How to start thinking about the new economy
We are on the verge of moving towards a major societal transformation characterized by innovations which disrupt every single industry. Central to this transformation is the way we do business in the new economy of digital currency. It’s taking economists by surprise while central banks are clueless as to how they have to react to this change in the global economic system which takes away essential elements of control of monetary policy from them. Inflation has no influence over the value of money in this new era of digital currency which is already here.
As the last frontier of trust towards the global economic system fell in 2008 with the collapse of the biggest investment banks which created the global crisis, the opportunity was clear for the innovators and the disruptors of the global economy. The events that followed the global crisis with the concurrent combination of the technological advancement of cloud computing and the internet provided the perfect opportunity for the development of digital economic ecosystems.
This advancement though, is uncontrollable and still lags of proper policy making, and of regulatory frameworks that would control the high risks that are associated with online transactions of digital currency. Additionally, it hinders the expansion and the usage of digital currency for its true purpose. In spite of this fact, and because of the many advantages in the underlying technologies, major organizations around the world have already welcomed and are adopting digital currency transactions. Facebook, a community of billions and the biggest ecosystem is about to create an economy of its own with the launch of “Libra”, its digital currency. Contributors to this effort are companies such as Visa, Mastercard,and PayPal. These companies have set the path in the past for innovation in many areas and certainly in how their users transact online.
Meanwhile, Ripple a real-time gross settlement system, currency exchange and remittance network which is also behind the XRP cryptocurrency, is working closely with some of the biggest banks as well as with Moneygram to make payments around the world and between people much easier and much faster. These are just a few of the most important advancements in the digital currency stratosphere, which clearly help us to understand that we are entering a new era, the digital currency era. Any business should be prepared to enter this new global economic system, take advantage of its benefits and utilize the latest tools in business to acquire new clients, retain the existing and expand to new markets. Why is that? Because simply every major change comes with opportunities but also with opportunity cost. What could you do now, therefore, to be ready and prepared?
Are you a strategic leader or a follower?
Waiting to see what will happen it is not the way to think unless you are a follower in terms of your development strategy. Clearly, the pioneers have an advantage, and if you want the same, you have to think differently. Start by asking for advice or educating yourself on the basics of the mechanisms behind these upcoming changes and follow the developments in the news of what is already happening. You need to think strategically at this point. Find out what some of the early adopters of digital currency are doing and how are they implementing these changes into their business models.
The discussion is mainly concerning changes on a FinTech level and how FinTech itself can help in making your business friendlier in regards to digital currency transactions. Adopting FinTech means being ready to make changes to the complete processing system of transactions within your organization, from how you are getting paid via e-wallets to how your accounting department and system is processing them.
Another aspect of this transformation is the legal one. FinTech law is a specialized area of law, a new legal practice which requires an expert in the field to guide you. Business is conducted on a very different level, which is extremely complicated. It is advisable to therefore understand this and talk with a Technology lawyer or law firm with FinTech expertise.
The main objective is to initially gain an overall understanding of the developments in the digital currency world. This will help you accept the new reality of our times and adopt it as the modern philosophy of doing business in the near future. Moreover, though, it will help you have an understanding of how your business, depending on its scale of operations and industry, can start planning for the future. Fintech and Blockchain technologies are currently part of the strategic development of many businesses worldwide, which are analyzing how they can gain a competitive advantage and how they can be a step ahead and gain momentum in the market when the time comes. This is called “digital strategy”, and as it seems, it's becoming central to the overall strategy for an organization to stay competitive in today’s marketplace.
Identify opportunities within your business model
You must identify exactly how your industry and business model will be affected by these changes, which happen mainly on the level of external stakeholders and clients. External stakeholders are those entities that work with you (i.e. providers, suppliers, partners) and that are affected by any change you might do within your organization. For example, will the implementation of FinTech solutions by your side facilitate the business you do with them? How can you help in increasing production through the supply chain or in achieving economies of scale? Although these example questions concern more FinTech related solutions than solutions for digital currency transactions, yet, let’s not forget that FinTech is the foundation for digital currency transactions. Therefore one without the other cannot exist. It is paramount that you think overall on how your business can adopt FinTech if you want to transact in digital currencies.
You should research more with your existing external stakeholders whether they have clients that would welcome the option of paying in digital currency. In general, you need to examine the extent of how digital currency can become a facilitator to the expansion of your business and your external stakeholders definitely have a role to play in this. The extent would, of course, depend heavily on your market and industry and on the relationship you have with your external stakeholders. Eventually, though, all will have to adapt. It only requires one in the value chain to affect the rest, making a significant impact in the whole process, a positive one. You have to delve deep into every transaction point between your company and your external stakeholders.
The same applies to your clients. Identify all channels from which you transact with them. Usually, the channels are the transaction points from the provision of a service or the sale of a product. Whether you are in the retail market, the services market or even a B2B business, transacting digitally is the same. What differs are the transaction points and the channels each business uses. Your clients are a major asset to your organization. It does not only matter that you provide the option to transact in digital currency but to transact in a safe way too and by safeguarding their interests as well. It would be wise that as an adopter of these new technologies, you also become a promoter. This marketing tactic will have a positive impact on gaining new clients and gaining a competitive advantage too.
Be ready - be prepared
This article does not promote digital currencies but rather a philosophy of accepting their existence and the fact that businesses which will not adopt this philosophy will end up paying an opportunity cost. This will be much higher than the cost of adopting, initially at least, this philosophy. Preparing your business for the new digital economy starts by accepting that change is inevitable. The regulators, and policymakers are expected to develop along the way the proper framework, legal or other, that will enable every business to transact with safety in digital currencies. Preparing for it today and strategizing on how you will become a business of the future is a wise move which will pay high returns and ensure longevity and continuation of your business success. Be ready - be prepared.