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Machine Learning coming at you

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Deloitte Global forecasts major strides in machine learning for the enterprise, a worldwide appetite for digital subscriptions among consumers, and ongoing smartphone dominance.

Among the findings pertaining to the enterprise, this year’s report indicates that business organisations will likely double their use of machine learning technology by the end of 2018. TMT Predictions highlights five key areas that Deloitte Global believes will unlock more intensive use of machine learning in the enterprise by making it easier, cheaper and faster.

The most important key area is the growth in new semiconductor chips that will increase the use of machine learning, enabling applications to use less power, and at the same time become more responsive, flexible and capable.

“We have reached the tipping point where adoption of machine learning in the enterprise is poised to accelerate,” said Mark Casey, Deloitte Global Media & Entertainment & TMT Africa Leader.

Live content in an online world and digital media worth paying for

TMT Predictions includes a number of consumer forecasts as well. Deloitte Global predicts that live broadcast and events will generate over $545 billion in direct revenues in 2018. Despite consumers’ capability to consume content on demand or attend events remotely, live consumption is thriving. And in many cases, live content’s performance has been made more productive and profitable by digital.

Indicating an increasing willingness from consumers to pay for digital content, Deloitte Global also predicts that by the end of 2018, 50 percent of adults in developed countries will have at least two online-only media subscriptions, and by the end of 2020, the average will have doubled to four.

“Digital’s rise has augmented not dented the public’s appetite for media, which in 2018 will likely include over half a trillion dollars’ worth of all forms of live content,” said Casey.

The future of the smartphone

Smartphone adoption continues to grow. By the end of 2023, more than 90 percent of adults in developed countries are expected to have a smartphone, with ownership among 55-75 year-olds reaching 85 percent. And Deloitte Global predicts that owners will interact with their phones on average 65 times per day in 2023, a 20 percent increase on 2018.

At the same time, Deloitte Global predicts 45 percent of global adult smartphone users and 65 percent of 18-24 year olds will worry that they are using their phones too much for certain activities and may try to limit their usage in 2018.

“As smartphones continue to be a big part of our professional and personal lives, we are finding more of a balance and etiquette, especially in our personal lives, even as we continue to experience more opportunities in this exciting mobile ecosystem,” said Arun Babu, Deloitte Africa Telecommunications Leader.

Additional topics from Deloitte Global’s 2018 TMT Predictions include:

  • Augmented reality on the cusp of reality Over a billion smartphone users will likely create augmented reality (AR) content at least once in 2018, with at least 300 million doing so monthly, and tens of millions weekly, according to Deloitte Global.
  • Mobile only wireless home internet – For 2018, Deloitte Global forecasts that one fifth of North American homes will get all of their internet data access via cellular mobile networks. There will be significant variations by country, however. In Brazil, for example, nearly a third of all homes will be mobile only, but only 10 percent in some European countries. The differences between geographies are due to a range of technological, economic and demographic factors.
  • An increase in #adlergic – While three quarters of North Americans engage in at least one form of regular adblocking, only about 10 percent of this population engages in blocking ads in four or more ways – the “adlergic” population. Consumers who are young, highly educated, employed, and have higher incomes are more likely to be heavy adblockers.
  • TV viewing by 18-24 year olds: stable declines, but no tipping point – Deloitte Global predicts that traditional TV viewing by 18-24 year-olds will decline by 5-15 percent per year in the US, Canada, and the UK in 2018 and 2019. This rate of decline is a similar rate to the prior seven years and is not getting worse. Many forces that distracted young people away from traditional TV, such as smartphones, social media, and video piracy, are reaching saturation.
  • In flight connectivity takes off – One billion passenger journeys, or one quarter of all passengers, are expected to be on planes fitted with in-flight connectivity (IFC) in 2018, according to Deloitte Global. This is an estimated 20 percent increase from projected 2017 totals, generating IFC revenue close to $1 billion for 2018.

Arts and Entertainment

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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