Following a growth peak, the GCC banking industry is feeling pressure. Understanding what's altering the landscape can help players flourish.
The Gulf Cooperation Council (GCC) banking industry has seen a flurry of positive headlines over the past few months. Many banks are reporting year-on-year and quarter-on-quarter improvements in growth, revenues, and profits, and there are clear signs this will continue for the foreseeable future. The financial crisis appears to be firmly in the past.
However, a closer look reveals that the GCC banking market has experienced a fundamental change. The pre-crisis heyday of growth for all GCC countries is gone, leaving behind a more diverse banking landscape. Triggered primarily by macroeconomics, demographics, and regulation, the new landscape is here to stay, and it is having far-reaching consequences on both strategic and operational levels. This paper takes a look at GCC banking performance, examines the factors behind the changes, and explores how banks can tackle this new reality.Close
Mobile health presents risks and opportunities for pharma and medtech companies.
With chronic disease on the rise in an aging population and advances in medical technology straining the system, Germany's healthcare system is facing rising costs. Mobile health (m-health) is a technology that will not only help ease this situation for companies in the health industry, but also revolutionize patient care and bring long-term growth. A branch of the e-health market that includes the use of mobile technologies for health services, m-health is applied primarily in the remote monitoring of patients with chronic diseases.
As the Internet becomes ubiquitous through smartphone and tablet use, the hopes for m-health are high. This paper examines the true potential of m-health for various players in the German healthcare system—particularly those in the pharmaceutical and medical technology industries. Among the key questions answered are:
- What is the mobile health promise?
- Why is mobile health still waiting for its big breakthrough?
- How attractive will the mobile health market be for the German health industry in the future?
- How can the pharmaceutical industry profit from the mobile health market and what opportunities does m-health present for the medical technology industry?.
The dominant theme of the coming era is likely to be innovation in the delivery and coordination of care.
The unconventional collaboration of the more than two dozen senior executives who participated in the Healthcare Innovation Roundtable—most had never met—prefigured the shape of healthcare to come. The roundtable, an A.T. Kearney partnership with the Center for Healthcare Innovation (CHI), brought together executives from multiple points in the healthcare value chain—payers and providers, big pharma, biotech, startups, academics, and venture capitalists.
The group’s animated conversation was given structure by the Healthcare Disruptor Study, an A.T. Kearney-led analysis conducted with executives across the healthcare ecosystem that identified the forces reshaping the industry, and their candid exchanges illuminated the product and process innovations cropping up in every sector of healthcare.
The dominant theme of the coming era is likely to be less a story of blockbuster drugs than of innovation in the delivery and coordination of care.
The new era of healthcare will be characterized by frequent, even bold, partnerships between established and nontraditional collaborators. The ferment of new thinking at the October 2013 roundtable raised many topics with rich potential for deeper investigation, forming the foundation for an ongoing series of roundtable discussions over the course of the next several years.Close
Smartphones could be a lucrative revenue source for telecom operators in developing markets.
Developing markets are a challenge for telecom operators when it comes to handsets and data plans. Roughly 95 percent of consumers use prepaid, no-contract phone plans on low-cost phones, which result in lower revenues per customer than contract plans. Telcos have traditionally avoided promoting and bundling high-end devices with their plans, largely due to fear of losing traction. Most of the efforts made to bring smartphones to developing markets have been sporadic and generally unsuccessful.
But the market is shifting. Smartphones are proliferating rapidly in many emerging markets, with penetration expected to more than double between 2011 and 2015 in countries such as Brazil, Thailand, Indonesia, and India. Demand for data services and applications is also rising in emerging markets—particularly as operators roll out 3G speeds, and younger, more educated users flood the market. And handset makers are unveiling affordable mid-tier smartphones.
As smartphone and data penetration rise, the next wave of growth will come with sales to low-income and rural customers. For example, in India, mobile data traffic is expected to explode, from seven megabytes per user in 2011 to 274 megabytes per user in 2016, by which time nearly one-quarter of all Indian Internet traffic will be mobile. Already, two-thirds of smartphone owners in India use their phones primarily for the Internet. Handset makers are now seeking out telecom operators that can provide access to low-income and rural customers.
The question for telecom operators is not if or when to tap into these emerging markets—the time is now. The question is how to define coordinated smartphone retail and data strategies to capitalize on the opportunities. Done properly, our research has found that operators could increase smartphones’ share of phone sales from 2 percent today to as much as 10 percent by 2015.Close
With a new economic community around the corner, Southeast Asia is poised for massive growth.
The Association of Southeast Asian Nations (ASEAN) encompasses 600 million people across 10 countries, with a combined GDP of $2.3 trillion. In two years, the ASEAN Economic Community (AEC) will come into effect to form a single market and production base with a free flow of goods, services, investment, and skilled labor.
JWT and A.T. Kearney recently conducted an in-depth study of the AEC bloc and its impact. Our conversations with 50 corporate leaders, most from domestic companies across Southeast Asia, and leaders of key Asian and Western multinationals that operate here, show the AEC is high on their radar screens. Sixty-four percent say their organizations plan to enter new markets in the region once the AEC kicks in; 60 percent say they will expand their existing brands or product lines; and 24 percent say they will add completely new ones to their portfolio after 2015.
The AEC will be a game changer. Companies across Southeast Asia are going to have to work harder to defend their home turf against a growing number of global and regional competitors.Close
With a plan in place, schools can make sure that their investments in digital technology don’t go to waste.
Digitization has rocked the classroom experience and the education system as a whole with a flood of new technologies that promise to change the way teachers teach and students learn. From tablets and e-readers to interactive whiteboards and online learning programs, classroom technology has become a big business. According to the Center for Digital Education, U.S. elementary, middle, and high schools will spend almost $10 billon on technology in 2013, an increase of $4 billion since 2003.
Yet cutting-edge technology is so enticing that it’s easy to get caught up in the moment—acquiring new devices before truly understanding how they apply to the classroom and enhance the learning experience. The truth is, despite many successes, there remains uncertainty about the efficacy of technology in the classroom, and how school systems acquire and implement technology remains a challenge. Without a plan in place, even the best technologies can go to waste.
That’s why today’s schools need a flexible, evergreen process in place that gives students and teachers access to technology while accounting for ever-changing, ever-improving technological advances. This paper examines how those involved in the classroom experience, from administrators to teachers to educational technology firms, can create a structured process for developing a technology strategy and a road map for 21st century learning.Close
Digitization could be a major opportunity for healthcare industry players—if they take the right steps.
Forecasting the future of any industry is difficult, none more so right now than healthcare in the United States. There are countless reasons why healthcare will look different in the near future, not least of which being the country’s movement toward national coverage. However, digital transformation—the cumulative change that comes when digital technologies are introduced wholesale into an established industry—is poised to have an even bigger impact. For the U.S. healthcare industry, digital technology will be transformational, cutting healthcare delivery costs, eliminating errors through improved electronic medical records, and establishing routinized, evidence-based approaches to treatment.Close
Digital forces are pulling at the industry and significantly altering services, products, innovation, delivery, and remuneration (see figure). There are digitally integrated healthcare providers, digital medical devices and technologies, and digital delivery and monitoring of home healthcare. In addition, new ideas are emanating from developing markets, agile competitors are embracing technology, and a digital-friendly federal administration is pushing innovation. And don’t forget the digital consumer who is used to digital banking, digital retailing, and digital education, and expects digital healthcare.
Digital represents a tremendous opportunity—and a significant threat—for the various participants in the U.S. healthcare industry. No one in this industry can afford to fall behind. This paper examines how the healthcare industry can capitalize on digitization.
As the role of telecom stores changes, prudent operators will review the split between owned and franchised stores.
The global telecom industry looks very different today than it did just a few years ago, thanks to two trends. On one hand, markets are maturing, with the developed ones experiencing high penetration of telecom services and the emerging ones seeing a flattening of the growth peak. On the other, digital is changing the way companies interact with their customers. Although the brick-and-mortar store is far from disappearing, its role is evolving: Stores can reinforce a brand and convey elements in ways that online channels cannot.Close
Branded stores are a key spending item for telecom operators, typically contributing 5 to 6 percent of total operating costs. But are they worth the expense? Can operators get more out of their branded stores?
In today’s environment, one of the best ways to improve store operations is to look more closely at the ownership mix, the split between owned and franchised stores—companies that revamp that mix can improve earnings by up to 2 percentage points per store. Defining the right ownership model is not a straightforward exercise, however. This paper discusses the five principles that come into play.
From the Industrial Revolution to the 1990s high-tech boom, manufacturing shifts with periodic waves of disruptive change.As the latest waves of change gather momentum, 21st-century manufacturers face decisions that could create opportunities or competitive challenges as significant as Eli Whitney’s idea of interchangeable parts or Toyota’s improvements on Henry Ford’s assembly line. Today, the potential impact of new technologies such as 3-D printing, the risks inherent in global supply chains, the exponential growth of data, and the changing socioeconomic demographics are just a few of the new disruptors.As a result, the future of manufacturing is again a hot topic in public debate and on boardroom agendas. Companies are looking for a unique competitive edge or ways to respond to the unexpected. Manufacturers that can accurately anticipate how these trends will affect their businesses can turn challenges into profitable opportunities.In this first in a series of papers on mastering disruptive change in manufacturing, and based on our work in six core areas and on insights gathered from our Global Excellence in Operations Factory of the Year competition, A.T. Kearney identifies the driving forces we expect to be among the most influential to manufacturers.Close
Cooperative competition has yet to produce a satisfactory replacement for cash. Perhaps government regulation is the missing catalyst.
Almost 65 years after the introduction of the first general-purpose credit card, most transactions today are still of the cold, hard variety. Cash is king, and its reign continues despite the hidden costs—as much as 1 percent of gross domestic product (GDP) in a mature economy, according to some experts. Significant advances have been made in the area of noncash payments over the past decade. For example, credit and debit card fraud has been reduced by the introduction of the EMV system. At the same time, the cost of bulk electronic payments has fallen sharply. Cash won't be displaced on a large scale, however, until today's closed-loop systems, where multiple players seek to collect rent for the infrastructure they have built, are replaced by a zero-fee, open-standard ecosystem that allows consumers to use any device in any scenario.
We believe that government regulation will be required to break down the barriers that cooperative competition has proved unable to overcome. Governments and central banks need to acknowledge the cost of cash to the economy and seek to actively reap the benefits of a cashless society, investing directly and heavily in building national payments infrastructure and platforms, defining standards to ensure harmonization and interoperability, and applying incentives and penalties. Another possibility is a provider-led play, in which an incumbent (for example, a bank or a telecom operator) or disruptive player becomes a dominant force in payments, either regionally or globally.
Regardless of how the transition plays out, achieving a cashless economy will require stakeholders to adopt a new mind-set, strategy, and business models.Close
Fully benefiting from Connectional Intelligence requires creating and using networks to generate value.
A.T. Kearney announced the hiring of four partners who will join the firm's Communications, Media & Technology Practice.
As years-old cost pressures maintain a chokehold on margins, Europe’s airlines can improve their performance and win market share.
A handful of low-cost carriers, led by Ryanair and easyJet, are now the leading competitors to the European airline industry’s legacy carriers, thanks to their minimally priced plane tickets augmented by paid services ranging from checked baggage to on-board food to rental cars. As Europe’s established carriers transfer their intra-European routes to low-cost subsidiaries, these low-cost carriers (LCCs) now make up nearly 40 percent of Europe’s market. On long-haul routes, the competitors are primarily Middle East carriers such as Turkish Airlines and Emirates, which are upending the competitive dynamics as they make big global strides into Europe, Asia, and Africa. Both the LCCs and Middle Eastern carriers do two things very well: they increase market share while keeping costs down, and they register much higher profits than their legacy rivals.
Europe’s established carriers have responded by overhauling their services and improving cabin quality on long-haul fleets to rise to the standards of their “five-star” challengers. They have gained ground, but significant potential and opportunities remain. In fact, all bets are off as these carriers find that traditional answers to growth no longer work.
All airlines in Europe, the Middle East, and Africa have two objectives: (1) to stabilize the business (for example, by diversifying much as airports did in increasing their non-aviation revenues) and (2) to become true innovators, finding inspiration from outside of the aviation business, in particular from the service and consumer goods industries.
Success can be as easy as emulating the best practices of direct competitors and leaders in other industries in how they manage their revenue, customers, brands, and markets.Close
GCC countries rank among the world's leaders in defense spending, offering a vast economic-development opportunity. Offset programs can unlock that opportunity.
The Gulf Cooperation Council (GCC) countries—Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates—together spend nearly $80 billion a year on defense, ranking the region third among the world’s biggest defense spenders, behind the United States and China. At more than $48 billion a year, Saudi Arabia leads the GCC countries in defense spending.
The real significance of these expenditures goes beyond their massive totals: They signal a unique growth opportunity for the region’s manufacturing and knowledge sectors. Consider this: Between 2013 and 2025, GCC countries will have spent about $1 trillion on defense and roughly 30 percent of this is dedicated to capital expenditures. If a 35 percent offset requirement is enforced, this means a whopping $105 billion could be either reinvested or sourced domestically, creating more than 280,000 advanced jobs—84,000 in Saudi Arabia alone—and an opportunity to build sustainable value chains in the region’s nascent aerospace, automotive, and marine sectors. Because these opportunities have gone largely untapped, defense offset programs are essential to tapping them.
This paper offers, among other things, four practical actions for GCC countries to realize a once-in-a-lifetime opportunity.Close
A Fit Transformation translates a company's strategy into the right combination of organizational strength, agility, and cost.
Companies are complex, living organisms. Just as a disorder in the pea-sized pituitary gland can affect a range of bodily functions and an organ transplant requires the systematic reconnection of numerous blood vessels, interventions in one area of your company can have major systemic effects. In business transformation as in surgery, interconnections must be carefully considered, and the instruments and techniques chosen must be suited to the task.
To do this, Fit Transformation translates your company's strategy into the right combination of organizational strength, agility, and cost. Furthermore, it aligns the different building blocks of your company's operating model and breaks down silos across functions. Finally, it manages the transformation itself, galvanizing the imagination, enthusiasm, and commitment of your workforce to transfer ownership and ensure a sustainable transition from today's reality to the desired future.
Fit Transformation is a complex undertaking, but when performed by experienced practitioners, it is one that is manageable.Close