Data Is Coming

If we take a look of the largest firms in terms of market capitalization, we can see a clear trend:

1. Apple Inc.
2. Alphabet Inc. (Google)
3. Microsoft
4. Amazon.com

They all are IT-companies that deal with a huge amounts of data. Especially Apple and Google have been in the news many times when issues concerning privacy and data gathering are presented by different government authorities. Seems that data is going to be the new oil.

In this blog I talk about little about the roles of these companies in the society and explain why they are going to change the world. My prediction is that these 4 companies are just not going to renew their industries, but they are going to crush completely three traditional industries: Banking, transportation and retailing.

Banking

First of all, a quick word about the PSD-2 regulation (Payment System Directive 2). It is a new regulation that basically allows other institutions than banks to enter to the business of payment systems and transfers. Soon you don't need a bank account to make transfers or payments, it is enough for you to have your personal Amazon account with Amazon Pay or an Apple ID with Apple Pay. Also other players like Bank of Norwegian and even Starbucks are allowed to enter to the market of payment systems.

In this battle banks however have one advantage: information and data. Currently the banks possess all the information about their customers and the way their customers act. Banks know about the places you go, where you make payments and how much. The bank can even know about your girlfriend's pregnancny before you.

But what happens when firms like Apple, Google and Amazon can buy, trade and gather this same information? Banks become useless. These IT-companies have the same data and can offer the same services half the price and with more flexibility. You can have separate services for different purposes and you no longer are tied to the one bank that knows everything about you and can thus offer you its services.

From European banks I believe that Nordea has noticed this change. This has caused a rapid cut in expenses and massive investments to digital services and data gathering to fight this battle. In the same time many branch offices around Finland, Sweden and Norway are being closed and Private Banking services in Switzerland and Luxembourg are being sold to UBS in order to gather strength and resources against Apple, Google and Amazon.

Nordea's quest for digitalization has even gone so far that last fall a co-operation was introduced with Apple Pay as the first bank in the Nordic countries. This has raised concerns on Apple's efforts to try to buy and gather data from the bank's customers for its own purposes. We will have to see what happens with these companies in the following 5 years or so.

Retailing

Now this isn't anything new. It has been a trend for a long time that consumers tend to buy more goods from online than from traditional retailing stores. This has caused problems for traditional retailers like Macy's, Target and Stockmann. Retailers like Alibaba, Amazon and Zalando have taken huge pieces of the market. This has caused retailers like Walmart to invest heavily into digital services to fight against Amazon.

Last summer Amazon announced to acquire Whole Foods, a grocery store specialized in unprocessed and unrefined plant foods (which is, if you haven't noticed, quite trendy at the moment). This added to the concept of Amazon Go is going to crush traditional retailers. Now even Jounin kauppa with it's social media attendance can compete against that.

When you go to do your groceries in Amazon Go, you can just take your items to your basket and walk away. Infra-red detectors detect the person who is buying the groceries and will take the money automatically from the person's Amazon account. No credit cards, no cashiers, no bank accounts. You can clearly see the linkage for Amazon's role in competing against the banking industry as well?

Transportation

Especially Apple and Google are investing into driver automation and self-driving technology. This makes sense, since according to the study perfromed by Volvo in 2013, 90 % of all truck accidents are due to driver error. Not to mention the reduction in costs when you wouldn't have to pay wages for your drivers.

Driver automation has been a hot topic recently. Different forms and stages of driver automation have been developed and researched by companies like Apple, Google and Tesla. Even Amazon is entering the market in a co-operation with Toyota to include their Alexa-virtual assistant to the cars. Traditional automakers should stand on their toes. This has also raised a concern for my-self: weaponization. I'm not going too Terminator about this, but self-driving technology could easily be misused for darker purposes. Beware.

Not only road vehicles are planned to be automatized, but also air traffic. Currently autopilot does pretty much everything during a flight expect take-off and landing. It is just a matter of time before these stages are also automatized and we don't need pilots anymore.

Conclusion

Conclusion is that the 4 largest companies of the world are coming and they are coming fast. These firms are going to shape, rebuild and destroy the industries we know today. It might be that in 10 years we don't need banks, truck-drivers or grocery stores.

The ones who want to survive must brace themselves. Data is coming.

Text: SW
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