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Apps drive work democracy

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Apps have made just about anything possible and are broadening service providers’ access to their customers. Also, anyone can now start an enterprise, thereby brining in more competition and offering better prices and more choices than ever before.

In the evolution of the digital world, apps have made just about anything possible by broadening the access that service providers have to customers. Ultimately, it can be said that digital has democratised business by enabling anyone, even those operating on shoestring budgets, to start an enterprise of their own and exceed their wildest dreams. For consumers across the globe, this new world means more choice and better prices than ever before.

So says Ethel Nyembe, Head of Small Enterprise at Standard Bank, who points to the success of Uber, the innovative app that connects riders to drivers through smartphone technology. It has revolutionised the transportation industry around the world, and is presently making waves on South African shores.

The change Uber is bringing to the transportation industry, and the inspiration it provides to entrepreneurs looking for a new niche for their ideas, was illustrated in a recent episode of The Growth Engines, supported by Standard Bank and aired on Business Day TV. The series examines how innovative small and major businesses can collaborate to innovate in their markets.

“By using an app to create a connection point between transportation providers and passengers, Uber has changed the way that people move across 300 cities around the world. It has also boosted the earnings of taxi drivers who can use the technology to be connected to a new base of riders across their cities – thus reducing the ‘dead return time’ that normally occurs after a fare is dropped at a destination.

What is particularly interesting is that fitting the modern app-driven convenience of mobile technology into an established, traditional business like driving a taxi has involved some compromise on the part of Uber. Innovation has won the day, but collaboration between the old and the new is what is making the concept work,” says Ms Nyembe.

“The app has become the middle-man, bringing the essentials of democratisation to the transportation business. By bringing efficiency and accessibility to the fore, it has simultaneously empowered drivers to transform the way they do business,” says Alon Lits, General Manager: Uber (Gauteng and Durban).

In its six years of existence, Uber has transformed the way that people move around the world’s major cities. Commuters use the app to request a driver close by, are collected by the vehicle, and are billed through Uber, making the service seamless and easy.

“The birth of the Uber service was spurred by the founders walking through the snow in Paris trying to find a taxi. Both, already entrepreneurs in their own rights, returned to San Francisco and developed the app,” says Mr Lits.

Uber does not employ drivers or own any cars, but partners with the drivers. The drivers, in return for being able to access customers through Uber, pay a fee for the lead generation software every time they pick up an Uber rider. Security, however, dictates that drivers must have the necessary public professional driving permit, commercial insurance, roadworthy certificate, and spotless character references before they can join Uber.

It is at this point that the new way of doing business couldn’t succeed without the traditional, concedes Mr Lits.

“We looked at the system in South Africa and saw drivers coming through who had criminal records. We instituted additional screening practices by partnering with EMPS (Employers’ Mutual Protection Services) to clear prospective driver-partners.”

Says Kirsten Halcrow, Managing Director: Employers’ Mutual Protection Services, whose company uses the services of the South African Police Service (SAPS), Automated Fingerprint Identification System (AFIS), and other South African institutions to ensure that people who apply do not have criminal records and that they do in fact have the qualifications and experience they claim:

“We are constantly examining technology and what value we can add to our clients’ recruitment processes. This is particularly important in the present socio-economic environment where it is tough to get jobs and individuals are looking for easy ways of getting employment – many will use fake qualifications to achieve their ambitions.

Individuals who have criminal records do not admit this on application forms. For Uber specifically, we look for fake driver’s licenses, permits and examine all partner-drivers’ references. Unfortunately, to trust what is on a CV or driver application will not help anyone.”

A more challenging problem for Uber has been the failure of regulations and legislation to keep pace with the changes that have taken place with the emergence of the app world. An alleged contravention of permit bylaws in Cape Town recently saw 60 Uber operators running foul of the law.

“We continue to engage with regulators at city, provincial and national levels to ensure that our partners have a clear route to licensing. At the end of the day, we are dealing with a case where regulation is lagging innovation. It doesn’t make sense to step back and wait for regulation to catch up.

This is especially so in the context of South Africa. How can we sit back and let outdated regulations stand in the way of job creation, and safe and reliable rides that can transform the taxi industry?

We see Uber as not taking away business from traditional metered taxi drivers, but assisting them by taking away their down-time. It is not about them losing existing business, it is about adding to it. Even though Uber fares are lower, we are being told by drivers that they are making more money and also managing their time better,” says Mr Lits.

“The path to innovation and democratisation will never be totally trouble-free. In a fast-moving world, it is becoming increasingly common for entrepreneurs to identify a need and do what they can to supply solutions. It is inevitable that from time-to-time, entrepreneurs will conflict with entrenched interests and regulators.

Inevitably, the needs of customers and the opportunities offered to people to find gainful employment by using apps and digital services will win out,” says Ms Nyembe.

The Growth Engines can be viewed on Business Day TV (DSTV channel 412) on Tuesdays at 9:30pm, with repeats on Wednesdays at 10:00am and Thursdays at 2:00pm. For more information and to view in-depth articles on the key themes explored on the programme, log on at bizconnect.standardbank.co.za or bdlive.co.za/indepth/growthengines.

 

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VoD cuts the cord in SA

Some 20% of South Africans who sign up for a subscription video on demand (SVOD) service such as Netflix or Showmax do so with the intention of cancelling their pay television subscription.

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That’s according to GfK’s international ViewScape survey*, which this year covers Africa (South Africa, Kenya and Nigeria) for the first time.

The study—which surveyed 1,250 people representative of urban South African adults with Internet access—shows that 90% of the country’s online adults today use at least one online video service and that just over half are paying to view digital online content. The average user spends around 7 hours and two minutes a day consuming video content, with broadcast television accounting for just 42% of the time South Africans spend in front of a screen.

Consumers in South Africa spend nearly as much of their daily viewing time – 39% of the total – watching free digital video sources such as YouTube and Facebook as they do on linear television. People aged 18 to 24 years spend more than eight hours a day watching video content as they tend to spend more time with free digital video than people above their age.

Says Benjamin Ballensiefen, managing director for Sub Sahara Africa at GfK: “The media industry is experiencing a revolution as digital platforms transform viewers’ video consumption behaviour. The GfK ViewScape study is one of the first to not only examine broadcast television consumption in Kenya, Nigeria and South Africa, but also to quantify how linear and online forms of content distribution fit together in the dynamic world of video consumption.”

The study finds that just over a third of South African adults are using streaming video on demand (SVOD) services, with only 16% of SVOD users subscribing to multiple services. Around 23% use per-pay-view platforms such as DSTV Box Office, while about 10% download pirated content from the Internet. Around 82% still sometimes watch content on disc-based media.

“Linear and non-linear television both play significant roles in South Africa’s video landscape, though disruption from digital players poses a growing threat to the incumbents,” says Molemo Moahloli, general manager for media research & regional business development at GfK Sub Sahara Africa. “Among most demographics, usage of paid online content is incremental to consumption of linear television, but there are signs that younger consumers are beginning to substitute SVOD for pay-television subscriptions.”

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New data rules raise business trust challenges

When the General Data Protection Regulation comes into effect on May 25th, financial services firms will face a new potential threat to their on-going challenges with building strong customer relationships, writes DARREL ORSMOND, Financial Services Industry Head at SAP Africa.

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The regulation – dubbed GDPR for short – is aimed at giving European citizens control back over their personal data. Any firm that creates, stores, manages or transfers personal information of an EU citizen can be held liable under the new regulation. Non-compliance is not an option: the fines are steep, with a maximum penalty of €20-million – or nearly R300-million – for transgressors.

GDPR marks a step toward improved individual rights over large corporates and states that prevents the latter from using and abusing personal information at their discretion. Considering the prevailing trust deficit – one global EY survey found that 60% of global consumers worry about hacking of bank accounts or bank cards, and 58% worry about the amount of personal and private data organisations have about them – the new regulation comes at an opportune time. But it is almost certain to cause disruption to normal business practices when implemented, and therein lies both a threat and an opportunity.

The fundamentals of trust

GDPR is set to tamper with two fundamental factors that can have a detrimental effect on the implicit trust between financial services providers and their customers: firstly, customers will suddenly be challenged to validate that what they thought companies were already doing – storing and managing their personal data in a manner that is respectful of their privacy – is actually happening. Secondly, the outbreak of stories relating to companies mistreating customer data or exposing customers due to security breaches will increase the chances that customers now seek tangible reassurance from their providers that their data is stored correctly.

The recent news of Facebook’s indiscriminate sharing of 50 million of its members’ personal data to an outside firm has not only led to public outcry but could cost the company $2-trillion in fines should the Federal Trade Commission choose to pursue the matter to its fullest extent. The matter of trust also extends beyond personal data: in EY’s 2016 Global Consumer Banking Survey, less than a third of respondents had complete trust that their banks were being transparent about fees and charges.

This is forcing companies to reconsider their role in building and maintaining trust with its customers. In any customer relationship, much is done based on implicit trust. A personal banking customer will enjoy a measure of familiarity that often provides them with some latitude – for example when applying for access to a new service or an overdraft facility – that can save them a lot of time and energy. Under GDPR and South Africa’s POPI act, this process is drastically complicated: banks may now be obliged to obtain permission to share customer data between different business units (for example because they are part of different legal entities and have not expressly received permission). A customer may now allow banks to use their personal data in risk scoring models, but prevent them from determining whether they qualify for private banking services.

What used to happen naturally within standard banking processes may be suddenly constrained by regulation, directly affecting the bank’s relationship with its customers, as well as its ability to upsell to existing customers.

The risk of compliance

Are we moving to an overly bureaucratic world where even the simplest action is subject to a string of onerous processes? Compliance officers are already embedded within every function in a typical financial services institution, as well as at management level. Often the reporting of risk processes sits outside formal line functions and end up going straight to the board. This can have a stifling effect on innovation, with potentially negative consequences for customer service.

A typical banking environment is already creaking under the weight of close to 100 acts, which makes it difficult to take the calculated risks needed to develop and launch innovative new banking products. Entire new industries could now emerge, focusing purely on the matter of compliance and associated litigation. GDPR already requires the services of Data Protection Officers, but the growing complexity of regulatory compliance could add a swathe of new job functions and disciplines. None of this points to the type of innovation that the modern titans of business are renowned for.

A three-step plan of action

So how must banks and other financial services firms respond? I would argue there are three main elements to successfully navigating the immediate impact of the new regulations:

Firstly, ensuring that the technologies you use to secure, manage and store personal data is sufficiently robust. Modern financial services providers have a wealth of customer data at their disposal, including unstructured data from non-traditional sources such as social media. The tools they use to process and safeguard this data needs to be able to withstand the threats posed by potential data breaches and malicious attacks.

Secondly, rethinking the core organisational processes governing their interactions with customers. This includes the internal measures for setting terms and conditions, how customers are informed of their intention to use their data, and how risk is assessed. A customer applying for medical insurance will disclose deeply personal information about themselves to the insurance provider: it is imperative the insurer provides reassurance that the customer’s data will be treated respectfully and with discretion and with their express permission.

Thirdly, financial services firms need to define a core set of principles for how they treat customers and what constitutes fair treatment. This should be an extension of a broader organisational focus on treating customers fairly, and can go some way to repairing the trust deficit between the financial services industry and the customers they serve.

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