Contactless economy: are you prepared?

https://www2.deloitte.com/content/dam/Deloitte/sg/Documents/strategy/sea-cons-contactless-economy.pdf

 

Wars, natural disasters, pandemics: the world has gone through crises over and over again throughout its millenarian history. And each time humanity has found a way to come out stronger and more resilient, and often the end of a crisis gave way to the beginning of a new age of renaissance and growth. In a recent report, consulting firm Deloitte asked what would make the aftermath of this crisis different from what we experienced in the past. The rise of the contactless economy is definitively the answer. The study quotes as an example the case of South Korea, a country that led a successful fight against the pandemic and announced a national push to reshape its economy around the concept of “untact”. “Untact has become a key plank of South Korea's 76 trillion won ($62 billion) “New Deal” program. A 136-page report released detailing the program mentions untact 47 times and calls for further investment in robots, drones, self-driving vehicles, and other technologies that will reduce the need for person-to-person contact.”

 

Japan has followed a similar path, and started encouraging the use of contactless services due to consumers’ increased fear of touch. The shift, destined to become increasingly evident once the world starts recovering from the pandemic, has given way to the rise of ‘At-home consumption, and ‘Contactless outside home’ consumption. According to Deloitte’s estimates, the ‘At-home consumption’ – which includes leisure/recreation education, health products and financial services, among other things - will increase by over two-fold amounting to $3 Trillion by 2025, with almost 20% of this figure due to the uplift caused by the COVID-19 pandemic. In short, the report notes, “the ‘at-home’ consumption trend has been greatly boosted by the pandemic.”

The second branch is the Contactless outside-home consumption where the consumer touch-points have become ‘touchless’. Examples of contactless offerings outside the home are mobility as a service in urban transport and touchless store experiences. “At least 2 of the top 10 global retailers will establish robot resource organisations to manage non-human workforce signifying an increased uptake of contactless technologies in the physical space. Already, the global pandemic has seen massive demand for effective deep cleaning and disinfection technologies that don't involve direct human contact with potentially infected areas15. Furthermore, the advent of 5G is a further push to the contactless outside home economy.” In terms of the digital transformation of the post Covid world, experts believe there will be no “return to normal”.

As the IMF argued in a study published last June, lockdowns have placed technology “squarely at the forefront of work, consumption, supply, interaction, and delivery (…) Videoconferencing, remote desktops, and new social platforms are powering remote work almost overnight, a trend that will likely endure when lockdowns are lifted. Digitalization of services—from tele health to online education to cashless transfers and emergency assistance to support the vulnerable—has been at the center of country responses. The need for contactless payments is propelling the shift from cash to digital payments, and digitalization of business models and supply chains is reshaping commerce and delivery.” https://www.imf.org/external/pubs/ft/fandd/2020/06/the-international-order-post-covid19-dabla.htm

Deloitte in its report concludes that “To make the most of this or to prevent from getting disrupted, organisations 1) need to critically assess how its customers' needs and behaviours are evolving within the contactless economy 2) determine how many of these segments it should target 3) develop new value propositions for the customer segments 4) unpack the new capabilities that the business needs to have to deliver on the value proposition and 5) decide its capability development model with a focus on leveraging its partnership ecosystems to ensure flexibility given the uncertainties ahead.”