Published in Dagens Industri 2017
When a Swedish bank recently asked young customers about how they saw the bank of the future, the answer was somewhat unexpected: “Bank? I don’t need a bank. I need to be able to pay bills, have my salary somewhere and take a loan later in life – but I do not need a bank.” Digitization breaks down established institutions into an array of individual services.
Banks are fully underway when it comes to developing new digital solutions, but other institutions are also being challenged. Services that are provided by universities, libraries and healthcare are more interesting than ever, but the packaging, distribution method, as well as the buildings from which they are delivered could be perceived as outdated.
The consequences of digitization follow a pattern. Institutions with a well-established focus around a geographical location in the “real” world are going to come up against international challengers, often new players in cross-border networks. Closed environments with long distances between themselves and their users will be questioned by a co-creating and transparent culture. Traditionally knowledge-dominant institutions will be challenged by individuals who, with the help of infinite access to information, can carefully evaluate all available expertise.
More and more people are streaming books in text or audio format on different platforms. Libraries need to find a new role that includes digital advice – and get more people involved in the digital world. In the future, students will choose their favorite courses from a unique blend of artificial intelligence at Stanford and distance learning at Umeå University. Now that almost all courses can be held online, many more people can be admitted to the most popular universities. The old logic, that the offer should be exclusive to a few chosen, will fail due to its dishonesty. Why should some be offered a poorer education than others when there is room for everyone to get the best?
Universities will enter into stronger competition on the course level, where students are just as likely to go with an international player. Patients will take power over their own health and might feel that they have more information about their own treatment than their healthcare providers. When healthcare institutions are not able to meet individuals on their level of knowledge, it paves the way for lots of new players that will include the user’s health data and allow them to make their own analyses.
Institutions are designed to remain stable in the midst of a turbulent world. In their article, “Institutional Innovation,” researchers Seely Brown and Hagel write that culture and infrastructure embed institutions in the past. Social and technological innovations can then become catalysts for renegotiating the contract with different stakeholders. In the short term, it is about developing competitive digital services that reach users in their existing environments, such as training on Spotify, streaming books from publisher’s audio services, health advice via chat messaging, and banking services on e-commerce platforms.
In the long run, those individual digital products will become more and more similar, at which point more will be expected from them. Institutions must redefine their roles and put these individual products and services in a new context with data-driven services, continuous learning and pedagogical tools for the user to see the big picture and its consequences. Just as the music industry developed dynamic performances and tours to meet their audiences and remain relevant, the institutions of the future need to create live shows and define where in the digital world they want to perform.