and generate dynamically personalized content for potential clients, all of which help to increase customer acquisition.
Digital Onboarding: Customer onboarding has traditionally required time-consuming manual documentation. However, many broker-dealers and other wealth management companies are digitizing and automating the process to enhance the client experience and save money.
The foundation for a long-term client relationship is established during the wealth management onboarding process, which includes the first serious interactions between an adviser and a client. Client onboarding processes include
New Account Opening (NAO)
As a result, businesses are now able to onboard and serve more clients in less time and with fewer resources, maintaining their competitiveness in a market where investors and regulators are driving down fees. Firms with a robust digital onboarding experience will have a solid competitive advantage in the industry.
Achieving investor centricity through data analytics and management
Wealth managers need accurate and real-time data to assess investor sentiments, understand critical market parameters, and produce insights for quick investor decisions. Data can provide timely, pertinent, and actionable insights that can be used to create new (and enhance existing) product and service propositions, optimize channel management, generate higher returns through informed portfolio choices for the investor, and boost customer engagement, and customer retention.
Wealth managers can make wise decisions and appropriate portfolio modifications by using a quantamental investment technique that leverages sentimental analysis, alternative data, and return analytics. Most wealth managers have advanced their client analytics and advisory capabilities and are in various phases of development.
At present, wealth managers have most of their data locked in product silos and legacy systems. Before using advanced analytics, it is understood that access to precise and complete data is necessary. Wealth management companies need a client-focused, precise master data architecture that combines data from all points along the value chain. By increasing their investment in data management and analytics as part of their digitalization initiatives, wealth managers have a better chance of generating higher returns.
Personalized client experience at the front and center
Personalization is one way that advisors can stay competitive with other firms that may offer lower fees or higher returns on investments. According to a survey, investors are increasingly in need of personalized, goal-based planning and other specialized services. In the next two years, 58% of respondents said they would like personalized financial guidance.
Personalization as its name says is unique to each client. To build solutions that will work with whatever position the clients find themselves in, advisors have for decades always thrived on understanding their clients’ backgrounds and perspectives on risk. For instance, knowing information about a client’s household size, state of residency, and annual income are crucial data points in creating customized options that may be more suited for particular people.
Wealth managers can now offer personalized services at a reasonable cost, enabling them to better compete with firms that offer lower fees or higher returns on investments. Automated rebalancing and custom indexing are two examples.
Advisors can automate trading and rebalancing via automated portfolio allocation. And with the help of automated reporting tools, the adviser can inform a large number of clients about portfolio changes.
Enhancing digital investor management and advisory services
For the wealth management sector, it is crucial to offer a more holistic customer and advisory experience. In addition to the human touch, new-age investors are extremely drawn to digital personalization. Wealth managers may increase client acquisition by creating personalized content for potential investors using AI and data-enabled marketing. By increasing customer engagement, a redesigned digital experience can increase customer retention and give advisers more leverage.
A few of the main touchpoints are-
Omnichannel engagement experience: Extends “zero-touch” service by using customized solutions built on video conferencing, on-demand virtual meet (with human advisor), and bot-enabled self-service. Portfolio review and building can be performed over user-friendly virtual solutions accessible over multiple channels.
Data-empowered custom solutions: Includes chatbots and avatars that create a personalized and smoother investor experience, thereby promoting customer retention, upselling, and cross-selling. Many established firms are providing AI/ML-powered offerings to query investor portfolios and their holdings and provide data analytics on the performance of the securities in their portfolio.
Advisor mobile apps: Enables wealth advisors to organize their activities and handle customer interactions. These apps (for example, MyMerrill) can include functionalities like advisor dashboards and 360-degree visualizations of customers and their risk appetites.
Adopting a cloud architecture to improve scalability and operational efficiency
The Information Technology (IT) landscape within wealth management firms consists of legacy systems that maintain a high volume of financial data, which requires increasing maintenance efforts and costs. An increase in financial data will drive automation processes and solutions as automation and AI/ML become more integrated into wealth management services.
Cloud infrastructure can offer a more reliable alternative to internal legacy systems for handling the increased inflow of data at scale, as well as higher operational efficiency and improved agility/time-to-market. By identifying the migration’s decision paths, which will guide the cloud migration strategy through the assessment, design, build, and migration stages, wealth management firms can optimize their existing application portfolio for cloud adoption.
Robo-advisory: taking the stress out of investing
Robo-advisors use automated, algorithm-based systems to provide portfolio management advice. These services are created with customer-centric thinking, and the technology is developed based on their wants and needs.
Customers are drawn to Robo-advice for a variety of reasons. First of all, it entails lower transaction fees and smaller investment requirements. Secondly, it entails more effective investment management. This is because the majority of Robo-offerings offer portfolio management using algorithmically based automated investment solutions that automatically rebalance the customer’s portfolio’s asset allocation without requiring any activity from the user. Thirdly, it provides less experienced investors with more comprehensive advice. Finally, Robo-advice offers more transparency on each investment and how they are likely to perform. The digital interface of many Robo-advisors makes it easy for an investor to analyze their returns versus benchmarks and progress toward goals.
Robo-advice services, whether new-age start-ups or established ones, also have the potential to widen the availability of investment advice from high net-worth individuals to less wealthy investors. Designing robo-advice services for the mass affluent presents a challenge because the customers may have good investment knowledge or little to no investment knowledge, and there is no human advisor there to make sure that the customer has understood the advice they have received.
Robo-advice services that are well-designed assist customers in receiving the best advice for their financial situation and reduce the likelihood that they will purchase the incorrect product. An agile, customer-experience-led, iterative strategy that designs and tests various interaction patterns is the most effective way to do this; whether that be an interactive Web or Mobile App, Chatbot, or combination of multiple technologies, that is right for the persona of a customer using the service.
Enhancing Digital Experience across the Wealth Management Value Chain
Opportunities for digitalization are seen throughout the wealth management value chain. An integrated digital transformation that addresses all the relevant user touchpoints would make it possible for investors and advisers to have a generally improved user experience. Every component of the wealth management value chain can be linked to a digitalization lever (Front office, Middle office, and Back office).
Customer experience is adversely affected by front-office digitalization. The focus is on seamless engagement and improved digital user experience to reduce the turnaround time, increase process efficiency, and ensure a smoother customer journey by Big Tech and Fintech experience.
The middle office, which drives the core line of operation in wealth management, is firmly focused on data analytics. However, given the sensitive nature of client data protection concerns and legislation like GDPR and equivalent laws coming into place around the world, a controlled approach to data management and cloudification is the way forward.
Automation and cloudification are the main digitalization potential in the back office space. The user experience quotient is not very high primarily because the activities are more in-house driven rather than external stakeholder driven.
The Road Ahead
The need to stay digitally connected and have a lasting influence on investors and asset managers have accelerated after the global pandemic. The focus is on creating a digital ecosystem built on tools and measures for a touchless remote experience without compromising on quality, which may have permanently changed how people work.
From a service and product perspective, the focus is steadily moving toward personalization, driven by effective data analysis. The emphasis is now on specialized products, personalized advisory services, and flexible pricing structures for different investment classes. One key factor that unites these shifts is the proactive application of technology and accelerated digitalization, whether inorganically or organically.
Effective use of technology through an omnichannel delivery model is essential for people-centric and relationship-driven industries like wealth management to promote the right level of customer engagement. Firms can look forward to investing in in-house technology and aligning with tech vendors, for the timely implementation of modern investment solutions, keeping relevant to a variety of customer segments, and staying ahead of ever-increasing competition.
An airport is no longer just a temporary home for passengers in transit or those making their way to scheduled flights. Airport users can spend their waiting time between flights at any of the retail outlets, food courts, gaming arena or lounge areas for infotainment/recreational experiences.
However, as more airports get privatized, they’re under pressure to show profitability by increasing their overall revenue with an emphasis on generating more revenue per customer. Considering the change in the nature of the airport experience, airport operators have the opportunity to transform the airport from a point of transit to a destination in itself. As a result, they can grow revenues by enhancing the emotional connection with customers and enabling a superior experience they would want to repeat – by crafting relevant digital solutions.
The Airports Council International shared an interesting overview of the airport economy:
Passenger satisfaction can be achieved in two ways at the airport – by ensuring seamless transit or by keeping them engaged during their time at the airport. In recent years, technology has proved to be the differentiator between a nightmarish or boring experience, and a memorable experience they would eagerly repeat. As illustrated below, there are infinite touchpoints at the airport where technology can help airport management design a welcoming and intuitive experience for passengers.
The need for a unified and seamless experience for airport users
Many airports offer a fragmented customer experience as they force passengers to crisscross different touch-points from the point of entry through to parking, check-in, baggage, navigation, food and recreation, boarding, immigration, and so on. Often, they lack a single source of information and don’t have digital means to pre-book or check availability of certain services such as lounge area etc. In specific cases of first-time travelers or elderly flyers, navigating through busy, large airports can be overwhelming and disorienting.
However, through technology interventions, airports can go a long way to provide a more unified and harmonious experience for airport users. For example, they could develop a mobile-based app or website that integrates the passenger’s journey at various touch points and enables a single point of information for all their needs from the time they arrive, transit, and depart from the airport.
Here, we illustrate the different possible ways in which technology can intervene to enable a unified and seamless airport experience.
Many airports, including the best, busiest, largest, and popular ones, are implementing some of these digital solutions. Here, we present some of the innovative use cases that are emerging as a result.
Simplifying the passenger experience through technology
#1 Smart parking – Airports can integrate a parking solution on their app/website that allows passengers, especially those who are hard-pressed for time, to reserve spots in advance. They can use their allocated QR codes to pay for this service and enjoy the benefits of knowing exactly where to park and plan their travel/commute accordingly. This can address the stress points and improve efficiencies for airport authorities and passengers as well.
#2 Easy navigation enabled by Augmented Reality (AR) – Passengers can use AR guided navigation on their phones to find their way through vast airport spaces, avoid crowded spaces, find the least congested lounge areas or restrooms, and get to their destination gates faster, especially when they are running late. The UK’s Gatwick airport has invested in beacon technology in the form of 2,000 battery-powered Bluetooth Low Energy beacons for this purpose. Also using beacon technology at United Airlines’ Newark airport hub, its app users can pin their location inside the airport and be guided to their boarding gate, ATM, restroom, dining area, waiting areas and more. This is drastically reducing travel day friction for the airline and its passengers at the airport. Other approaches being developed in this area include built-in mobile sensors and cloud-based AR that superimposes user-centric digital content over physical objects.
#3 Information and navigation with robots as guides can provide flight-based information to help passengers navigate through the airport unhampered. British Airways has invested in autonomous robots who interact with passengers at Terminal 5 in multiple languages and keep them informed with real-time updates. Also at Heathrow’s busiest terminal, self-driving luggage vehicles are being used to trim down lengthy waiting lines. The future for robots at airports looks promising with other airports including Seoul, Munich, and New York’s LaGuardia also trying out autonomous machines on their premises. Robots will take over check-in processes by the end of the decade predicts a 2020 report by Vero Solutions.
#4 Wheelchair assistance using AI & ML – Clever implementation of AI and ML can help those with mobility challenges or sensory impairments who need to be assisted through airport procedures including check-in, security, baggage claim etc. An innovative example of this is being implemented at India’s Sardar Vallabhbhai Patel International Airport in their AI-based surveillance desk that will serve senior citizens, infants and other passengers seeking timely wheelchair assistance in case of an emergency.
Enhancing leisure and entertainment at airports
The convenience industry is growing significantly as people expect everything to be delivered wherever they are. Digitalization is enabling this along with time saving, cost-saving benefits for the airport authorities who need to deploy fewer staff for various processes. For passengers, the biggest advantage is less time spent at the airport as they don’t have to come hours in advance to the airport to complete checking in before boarding their flights. But there are times when passengers are forced to have long layovers especially, in international travel. Here, the airport management knows that real value comes from offering premium services in ways that make users feel the premium-ness of the experience.
Airports are using several technology deployments to create a premium leisure experience and increase their non-aeronautical revenue.
#5 One-stop-shop for all travel-related info, especially when traveling in countries where passengers don’t understand the local language, having a single app can smoothen their transit with timely notifications to move from point A to B and so on seamlessly. If their layover is lengthy, they could also benefit from local travel suggestions, and personalized offers and recommendations for leisure, entertainment, food as well.
#6 Gamification opportunities at the airport – Authorities at Cochin’s International Airport introduced interactive video games to inform passengers of first-aid principles for heart disease. Gamification will allow new-age travelers who have long layovers to entertain or distract themselves. There could be a competitive element introduced by offering players discounts or airport-specific reward points that can be redeemed at retail or duty-free outlets. Airport authorities can also draw more attention to certain portions of the premises such as lounges and direct people towards these in order to decongest other parts of the airport.
#7 Using geofencing/ beacon technology and location, airport apps may be able to push targeted offers and messages to people at the airport. For example, the Miami International Airport app sends offers and recommendations to travelers prompting them to patronize food and retail outlets.
The age of the digital airport is here
Technologies like AI/ML, AR/VR are holding sway in the market as they continue to disrupt, enable, and engage passengers with the power of digital experiences at airports. These digital solutions offer benefits to the airports, airlines, and travelers alike and the opportunities that they open up, are truly infinite.
Using these solutions innovatively, airports certainly have significant potential to grow non-aeronautical revenues while strengthening ecosystem relationships and addressing some of the inherent complexities and pain points in the industry. These possibilities are captured in the visual below.
Nevertheless, the new-age traveler still expects the human touch to an extent. Therefore, airport authorities must refrain from blindly investing in technologies, which can be costly and ineffective. Instead, they need to take an iterative approach to digitalization and create a clear blueprint of the right technologies and tools that retain enough of the physical aspects to make the digital airport experience real and memorable.
When motorized vehicles were first seen in the early 1800s, these ‘horseless carriages’ were perceived with ‘magic and wonder’. They brought with them a paradigm shift in the way people moved and lived.
In 1902, Henry Ford built his own ‘horseless carriage’, but had already failed twice at manufacturing commercial automobiles. It was his partnership with Alexander Y. Malcomson, Detroit’s largest coal dealer, that helped him succeed with his third attempt – . Ford’s Model T.
He revolutionized mass production of these ‘magical vehicles’ that were affordable and targeted at the masses. Using assembly lines, around 10,000 cars were being produced each day; this was a milestone moment in automation for the entire manufacturing sector, changing the very nature of production. Over the years, several car manufacturers entered the fray and automation in the manufacturing sector increased several fold, sparking a revolution in the manufacturing industry.
The next milestone in automobile evolution is here – digitalization is sparking a new revolution for the sector, redefining personal transportation yet again. New horizons are emerging around digitalization, especially through ‘Industry 4.0’ and Industrial Internet of Things (IIoT).
Digitalization is re-defining mobility and the car ownership experience
Digitalization and automation are re-defining mobility and can be seen as a win-win for both, car owners and automobile manufacturers.
While cars were earlier seen as a luxury, they have now become a necessity and an integral part of lifestyle experience. They are much more than just means of personal commute. Apart from the avenues that mobility opened up for them, car owners are now ready for a new relationship with their vehicles, through smart cars and in-built ‘digital assistants’.
For car manufacturers, digitalization is helping them maintain an ongoing and direct relationship with their customers, apart from getting access to data collected by these smart vehicles. This data is helping car manufacturers get insights into the ownership experience, driving behavior and vehicle response in different conditions, which aids their future development and business strategies. Digitalization is also automating the manufacturing processes with new efficiencies and helping them innovate on behalf of consumers with partners in the ecosystem, such as dealers and insurance providers.
Manufacturers are increasingly relying on technology across their processes
Automobile manufacturers are depending on digitalization like never before. Digital technologies are being applied across processes, right from product design to customer engagement. These include:
Digital technologies are being used for product and process simulations, closing the gap between product design and manufacturing feasibility. With virtual prototypes reducing cost of research and development, it is also leading to faster production and easy management of complexities.
With Supply Chain 4.0, supply chain management and logistics have become more automated.
Dealers and service networks are now closer to the automobile manufacturers, thanks to digitalization. Dealerships have become touchpoints for customer experience.
With customers moving to digital buying experiences, sales and marketing is embracing new technologies to include personalization and improve the car buying experience.
Digital technologies fulfill the promise of personalized mobility
With the advent of ‘smart’ cars that often come inbuilt with digital assistants, the relationship that people have come to have with their vehicles has transformed. Right from research around the kind of vehicle they want to buy, to the purchasing cycle that follows, people are turning to online channels or a combination of online and physical channels. This is the reason that many automobile manufacturers are turning to digital channels – to attract buyers and maintain a sustained relationship with customers.
With increasing digitalization, the driving experience has also seen a transformation. Smart cars are improving the driving experience in a myriad of ways – by informing their owners about the time taken to reach their destination, vital parameters such as air pressure in the tires, roads to avoid, parking assistance, speed warnings – and this is just the beginning.
Dashboards in cars have been reimagined and now are a portal for a host of infotainment and telematics services. In-car digital assistants not just improve conveniences, but also offer a host of services, such as vehicle tracking, security and 24/7 road assistance in case of any breakdown/ accident.
Reshaping public commercial transportation
Digital disruption is also now igniting imagination of new systems around public and commercial transportation. Online ticketing, online payments, tracking and other digital options are now seen as pre-requisites of an efficient public transport system. But to popularize use of public transport, urban planners are looking at the opportunities digitalization has to offer.
Digital solutions for fleet management and route optimization are being used by several public transport operators across the world, while apps integrating different modes of public transport – buses, trams, metro rail, mono rail etc. – are either already in use or are being developed in several cities.
The future of transport with autonomous, electric, connected and personal vehicles
The automobile sector is going through another paradigm shift. With climate change now more real than ever, automobile manufacturers are investing heavily in electric vehicles. Research is ongoing into the sphere of autonomous or self-driven cars, which is likely to herald a completely new era of transportation.
Despite the ground-breaking research and huge investment in these areas, car ownership has seen a decline. Towards this end, shared mobility, such as ride sharing or carpooling, could see a rise in the future.
Digital transformation or DX can be defined as bringing cultural, organizational, and operational changes in the organization, and across entire ecosystem through digital technologies, processes, and competencies across all function levels.
Over the past few years, Japanese companies have been focusing on digital transformation and modernizing their businesses to accelerate their growth. Pandemic gave an opportunity to further accelerate the transformation for the organizations.
Current scenario: Digital Transformation is serious business
Not just businesses, but even the Government of Japan is showing a keen interest in digital transformation and sees that as an opportunity to drive up productivity and build a stronger nation. They have set up an ambitious plan called Society 5.0 which is defined as ‘a human-cantered society that balances economic advancement with the resolution of social problems by a system that highly integrates cyberspace and physical space’. In order to meet this objective they aim to integrate cyberspace & physical space, use technologies such as AI, IoT and Robotics.
However, certain structural challenges such as the ageing population and increasing skills gaps have hindered their digital transformation efforts. According to IMD’s Digital Competitiveness metric 2021, digital talent in Japan is just 1% of its entire workforce and the country ranks 28 in digital and global competitiveness. Further delays in digital transformation could jeopardize their position as the third-largest economy.
Improvement in workforce productivity especially in the areas of digital experiences has been a challenge for several years. Japan has a digital workforce productivity of 7.6 as compared to US which is at 13.3.
I have lived and worked in Japan for almost a decade and my areas of expertise span across IT Consulting, large-scale Digital Transformations, bootstrapping IT setup and scaling it across organizations to drive business growth. Based on my interactions with business and technology stakeholders across leading organizations in Japan, I would like to explain how this problem can be tackled efficiently.
Challenge #1: Understanding the “WHY” part of transformation
McKinsey’s recent report on Transformation Change says that only 16% of digital transformations are successful. Lack of clear strategy could be one of the reasons for such a low rate. The ideal approach would be to start with a clear strategy. Start with knowing the ‘why’. For example, ask yourself why is digital transformation necessary? Will it increase the revenue or decrease the overall OPEX? Knowing the answer to the ‘why’ will give you a head start to a smooth and successful implementation. It is important to involve the Business & IT Strategy teams. The business strategy is the outcome that the company plans to achieve through transformation. The IT strategy involves the technologies that will be used to make the transformation successful.
While both Business & IT teams find ways to build the consensus, IT teams can take the lead in explaining the values it can generate for the business. Visualization, road shows can help to solve this problem. They should be able to explain how the changes can help the business unit improve its productivity or enhance performance.
Seek help from a technology partner company to help you sharpen your technology strategy. This could be the best chance to overhaul your complete enterprise architecture as well.
Challenge #2: Resistance to change
Willingness to change is an important factor contributing to the success of Digital Transformation. Change in the mindset is very much required to improve the adoption of Digital Principles in running the IT of organizations.
According to McKinsey’s research, two out of three Japanese managers feel they are not fully prepared to undertake digital transformation projects. There’s also the fear of failure, as only 16% of projects in Japan have been successful. Getting executive and stakeholder buy-in is vital to greenlight the project with adequate budget and resource allocation.
Stakeholder buy-in and continuous engagement is of paramount importance.
Organizational Change Management practices must be followed and a Change Manager must be appointed.
Take help from technology partner companies to develop a proof of concept (POC) or proof of technology (POT)
Robosoft, for instance, does lighthouse projects to build POCs and POTs. We pick up small-scope projects that can be completed within weeks and collaborate closely with the customer teams. We demonstrate the outcome, show that as quick wins, conduct demos and help to win the confidence of stake holders. We observed this helps the customers to overcome the fear of failure, encourage them to adopt technologies and set their foot in right direction.
Challenge #3: Increasing skills gap
Call it a symptom of ageing demography or the dynamic nature of technologies that change quickly, Japan has a shortage of skilled resources. 68% of Japanese companies cited human resources shortage as a challenge. The reports showed that the country has a massive shortage of artificial intelligence and data analytics specialists and a major factor for this problem is the lack of funding and support on new investments in digital areas. Cloud Engineering, Artificial Intelligence, Analytics is expected to grow to 15.6 million and it is high time for the Japanese Organizations to catch up with this speed.
Ongoing wave of digital disruptions requires multitude of roles within the organizations. They must re-organize their IT teams and fill key roles such as Product Managers, Product Owners, Scrum Masters, Change Managers, Enterprise Architect, Data Analysts etc. Companies must understand the typical roles they would need to keep it in house and start hiring for the same
Organizations traditional thought process to outsourcing – While the organization is building its own team, it is also equally important to start identifying outsourcing partner with whom the internal teams can work and gain exposure.
Do not ignore your internal team of experts. The external partner brings global and technical expertise and experience. But the internal teams know the business processes and systems of the company well. They represent the company and know what they want. They act as a support function and subject matter expert to the external technology partner. Always take a hybrid approach wherever possible.
Challenge #4: Lack of meaningful relationships with external technology partners
Traditionally, Japanese companies rely heavily on external partner companies for system integration and other tasks that are ideally done by the in-house teams. However, most of these external partner companies have a tough time understanding the business needs and have limited ability to perform a full-scale digital transformation. It is important to evaluate the technical partner on multiple fronts before you select the right partner.
What the CXOs expect in their partner companies before choosing one and why Robosoft can be the preferred choice.
Global expertise is a must have for partner companies. Working with multiple global organizations ensures understanding of a wider spectrum of business and solutions.
Working with larger organizations helps to clearly demonstrate best practices, do’s and don’ts of DX and get unbiased advice.
Time to market is always a critical factor. Technology Partner to have readily available and skilled talent pool.
Quality always matters. The availability of Subject Matter Experts in the domain and a strong Technical Team is imperative.
Ability to work as a trusted partner understanding the larger picture of business and to provide proactive solutions.
Challenge #5: Choice overload
There are hundreds of service vendors each in SaaS, PaaS, XaaS, pure play services IT play. Do you know that there are over 360 vendors for PaaS offerings alone? Companies are spoiled for choices. They can choose from an array of technology options and service providers. While this is good, so many choices can overwhelm you. CXOs often get caught up in the decision-making process.
Find a partner who can work at all 3 levels of an organization: Executive, Business and Project”. At Robosoft we aim to build deep relationships at level to align ourselves with the vision & mission, business goals of the organizations. Further, we help to narrow down the choices so you can make the right decision. Here’s how we do it for our clients.
Enterprises want to make impactful strides in terms of scalable digital transformation and the Government of Japan is also pushing them to make efforts to deliver results. Despite the challenges organizations are well poised to take the next big leap. The right technology partner can accelerate your digital transformation project and help you realize its full potential.
UX design has been a critical aspect of aviation for a long time, from the creation of cockpit systems to the development of cabin design and passenger experience. With the introduction of more refined UI and new technologies like AI/AR, and Biometrics, airlines are continuously looking at ways to enhance UX in Aviation. These exciting new technological advancements in the aviation industry are being enabled by robust new user experiences.
From the past, airlines have already been making significant efforts in improving the passenger experience from varied seating choices to chef-designed meals. Aircrafts are now also able to access real-time data directly from the ground, improving situational awareness and increasing control capabilities. Mobile devices will also gain access to wider navigation information and improved passenger services, ensuring that users of their devices will better understand why they’re using it.
However, improving customer experience is a never ending process and even now passengers tend to report that they are left looking for more in terms of improved UX. In a world where customer is king, it falls on the aviation industry as a whole to tackle its UX challenges and find CX improvement areas. Only then it may be able to appeal to the next-generation of customers.
Some UX Challenges and CX Improvement Areas in the Aviation Industry
According to McKinsey, the overall traveler satisfaction level hasn’t seen any kind of decline post pandemic. In fact, many have found the travel experience to be better than it was before the pandemic.
But these surprising numbers in customer satisfaction are mostly derived from leisure travelers who maybe just feeling happy to be on the road again. There are still major UX challenges and improvement areas like flight cancellations, delays, rebooking hassle, compensation merry-go-round, loss of time and money among others.
These are just a few examples of the vast majority of UX challenges generally faced by customers while traveling via air. Some major challenges and improvement areas in customer experience journey are:
#1 Non-uniform travel experiences
Till now aviation companies were looking to continuously improve only the in-flight passenger experiences while somewhat disregarding the other touchpoints for passengers. But now there is a need to improve the customer journey in all aspects of their travel by working towards an omnichannel experience. This will provide a seamless end-to-end customer experience by airlines from booking tickets to arriving at their destination.
The new generation of customers are driven by seamless smartphone experiences and seek for the same everywhere. A big step to achieve this is by providing important notifications via normal text or via app notification. Airlines are now expected to be able to provide pre- and post-flight information, timely updates and assistance to customers.
#3 Longer processing time
Earlier, the check-in experience was already a tedious task, now add new norms after the pandemic and you got a steep challenge to keep your wits end together. The new health check regulations have undeniably added more minutes to the long waiting time of passengers patiently waiting for their turn to check-in.
#4 Undeniable influence of Online Travel Agencies (OTAs)
While OTA websites drive most of the traffic, the actual purchase is generally made on the airlines’ own website/app. Still, when it comes to easy website navigation and other UI/UX features, airline websites lose the battle. Even in today’s time many travelers find booking a ticket very stressful and confusing from airlines’ own website.
#5 Increase in CX while maintaining operational costs
FSC or LCC carriers used to cater to very different class of passengers who were either driven by flight experience or price. As it is becoming a challenge for aircraft carriers to attract new set of passengers, they are looking for ways to attract both these set of customers without compromising much on customer experience.
In our article on digitalization effects on leisure and travel industries, we pitched a Right Price Model for airline business which tackles the important CX initiatives while maintaining operational costs.
How New Technologies are Boosting UX for Airlines [with examples]
One of the main enablers for improved UX is the emergence of newer technologies and their applications in aviation industry. These technologies are digitally transforming the aviation industry and paving the way for a customer centric airline industry.
Some of these technologies and their real life examples are listed below –
#1 Blockchain Technology
Using blockchain technology helps airlines to securely maintain user data and privacy across multiple touchpoints via a digital ledger. The technology can find its use in identity management & record keeping, cross integrations for seamless travel experience, building robust data security systems and airline maintenance.
Air France deployed blockchain technologies to create a COVID-19 test verification system via a mobile app during the pandemic. Singapore Airlines uses blockchain technology for their frequent flyer loyalty program using KrisPay. It also offers promotions to customers along with the program.
#2 Augmented Reality and Virtual Reality (AR & VR)
AR and VR technology when used correctly can not only enhance the UX but also help in improving the customer experience of navigating through the airport or aircraft. The obvious uses of AR and VR technologies can be seen in airports. For e.g. AR/VR can show the passengers cabin experience on VR headsets, provide a digital tour guide, show fastest route through airport, etc.
The Gatwick airport uses AR to help passengers navigate the complex layout of the airport, and London City Airport has installed AR tech to help air traffic controllers with the vital job of keeping planes safe.
#3 Artificial Intelligence (AI)
AI integrated with machine learning, and predictive analytics can help immensely in providing a connected and customized experience to the flyers. Further, AI also has the potential to ease out various operational processes of airlines like revenue management, managing ticket pricing, etc.
Shenzhen airport in China uses AI for AI airbridge allocation as well as for AI turnaround times. Air France implemented the specialized AI platform called Sky Breath that collects data from the flight, performs in-depth analytics, and helps identify fuel-saving opportunities and increase efficiency.
Biometrics is not new to aviation. All the major and minor airports started implementing it since 9/11 to improve their security details. But over the years it has found use in improving passenger experience as well by improving the time and speed of check-in and other operations. In fact, use of facial recognition has been proposed for airports to cut down on flight delays by 80 percent.
Fraport in conjunction with Zwipe have agreed to trial their biometric solutions to boost security at Frankfurt airport. Miami International Airport and US Customs and Border Protection (CBP) started rolling out biometric technology with a few airlines back in 2019. MIA is now seeking a huge biometric push by 2023 that will serve multiple purposes.
#5 Internet of Things (IoT)
The airline industry is using IoT to build a integrated ecosystem combining the organizational functions to increase efficiencies and provide a seamless experience to their customers.
Virgin Airlines have implemented IoT in its Boeing 787. Every single element on the plane is attached to a wireless airplane network, providing real-time IoT data on elements like performance, maintenance, etc. EasyJet’s Mobile Host at London’s Gatwick Airport combines the traveler flight details with live data from the airport’s Google indoor maps. This allows the airline to deliver updated check-in reminders, gate updates, and even personalized directions.
#6 Mobile Solutions
Airlines are using the mobile platform to connect with their customers throughout the passenger journey starting from booking a flight to deplaning it. Airlines can send real time alerts and notification on and off the airport.
Almost all airline carriers nowadays send real-time flight notifications from post booking to deplaning. These include self check-in, flight delay notifications, feedback, etc.
#7 Hearable, wearable & Voice Technologies
These technologies have increasingly found various usage in aviation from internal communication between flight attendants, voice searches, voice bookings to voice check-ins. These are also used in conjunction with in-flight connectivity which provide a real opportunity to drive conversion, upsell items on flight.
#8 Advanced Data Analytics and Big Data
Aviation companies collect traces of customer data from each stage of their travel journey, be it planning, research, reservation, stay, or post-travel review of their experiences. They can use insights from this data and advance analytics to provide a high degree of personalization to the travel experience which in turn could help in building customer loyalty.
These technologies have the potential to revolutionize air travel as we know it. The airline industry is on the precipice of a breakthrough, and most of the credit goes to the wave of digital transformation across the industry with CX as center.
Technology in each step of airline customer journey
As you can see how much of a bigger role technology plays in designing the UX of travelers. Let us further break down the whole customer journey into 5 different stages and discuss how technology plays a vital role in each step.
1. Pre-booking – Airlines can offer a digital tour guide powered by a personalization engine to show destination highlights based on individual customer preferences. Airlines use data analytics telemetry based pattern identification to drive loyalty management programs and offer dynamic rewards while booking.
2. Booking and Check-in – Airline companies can use geolocation based service and marketing apps to offer transportation services, bot assisted agent or self service changes. Geolocation also allows display of local language and currency on website for familiarity and convenience while booking and payment.
3. Airport Experience – Use of IoT baggage tags providing real-time tracking, self-tagging and activation. Biometric enabled check-in and security check. A combination of AR/VR enabled mobile computing, AI, robotics, Big Friendly Data (BFD), Intuitive UX, and wearable technology to help users in self-service check-in to intimate boarding experiences.
4. In-flight experience – Taking help of big data and hearable, wearable & voice technologies to enhance in-flight experiences with traveler loyalty services, communications, and purchases.
5. Post-travel – Mobile solutions to assist in un-boarding and baggage claims. Also, sending customer satisfaction surveys post travel for better personalization in upcoming travel plans.
How Airlines are Ensuring a Highly Personalized Experience for Customers
Introduced in 2012 by IATA, the NDC airline standard is now helping airlines break away from over-reliance on GDS intermediaries. Airlines can now offer more differentiation, push new offers right away on their website, and provide high class personalization to their customers.
The NDC standard ensures each ticket seller stays up to date with each airlines’ newest offers and products. Other benefits of NDC includes:
i) Direct access to upgrades, exclusive packages, or limited-time offers even when customer is booking from a third-party.
ii) High personalization according to individual preferences across customer journey.
iii) Advance level of comparisons for all airline options, including their different services, products, promotions and of course, prices.
iv) Speed to market while distributing products widely across third-party agents or sites.
v) Same content across airline website and travel agent sites.
In short, NDC allows airlines to take control of their purchase and distribution when dealing with customers. This ensures a high level of customer experience from the airlines.
Possibilities for Airline Industry
As new technologies find ways to integrate themselves across various industries, customer expectations are growing higher and higher. Technology is now playing a major role in UX design for the whole airport and airline experience for customers. Today, what looks mind boggling due to technology may become standard norms in near future.
It is very important for the aviation industry to keep evolving with the growing trends in CX and UX. In times to come the airline travel experiences are set to become more personalized, valuable, and memorable for the flyers.
If anything history has taught us, it is the brave, innovative, believers, and risk-takers who emerge the strongest after a catastrophe. The pandemic brought such an unprecedented event to people, businesses, and industries in general.
The COVID-19 pandemic brought additional challenges to the automotive industry which deeply impacted manufacturing quantity and quality, supply chains, chip shortages, and already shrinking global demand for vehicles. The pandemic, economic downturn due to the Russia-Ukraine war, etc. has leveled the playing field for auto manufacturers and original equipment manufacturers or OEMs globally. The field is set for proactive players to leverage this opportunity to the fullest.
We are already witnessing an increase in M&A and disposal activities as companies are focusing on rapid strategy execution. Using M&A, companies are now capturing and accelerating new capabilities, improving delivery time, and even improving their position in the market.
Auto manufacturers and OEMs are now finding that sweet spot of incorporating technology not only into their production but in mergers and acquisitions as well.
Disruptions due to digital transformation in the automotive industry
There was a time when legacy organizations held steadfast to their age-old beliefs and showed great aversion to any kind of change including technology.
But as we witness day after day, digital transformation is simplifying the lives of millions worldwide, and legacy organizations have started taking note. They are now becoming the beacons of change and leading the digital transformation revolution across industries.
The automotive industry is a highly competitive industry that is now continuously evolving by rapidly digitizing its operations. Digital transformation positively influences the entire value chain and impacts all stakeholders alike – consumers, suppliers, dealerships, manufacturers, and financial institutions.
Automotive majors took this opportunity to become more technology-centric organizations by adopting various tools such as big data analytics, cloud computing, and body/road sensors. The influence of technology could also be seen in establishing an efficient supply chain management system and enhancing vehicle performance through remote diagnostics.
Current Trends and Key Challenges for OEMs facing an Uncertain Future due to Changes in the Industry
Original equipment manufacturers face several challenges in today’s automotive industry from supply chain disruptions to shortage of semiconductor chips and skilled labor. This is why we will see companies increasing M&A activities in near future to acquire the capabilities they need to produce existing products as well as develop future ones.
#1 Surge in demand for Electric Vehicles or EVs
Since the introduction and favorable government norms, there has been an exponential increase in demand for EVs.
We are now witnessing various M&A related to EVs and autonomous vehicles (AV) between auto manufacturers, OEMs, and technology companies. It could well be a continuation of the trend from 2021 of SPAC mergers with early-stage automotive companies in the EV and AV space.
The increased demands for EVs mean key players will shift their R&D and production capacities to electrification, digital transformation deals (software, connectivity, customized chips), EV battery and fuel cell technologies, and charging infrastructure.
#2 Major disruptions from changed market behavior and expectations
The demand for new and costly features by customers with higher-tech means more pressure on OEMs to deliver quality in a shorter time frame. Adding to this, there are challenges with regulators rightfully demanding the strictest adherence to environmental and safety standards.
The impact of CASE (Connected, Autonomous, Shared, and Electric) megatrends also could be denied by OEMs to further increase the pressure on them. The disruption caused by these trends is restructuring the market with the future automotive industry likely to look substantially different from that of today.
Thus, OEMs are likely to enter into joint ventures sharing their R&D expenses and gaining access to scarce components such as semiconductors. Further, there will be alignment challenges with the governments to create the necessary charging infrastructure for EVs.
#3 Minimal differentiating factors
Earlier, manufacturers differentiated themselves on economies of scale, standardization, and product differentiation. Now with a seismic shift in the auto industry with advanced digital technologies, the differentiation factors have also changed.
Incorporating analytics, automation, and AI to improve efficiency across supply chain management to product development and customer relationship management is a must for almost any organization now. If businesses can’t keep up with the digital transformation, their businesses start bearing negative results.
In extreme cases, some traditional automotive suppliers must build exit strategies amid technological disruption across the sector. The financially and technologically weakest companies could be easy identifiers for turnarounds or restructuring by larger and technologically adept players.
#4 Change in organizational goals
The time is ripe for up-and-coming players in the auto industry to reconsider their vision for the future. They must now identify likely changing areas of profitability using scenario planning over the course of the next 10-15 years. Aligning your goals with changing times could prove to be vital as coming years declare a stark warning to those OEMs who are standing still.
Opportunities in Strategic M&A of Auto Manufacturers and OEMs
#1 New product line and business models
The first movers among the OEM and auto manufacturers are investing heavily in digital transformation to gain a competitive advantage. They are also competing with tech companies to enter into new businesses such as autonomous driving, connected services, etc. The strategic M&A with digital companies is also opening up new avenues for OEMs to establish communication channels with customers for selling vehicles, accessories, and services directly.
#2 Flexibility in choosing available strategic options
OEMs and their partners currently have three options to tackle the change and disruption in the industry – build, buy, or partner.
Small to mid-size automotive companies continuing their own production are bearing double expenses. There are two primary reasons for this –
(i) Continue manufacturing their existing products with upgraded features
and (ii) Developing hybrid and electric vehicles autonomously
Despite the heavy cost, the main advantage of adopting a build strategy by OEMs is preserving the rights to the intellectual property associated with the capability or technology they have built.
Companies can supplement in-house development with strategic M&A that helps fill the gaps and get instant access to required technologies. However, the increased costs of these assets act as a barrier to this method for most.
Moreover, the pandemic and lack of resources have made sought-after assets such as electric powertrain or connected car assets highly desirable and relatively rare. Also, there is a scarcity of assets associated with future technologies with appropriate scale.
However, there is an influx of capital toward tech-enabled companies that use intangible assets to serve customers. These companies are using newer business models with revised goals and letting technology play a far greater role than ever. Investors are betting big on these tech-enabled companies to provide important CASE capabilities to incumbent players in the auto industry.
Various analysis of the auto industry indicates a continuity in partnerships between automotive businesses as joint ventures or strategic partnerships. The main objective behind these partnerships is to share the burden of product and capability development.
Recent years have shown various automakers and OEMs to get involved in next-generation technology-related partnerships. We can expect full mergers between an auto manufacturer and a technology partner to create larger companies with larger balance sheets and larger capital spending capabilities.
Whichever strategic direction a business may choose to go, they must regroup first and ask important questions to themselves about their long-term and short-term plans. They must be open and honest to themselves about what new capabilities they need to bring into their organization, what are the gaps, and which strategy among build/buy/partner will be beneficial for them to fulfill those gaps.
Impact of Digitization on M&A of Automotive Manufacturers and OEMs
Improved efficiency: As automotive manufacturers and OEMs are gearing up toward the next generation of mobility, they are increasingly leveraging digital transformation to improve development time to market, reduce costs and improve efficiency.
Value addition for customers: While buying a company with an established working model, having a strong clientele base, talented workforce and technical know-how give automotive companies a head-start in achieving their business goals – acquiring digital assets enables them to not just accelerate but also add value to their existing operations which in return adds value to the customers.
New innovation and development: Automotive companies have also been looking at mergers and acquisitions as a way to innovate and develop new technologies for emerging mobility products such as e-vehicles, autonomous vehicles, connected vehicles, etc., which needs quick access to a talent pool with new capabilities.
Harmonious integrations: Digital transformation has opened up opportunities for automotive firms to integrate platforms from different industries that weren’t even previously considered part of vehicular services. For example – A car rental app can be integrated into an autonomous vehicle so that users can call upon them through voice commands on demand.
Digitization enables a quick M&A in the automotive industry
Some of the factors that play a role in the industry-wide changes could be found among the following:
Governments impose stringent emission norms for passenger cars due to environmental regulations. These strict norms reduce profitability for OEMs who relied on cheaper but environmentally harmful emission parts for vehicles. Now every manufacturer has to consider environmental friendliness while manufacturing parts
The economic downturn and the pandemic along with digital transformation have acted in conjunction to let smaller car manufacturers enter the market rather easily. The bigger players now not only have to reduce cost, increase profitability, and introduce digital, but also take care of competition from small players
The lack of resources and skilled labor has significantly increased product development costs. Companies are now in a conundrum to carve out non-profit making bodies and sell for capital while making sure they don’t look desperate to maintain their stock price
With all these factors pressing down on them, many auto manufacturers and OEMs are left wondering how they can survive the digital transformation in this sector.
Introducing digitization in any M&A significantly speeds up the process which proves to be beneficial for both parties involved.
A swift merger & acquisition between two parties can be done with the help of the right technology partner.
What is the importance of choosing the right digital partner?
Digital transformation brings a fundamental change to the companies by helping them embed required technologies across functions.
When done properly, digital transformation increases efficiency, develops greater business agility, and ultimately unlocks new values for employees, customers, and shareholders.
This is why it becomes critical for companies to seek help only from experts and specialists with a proven track record. The right technology partner can keep your company on track and guide you throughout the process of M&A.
Customer experience is becoming an important factor in driving digital transformation across the automotive industry. OEMs and dealers too must be in tune with the changing behavior of consumers or they risk falling behind.
Since it is not entirely a new thing, changing trends will call for more quick mergers between auto manufacturers and OEMs. Both parties should look for a quicker turnaround time for the merger. A swift action ensures profitability and scalability measures are taken as quickly as possible post-merger.
This trend will only gain more momentum as the introduction of electric vehicles is now bringing a whole new shift in the dynamics of the automotive industry. The future looks equally scary and exciting for auto manufacturers and OEMs depending on how brave and innovative they are and fast they can act and adapt.
The automotive industry is one of the major industries that has witnessed a massive digital transformation in recent years. Digital is revolutionizing the automotive experience for consumers. The recent innovations in automobiles are designed to complement the overall driving experience of a consumer. One could even go on and say there is a clear shift from RPM (Revolutions Per Minute) to EPM (Experiences Per Mile) when it comes to customer needs from their automobile. The industry must quickly find new ways to adapt to this growing customer need or risk being left behind. One major factor of digital transformation is mobility where customers want to get everything done from their always evolving smartphones. But the future of mobility in the automotive industry doesn’t lie in the features offered for the vehicle but lies in redefining what “moves consumers” emotionally when they purchase an automobile.
Here are 5 trends on how the automobile industry is evolving to meet changing consumer behavior and expectations.
Customer experience and behavior trends in automotive industry triggered by digital transformation
1. Automobile buying experience shifting from physical to digital
The traditional model of car buying experience involved physical visits to the car dealerships to know about the cars and their features before deciding to purchase one. However, two disruptions in recent years have somewhat changed the entire complexion of this car buying experience.
The first major disruption was the emergence of the mobile-first generation with the purchasing power who value experience over possessions. And the second disruption was caused by the pandemic which forever changed the way a few industries and their customers operate and behave. The pandemic prevented customers from visiting the commercial premises and the dealerships too started closing to prevent the virus from spreading. These two disruptions, on top of the arrival of technologies such as AR/VR, 360-degree views, and standardizations in other areas, have made Digital possible in the car buying space and accelerated the digital transformation.
In one of their insights, McKinsey validates the importance of car dealers having a digital presence for their customers. The report suggests the purchase intent of customers mainly using digital channels dropped by only 2 percent while for offline buying journeys the purchase intent dropped by 8 percent post-pandemic. As digital is becoming increasingly important in the automotive buying experience, those brands that dive in and create brand affinity through experience on the digital channel are reaping the benefits.
2. Auto manufacturers and OEMs must adopt a retail approach for digital-savvy customers
Leading e-commerce brands not only changed the retail industry forever, but they also trained consumer minds to expect a retail service in every other industry, the automotive industry included. The abundance of information and availability of data along with the latest technology made it possible for modern consumers to do thorough research and compare the products themselves, replacing the need for in-person discussions.
The post-pandemic era saw more and more consumers choosing a digital-first approach for many touchpoints of their buying journey. In this approach, the customers are demanding online platforms that enable accurate product searches and comparisons which in turn enables them to finalize buying decisions online.
It may be noted that so far very few auto manufacturers like Tesla and Mercedes Benz have adopted a direct-to-consumer e-commerce approach. This is a unique opportunity for auto manufacturers to create a competitive advantage by positioning themselves as digital innovators.
3. Seamless customer experience journey management with digital adoption
Customers now have the privilege to enjoy the benefits of a connected vehicle making it safer to drive and less stressful. This increased connectivity not only improves the overall driving experience, but also enables the vehicle to generate and process a large amount of customer data for a more seamless experience.
However, there are still some areas of improvement in handling such a large amount of customer data by the dealerships and OEMs. Since most of the dealers still rely on physical processes in the customer journey, it invites greater chances of human error in data handling. With proper digital systems in place, making the jump from physical to digital will eradicate such minor issues leading to better management of customer journeys. Once you assess the viability of digital transformation in your organization and adopt the way, it opens up a world of opportunities for you. Adopting a digital approach minimizes errors, makes your team more agile and responds better and faster to clients’ requirements. As a result, it improves customer experience operationally as well.
Mercedes-Benz was looking for a solution to better serve its customers in Brazil, which has the second-largest plant followed by Germany. They invested in a Microsoft Azure cloud solution coupled with Power BI and Cortana Intelligence to map their sales processes, and analyze decades worth of data like license plate records, macroeconomic indicators, regulations, sales information, and statistics by each region of the country. Through this change in data analysis and interpretation model, Mercedes-Benz was able to:
Provide 180 service locations around Brazil with consistent, actionable information to ensure each location could provide accurate proposals to their clients.
Assist sales reps to engage with consumers proactively before a need is even expressed with the help of predictive analysis.
Support employees in engaging and serving customers better, and in improving overall customer experience and satisfaction.
Digitization enables manufacturers to identify additional customer touchpoints to make them understand the customer better. They can now better understand what motivates customers to defect to other brands before it happens and find resolutions for these issues.
4. Possession or ride experience – changing preferences
This changing scenario is forcing manufacturers and dealerships to find new ways to keep their customers satisfied and loyal to them. One such example would be Porsche launching its ‘Porsche Passport’ service back in late 2017. According to this service, Porsche customers could pay a fixed fee per month in return to use up to 22 different cars based on their needs or desires. The idea was to offer greater flexibility to customers in terms of options to switch along with insurance, maintenance, and roadside assistance. The whole idea underscored the need to cater to consumer experience rather than ownership.
5. Increased focus on both purchase and service experience
As mentioned previously, digitization offers auto manufacturers and OEMs a larger pool of actionable customer data. Companies can collect and connect millions of such touchpoints from call centers, surveys, dealer management systems, and communications to visualize each customer journey. The companies can now use this visual map to better monitor and action planning of each customer’s journey experience by appointing “journey owners”. Thanks to technology, dealerships can offer IoT based servicing and car care to their customers.
A survey by McKinsey & Company shows almost 50 percent of customers believe a better service experience is more influential than the actual purchase experience in the customer journey.
As millennials are increasingly becoming the foremost segment in car ownership, it is becoming more difficult for dealerships to attract them with the traditional approach. This customer segment is accustomed to instant gratification in the digital space and hence very time-intensive. Dealerships who cater to these specific requirements from the millennials along with their other services will increase conversions and thereby increase revenues.
Digital Transformation is building a case for CASE to improve CX in the automotive industry
The automotive industry is in a state of continuous disruptive transition. Newer technologies like AI, ML, AR, Big Data are influencing the customer experiences more and more with each passing day. Dealerships are using eCommerce as an option to improve customer experiences or sell their products be it vehicles, automobile parts, or even accessories. For example, we can see how Tesla has included artificial intelligence, solar panels & electric vehicles in its portfolio.
Customers are now experiencing newer vehicle capabilities and changing behavior according to newer realities and increased convenience. This led to the industry aggressively shifting gears and setting forward on an ambitious new course: “CASE”— the push for more Connected, Autonomous, Shared, Electric vehicles, and mobility solutions.
A fully connected car relies on three pillars of connectivity – infotainment, infrastructure, and telematics.
In today’s digital age and mobile-first generation, customers are expecting similar seamless experiences everywhere. The same expectations are there from newer vehicles in the market. These expectations include everything from high-quality infotainment systems for passengers to assisted driving and parking with payment from the dashboard.
People can now watch movies, use Google Maps, listen to music with Bluetooth connectivity, and more thanks to connectivity capabilities like Bluetooth and Wi-Fi. Smart vehicles detect drivers’ sleepiness, and the galvanic skin-response sensors can give a metric for stress to warn the driver and avoid any harmful accidents. On the outside of the car, radar, cameras, and laser scanners can “read” the road and then respond. All the above features and more come preloaded or customized based on the demands of the consumer.
Automotive telematics assesses the driver’s behaviors from timely insurance payments to driving routes. It also can be used to optimize the fleets in a car-sharing model. Automobile manufacturers have released their own telematics apps that connect with their selected cars. Honda Connect lets your car get connected with Amazon’s Alexa provides over 32 ingenious features for the safety and convenience of the riders. Similarly, Suzuki Connect lets you connect with the car and offers dynamic attributes such as 24X7 roadside assistance, driving analytics reports, functional alerts, live vehicle tracking, and many more.
The vehicles are being manufactured with the increased ability to safely operate with less and eventually no input from the driver. With no driver, the autonomous vehicle experience is all about making an impactful product design. The driving pattern of automated cars can be algorithmically optimized, increasing the capacity on any highway.
Although with autonomy comes the fear of the unknown and being out of control. It is our innate human nature to be in control of things to feel calm. So here is an opportunity for automakers to make it a much more fulfilling experience for customers via the following:
1. The rider of an autonomous vehicle is quite likely to experience anxieties arising from loss of control. It presents a huge opportunity for CX to help calm the rider by providing several inputs and communications.
2. From a servicing perspective, the car can book a servicing appointment and drive itself to the service station at the scheduled time and return after servicing.
3. The rider can use their mobile to summon the vehicle when required.
All autonomous vehicles in near future will require a human-machine interface (HMI) to communicate with the driver as well as the pedestrians. The features of this HMI interface include – Haptic controls with embedded touch controls, a touch screen with possible haptic feedback, gesture control with visual feedback, and voice control and feedback. These cars could not only understand, inform, and ensure passenger safety but also entertain passengers.
4. Speech recognition (Voice to Text) to tell the car your destination, temperature control, music choice, etc. The autonomous vehicle would store these preferences and recreate via voice detection/face detection of the customer.
Increased acceptance of autonomous vehicles presents a unique opportunity for ambitious automotive companies to break away from the clutter with an increased focus on optimal customer service as a point of differentiation. They need to develop new business models that cater to field services of these autonomous vehicles by offering after-sales customer support and maintenance “in the field”.
Autonomous vehicles however present a big dilemma in front of the insurance industry and could prove to be a big disruptor in the future. If the driver is taken out of the question, who does the risk shift to in case of an accident? Who will be liable for the payment of the insurance? As of now the OEMs and manufacturers are taking the heat as we see Tesla being charged with many lawsuits for its driverless vehicle accidents. But with time, the vehicles will be safer which in turn brings down the risk and then will bring down the insurance amount – making a huge dent in the insurance industry. There is also the case of reimagining traffic management by regulating autonomous and self-driven vehicles.
In major markets like the US, the ownership of vehicles per household is almost double the number of households which leads to vehicles sitting idly for a large portion of each day. To lessen this implication, the mobility industry is rapidly deploying new forms of car ownership models – carsharing, ridesharing, and ride-hailing services, to the customers. Combining ride sharing and car sharing could take every passenger to a destination with nearly 80% fewer cars in metro cities.
The negative implications of newer forms of car ownership models are seen in declining sales figures for automotive companies. The automotive companies now not only have to battle against each other for market share but well-funded car-sharing technology companies as well. To tackle this situation the automotive companies are now starting their ride-sharing or shared leasing systems with the help of capable technology partners.
The benefits of these new car ownership models are seen around us. Fewer cars mean a lower cost of building and maintaining the roads. Also less noise pollution, less environmental damage. This is one of the main reasons most Governments are pushing for completely having electric vehicles on the road.
Disruptive OEMs and startups are expanding the capabilities of a vehicle and demonstrating compelling options for the end consumer. Add this to the rising global energy costs, resource scarcity, global climate change, and increased government incentives/regulations leading to the invention of green energy and environment-friendly vehicles.
Electric vehicles are perfect examples of sustainable mobility solutions that will revolutionize the automotive industry soon. The need of the hour for existing manufacturers is to support new software-based architectures capable of driving needed chemistry efficiencies.
Initially, the adoption of EVs was slow among customers. But with each iteration, electric vehicles are becoming more and more cost-efficient with increased access to charging stations everywhere.
However, all is not well for the future of Electric Vehicles or EVs if proper measures aren’t taken now. One such would be making a proper scrappage policy. The rise of EVs on the road would lead to scrapping a lot of polluting vehicles. Also, the batteries of the EVs need to be scrapped properly. A standard battery has a life of 4 years. We can expect massive battery junk to pile up if a disposal strategy isn’t in place.
Hitachi’s new compact, lightweight direct-drive system combines the motor, inverter, and brake into a single unit and installs the entire system into the wheel. This EV claims to reduce the energy loss by 30% and increase the single charge range of the vehicle.
Key stakeholders of digital transformation in the automobile industry
Sam Walton, Founder of Walmart, once famously said, ”There is only one boss. The customer.”
The center of any digital transformation for any industry is the customer. Everything done by the automaker is intended to provide a seamless, delightful customer experience. Online car purchases without a single visit to dealerships, safer cars with driverless assistants, sensors, radars, and cameras are some positives for customers. HMI is being used more and more to operate vehicles. Smart virtual assistants take care of activities such as taking a call, sending a message, playing a track, and rerouting while the driver can focus on driving down the road.
Auto manufacturers and Distributors
Auto manufacturers now are looking towards technologies and software capabilities like IoT, connectivity, autonomous, 3D printing while designing a car. Software competencies are increasingly becoming a key differentiating factor for providing ADAS – Advanced Driver Assistance System.
Huge car manufacturers are partnering with Google, Tesla, or Apple for in-car infotainment systems and car connectivity with customers’ smartphones. Manufacturers are using data collection methods and analytics to make various decisions during the lifecycle of the vehicle. They can also predict the car inventory replacement cycles and new sales thanks to digital transformation.
What are the key takeaways from the trends discussed?
The sales of automobiles were at an all-time low in recent years due to many reasons – the pandemic and chip shortages among major reasons. This led to manufacturers finding new ways to connect and retain their customers. Manufacturers are now exploring going direct in addition to going via dealers to establish a connection with their customers.
The pandemic was a boon in disguise for the physical to the digital movement of products and services. The increased acceptance and affinity towards contactless services opened the doors to a complete digital customer journey in the automotive industry. The dealerships are moving on from pull marketing strategies to push marketing strategies. The focus is not much on bringing customers to the dealership and building relations but to showcase the product and stand out among the competing products.
Autonomous cars have become a reality and it created a few more avenues for automakers to provide a seamless customer experience. Electric Vehicles are becoming the new normal in the automotive industry and we can now see many manufacturers and even governments promoting the usage of EVs.
There is a clear indication of buyers, especially millennial buyers, inclining more towards vehicle riding experience rather than possession. They are ready to give up their car ownership in favor of convenient mobility solutions that fulfill their needs of transporting from one location to another.
These new trends and other disruptions mean automakers and dealerships are now focusing more than ever on delivering the perfect customer experience.
How automakers are delivering perfect customer experience
Customer experience is primarily about establishing an emotional connection with the client. We can dissect customer experience at the brand level and product level. Automotive manufacturers and OEMs can establish an emotional connection with their customers at both brand and product levels. Let’s discuss these two in detail.
Brand level connection
The human brain is divided into two halves, one part is emotional while the other part is rational. A brand-level connection with the customer would require engaging with both these parts and evoking a response. All the branding and marketing efforts from the automakers and dealerships focus on either of these two halves to position themselves in the minds of their consumers.
Typically the brand connection can further be subcategorized into – Sentimental connection and Rational connection.
i) Sentimental connection
A strong emotional connection gives an extra advantage over your competition. More often than not customers are swayed by their emotions when making a purchase. Automakers run campaigns that try to evoke a response from the consumer.
In the middle of 2021, Lamborghini ran a campaign with the tagline “It takes time to become timeless.” Here the intention of the automaker was to position themselves as someone who had been there forever for the consumers irrespective of time, and situation. The goal is to free Lamborghini designs to any new automobile design trends and separate itself from the competition as one of its kind.
Not everyone likes a drastic change to an old hit – be it music, a motorcycle, or a car. Lamborghini banked on that human emotion towards finding similarities to drive their campaign.
Similarly, there are other examples of automakers targeting particular sentiments of consumers to run their campaigns.
Ferrari never talks about luxury or driving as its customer segment only cares about sports cars. Hence, Ferrari takes extra care in hugely popular F1 grand prix and other such racing tournaments to promote its brand.
BMW collects goodwill by taking calculated measures to become a fully sustainable company in the future. It has firmly embedded ecological and social sustainability along with the entire value chain into its strategies. Environment-friendly and sustainable approaches are what drive the corporate strategies of BMW – be it cutting CO2 emissions and recycling to expanding hydrogen technologies.
People like to associate themselves with something good. And when you drive a BMW, you are bound to feel better knowing you are contributing something good for the environment.
ii) Rational connection
Unlike purchasing groceries, buying a car isn’t a decision made in a matter of seconds. It may come down to a final standoff between two or three options and the consumer may make the decision based on emotional parameters. But the period between recognition of the need to buy a car and the actual purchase may run into many weeks or even months. During the whole period, consumers will assign certain values to different parameters involved in purchasing the car. It is up to the automakers to keep persuading their consumers with the right message at each decision-making journey so that the consumer continues to keep them in consideration.
“What I try to impress on people is that the rational brain is not good at being rational, but instead is good at simply rationalizing what the emotional brain has already decided to do, and this happens non-consciously. You need to know how to structure decisions so that, when the context demands it, you can minimize the role of emotion. The easiest way to do this is distill whatever variables you can to numbers.”
~ Baba Shiv, Professor of Marketing at Stanford GSB
Along with the features of the vehicle, several rational parameters come into play when forming a buying decision. Some of these are value for money, a better resale value, access to service centers in proximity, higher quality, and reliability of the material and engines, low cost of spares, and a lower total cost of ownership. These parameters may not affect the buying decision much when it comes to luxury cars. But the luxury car segment only covers about 20% of all vehicle sales in the US. The remaining 80% is still going to consider the above factors.
In price-sensitive markets like India, where consumers seek great value and prioritize rational parameters, brands such as Maruti and Hero do well. This is the reason Maruti and Hero MotoCorp are market leaders with a market share of 48% and 37% respectively. Both these vehicles have lower costs of ownership, better sale value, lower costs of spares, and easily available service centers.
Product level connection
The brand-level connection ensures the consumer has your attention, but you still have to deliver a perfect vehicle of their choice to them. The automakers and OEMs need to create a fascination with the product in the minds of the consumer.
In the earlier days, buyers would look for design, mileage, material, and comfort in their vehicle. But thanks to continuous innovations and changing customer expectations, vehicles are now equipped with much more hi-tech features which make a difference.
Features such as infotainment, voice-activated facilities, autonomous parking assistant, wireless charging, proactive servicing, and parts replacement, roadside assistance, looks, mileage, comfort and convenience, cockpit, charging stations play a major role in helping customers choose their ideal vehicle.
Delivering a superior overall purchase experience has become first and foremost priority for automakers.
Consumers constantly search for review videos on YouTube and get a 360-degree view of the vehicles they desire to own. This process goes on for weeks to months, collecting all possible information from the automaker website to third-party websites. If a consumer has his priorities set and is well researched, it is more likely he will purchase the vehicle after just one test ride. So it becomes imperative for the dealerships to present all required information easily to their consumers through various sources and assist them well in their purchase journey.
Establishing a product-level connection also includes delivering a superior service experience.
Some of the ways automakers and OEMs can ensure superior service are mentioned below:
(i) Proactive reminders to the customer for servicing and parts replacement.
(ii) Digital appointment setting with the service centers and dealers.
(iii) Automated fault detection in the car.
(iv) Auto estimate preparation for the service entailed.
(v) Auto payments for the services to the dealerships and service centers.
(vi) Autonomous cars driving to service stations and back without interference from the customer.
Key benefits of digital transformation for manufacturers and OEMs
1. Improved campaign effectiveness
“The secret to developing personalized campaigns that will reach the right customers in the right moments is data. In the digital age in which we live, we must live and breathe data.”
~ Shashi Seth, Sr. Vice President of Oracle Marketing Cloud
The biggest advantage of increased customer touchpoints and a multitude of data is the number of accurate information companies could get about the customer. They can now leverage the power of technology and advanced software tools to run personalized and targeted advertisements. It gives the capability to adjust the messaging to individual customers for increased engagements during a campaign.
2. Build customer satisfaction
Manufacturers and OEMs can reduce the overall transaction time using customer insights to connect and extend key business processes. Digital transformation gives an opportunity to provide an enterprise-class, comprehensive, cross-channel solution for managing the complete loyalty life cycle of the customers. Dealerships can now track, reward, and recognize customer behavior in every aspect. This includes tracking and analyzing repeat purchases of products, referrals, social activities, and business with loyalty partners.
3. Increase prospect generation
Running personalized targeted campaigns ensures proper incentives are offered to customers who demonstrate a higher willingness to purchase specific products. It also helps in delivering adaptive, intelligent recommendations through optimized analytics and algorithms.
4. Achieve the coveted 360-degree view of the customer
Digital transformation with proper partners ensures you have single cloud analytics and data platform. It helps you visualize a single, consolidated view of the customer through their entire lifecycle journey. You can now reap maximum benefits after providing the best experiences to your customers.
Look beyond the horizon
The digital transformation in the automotive industry is bringing some big changes for automakers worldwide. It opens up a vast level playing field for all the automotive players. The industry incumbents need to come out of their comfort zones and match stride for stride with technology to succeed. The automakers need to better understand the customer experience demands of their new-gen mobility customers so that they can be provided with new value opportunities.
Digital has played a role in the real estate business for several years now – but largely in the area of selling properties. Digital marketing as an outreach to find prospects, use of technology in creating 3D-walkthroughs were among the common use cases. Later the sector started leveraging technology to enhance customer experience – the role of technology could be seen in home automation, ‘e-homes’ and shared economy as seen in the rise of Airbnb, WeWork among others.
Over the last few years, the umbrella term PropTech has come to cover the use of digital technology in construction technology, property management, interior design and sales & marketing of properties. CXOs also see digital transformation as an imperative in the property market. As with many other sectors, COVID-19 pandemic has forced all the stakeholders of the real estate market to seek digital solutions.
PropTech – Emergence & Evolution
Short for ‘technology in the property domain’, PropTech is expected to meet the changing needs of the real estate ecosystem in the digital world. Today’s PropTech goes beyond online search and leverages virtual reality, augmented reality, drones, and Internet of Things (IoT), seamlessly integrating with the realty sector, optimizing the way people purchase, sell and use a property.
The amalgamation of the tech industry with real estate helps all parties involved – investors, developers, real estate agents, and property management companies. PropTech attempts to make the realty industry easier, efficient, and easier to navigate.
According to research firm CREtech, global investment in real estate technology start-ups and more established players reached $14 billion by the middle of 2019, rising from $12.7 billion in 2017.
As with many other domains COVID-19 pandemic had an impact on the PropTech too with increased interest and investments across sales and marketing, shared economy, interior design services, furniture rentals, and construction technology. According to a Housing.com survey, in India, 37 percent of the potential homebuyers are confident to buy a home completely online with a single on-ground site visit.
PropTech: Making an impact around the world
In the US, technology has traditionally played a role in home buying primarily through online search and connecting potential buyers with brokers. Of late technology has increased the dependence on sophisticated data to drive decisions, assess home value, and find ideal buyers. Adding to this are the emerging concepts of co-working and co-living that represent the largest group of today’s home buyers, which are driving real estate enterprises towards technology adoptions changing the landscape of digitized realty.
The next generation of real estate enterprises is already disrupting existing systems and creating new ones that address the customers’ growing demand for affordability, community, and flexibility. Companies like Better promise to ‘fix a broken business model’ by promising lower commission and fees.
Even in the commercial realty space, we see realtors focusing on providing digital experience to the customers. Recently, SL Green Corp Manhattan’s largest office landlord announced the launch of Summit One Vanderbilt, a new, innovative destination that combines unparalleled vistas, curated multi-sensory experiences and cutting-edge technology to offer an unprecedented guest experience spanning art, nature, and design. Offering an interactive experience, this new destination intends to redefine the way people experience the intersection between nature and the built environment.
The real estate & property tech industry has attracted investor interest too and the offerings are diverse:
Flyhomes, an end-to-end home buying start-up, raised $150mn in Series C funding in June 2021. It is a real estate brokerage platform and aims to help clients through the entire homebuying process.
Guest House stages shoppable homes, offering the furniture and décor used to stage the home for sale.
A startup, Cortex is helping commercial buildings to de-carbonize. It’s machine learning capabilities work with human interventions in optimizing energy utilizations of a building. It claims to have helped Empire State Building save $800K per year in energy costs
Compass is among the biggest in this category. It went public recently and provides an online platform for buying, renting, and selling real estate assets. They claim to provide simplicity and transparency for agents, sellers and buyers. In 2019, they enhanced their digital experience adding AI-powered recommendations, ‘a visual workspace that allows agents and clients to collaborate, discuss, and monitor the market in real-time’, search facilities across local and multiple geographies, dynamic map search and more. Such seamless digital experiences simplify the lives of all the stakeholders in the prop tech industry.
In Asia, as recently as 2019, KPMG concluded that property organizations may still be behind the curve in developing an enterprise-wide digital and innovation strategy. However, industry professionals were confident that use of technology could produce efficiency gains across their common pain points.
Big data analytics, artificial intelligence, business process automation and the Internet of Things are likely to be the top technologies for Asia’s property industry over the next five years. According to PropTech CBRE, around 151 of China’s top 200 real estate companies have already digitized their processes. South East Asia is also home to serious players across services in the property segment – Capitaland, PropertyGuru and iProperty to name a few.
India is another market where PropTech is gaining traction. In 2020, the domain received nearly $551mn in investments. The players in the domain offer diverse services including selling & buying of property, peer-to-peer property listing platforms, a marketplace for the construction materials industry and more. Recently, India’s first PropTech syndicate fund was announced by Brigade REAP, a real-estate accelerator program which aims to invest in start-ups looking to raise up to $500K in early-stage funding.
Europe too has seen massive investment in the PropTech sector. According to a March 2020 report, sector funding grew 550% in five years to €550mn with the UK claiming the biggest share. Here too, modular construction, student living, co-living and software for construction project management attracted investments.
Technology in the property ecosystem
With changing dynamics and customer demands, there are several areas where aspects of PropTech can play a role:
Home Automation: thanks to efforts from brands like Apple & Google, home automation has acquired a cool quotient. The smart phone can be used to control lighting to heating, ventilation, and air conditioning. Home & office security, multimedia integration and personalized spaces are other use cases of automation.
Construction: constructing a property requires a lot of planning, risk analysis, forecasting, and cost estimation. This entire exercise could be optimized with the help of PropTech. This increases accuracy and efficiency, enabling faster project completion.
Purchase & rental: the traditional house hunting exercise can be arduous and time taking, and the results are often dissatisfactory. PropTech apps and online portals enable agents and investors to choose their property as per their custom requirements.
Co-working: such workspaces benefit owners as well as agents owing to cost-efficiency. PropTech helps the administration keep a track of its members and their payments along with other integrated services.
Workflow optimization: planning, building, operation and maintenance of construction projects involves collecting data, tracking tasks, documentation and reports. The entire process can be streamlined and managed digitally. PlanRadar is one such offering available across platforms and devices.
Emerging trends in PropTech
As with other industries where there are diverse players in the ecosystem, technology can add value to all in PropTech – sellers, agents, investors, owners, and tenants. Let’s look at some of the technologies and their role:
Real estate enterprises are flooded with customer data which when analyzed properly can provide insights to create customized solutions and improve customer service. By analyzing patterns and probabilities, Big Data can play a role in mitigating risks. Property owners can plan activities by analyzing weather, traffic and environment data. Brand owners can derive insights to run media campaigns and advertise the property to the right target audience at the right time. It can also help customize the ads and its placement as per the customer needs which can help create brand affinity.
Artificial Intelligence and Machine Learning
Automating rule-based repetitive processes has simplified various tasks across operations. Leveraging AI and Machine Learning in reality have shown various benefits such as simplifying repetitive tasks and streamlining data management, identifying customer preferences & creating suggestions, deriving insights & using them for advertising campaigns. Lastly, using chatbots to provide 24/7 customer services and support.
Virtual Reality (VR) is software through which prospective buyers, renters, and investors are provided a virtual property tour alleviating the need to visit the actual property. It provides a 360-degree view of the property and opens the market to more buyers and is also a cost-efficient method to check and select properties.
Drones help view and record external features of the property, providing an outlook to interested clients saving them time and money. Unlike images and brochures, drones provide high-resolution aerial images, providing the actual view of the property. It can help present the entire location and surrounding areas. Drones are also used to deliver materials and even in bricklaying.
As per the United Nations, real estate accounts for about 40 percent of the world’s energy consumption and a third of all carbon emissions. As the need for green business models increases, real estate enterprises support and advocate the construction and purchase of greener properties and systems to manage them. Sustainable technologies help realtors provide their customers with the best of properties without exhausting natural resources.
Software as a Service (SaaS)
Several industries have been disrupted by SaaS products – which are cloud based solutions allowing users to access relevant data through browsers or apps. In PropTech too, SaaS can play a role in project management, sales and marketing, customer relationship management (CRM), financial transactions and property management.
Blockchain technology is used to store data and acts as a repository of deals and contracts for future reference. It reduces the use of paper and improves transparency, which is one of the main causes of disputes in the real estate industry.
Although in a nascent stage, 3D printing holds promise as it offers speed as a key benefit. Dubai aims to make real estate development more efficient by making every new building 25% 3D-printed by 2030. In India, a start-up built a 3D-printed house recently.
Future of PropTech
Although the pandemic has had a huge impact on the real estate business, it has also accelerated technology adoption amongst real estate industry leaders and start-ups alike. The emergence and evolution of PropTech are considered a boon at such unprecedented times, as they have helped real estate enterprises thrive during, and post the COVID-19 era. There are various opportunities in reality where technology could be leveraged to provide a better service to the customers and simplify business processes leading to greater impact for all – the enterprises, agents, investors and end consumers.
New emerging technologies such as AI, Machine Learning, Cloud Computing and Blockchain are redefining the way real estate enterprises are functioning today. However, what determines the future of PropTech is in its ability to simplify user experiences while ensuring safety. If PropTech enterprises can deliver this, the marriage between real estate and technology will be a lasting one and continue to shape the future of real estate in years to come.
Towards the end of last year, no one would have been able to predict how 2020 would fundamentally alter our lives. In the first quarter of this year itself change was forced upon us in the form of widespread lockdowns. This triggered a host of behavioral changes across the world, on a never-before scale. People became more conscious of health, learnt to adapt to new ways of living and working from home. Digital experiences played a crucial role in enabling such a lifestyle and behavioural changes. At Robosoft, we partnered with several enterprises in crafting products that made the everyday life of millions of consumers just a little bit easier – streaming services that brought entertainment, sports, and infotainment to mobile devices or utilities which made us more productive and enriched our lives. We have attempted to share our views on broad trends shaping these changes in digital experiences. Here are five of our top blog posts from 2020:
Apps that can help consumers accomplish a multitude of tasks – also known as Super Apps, were popular even prior to the COVID-19 outbreak especially in South and Southeast Asia. Such apps saw a widespread uptake in 2020 as they help consumers in many ways: providing convenience and simplicity, a unified and personalised user experience and more. In this article, our CEO, Ravi Teja Bommireddipalli outlines why Super Apps can help enterprises and shares key points to consider while building such experiences.
The world is increasingly dependent on digital products and platforms to accomplish many of their daily chores and needs. Hailing a cab, transferring funds to someone, consulting a doctor or shopping often involves a digital experience. In this context, the relevance and value of great product managers is critical. A product manager dons several hats: that of a CEO, fire-fighter or orchestra conductor depending on the product lifecycle and project needs. In this article, Syed Abbas our Principal Digital Consultant shares perspectives on what it takes to create products consumers love. In this article, he writes about the key attributes of a product manager and the steps involved in creating a product road map.
The world has seen the agrarian, industrial, and services economies. We are currently in the experience economy, a term first coined in 1998. In the experience economy, customers are expected to have two types of experiences: customer participation and connection. Microservices – an approach to developing a single application as a collection of small services is critical in the experience economy. In this article, our Rajeev Rajagopal outlines the differences between traditional software products and modern application. He also writes about the key components & benefits of the microservices architecture.
The rise of audio and video streaming services during the lockdown period was natural and has been well documented. But beyond media & entertainment, there is tremendous scope for OTT services to be adopted by other industries such as retail, among others argues our Jay Shah, in this article. It is a new format of the familiar home shopping networks on TV and offers the best of both worlds in terms of showcasing the product and in-store experience.
While we may switch back to older ways of worry-free travel and in-store shopping sometime in the future, some of our behaviors have been fundamentally altered in 2020. Our preference for contactless delivery has been a key development that may change the business proposition of many an industry beyond just food delivery. The value proposition of brands may be similar in many cases and hence great user experience will be a competitive edge opines our Srinidhi Rao, in this article. Now more than ever, customers would appreciate any simplified process. So any experience which goes a long way in reducing friction or making life easy – ordering through voice-enabled speakers, messenger platforms, or a smartwatch, enabling a virtual trial of a dress re-order previously ordered medicines, or renewing a subscription service would be welcome he opines.
We hope you enjoyed our collection of top reads from 2020. As we step into the new year, we look forward to even more exciting opportunities to simplify lives of consumers.
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