Whether it’s big data, artificial intelligence (AI), cloud storage or cyber security, the effects of digital technology development are all around us. Recognised as the third industrial revolution, we are experiencing one of the most transformative periods in history.
Digital - transforming our industrial society
In 2001, a group of software developers met at the lodge at Snowbird ski resort in Utah, USA and published the Manifesto for Agile Software Development, a set of incremental software development methods. Although they may not have realised it at the time, this triggered an acceleration in the development of digital services globally.
The introduction and growth of digital services in the workplace has forever changed the culture of work, requiring a digitally literate workforce. As the tech start-up culture gains momentum, the entrepreneurship culture is now reaching large corporates and organisations.
Research by Nesta indicates that the growth of the tech start-up sector has led to corporates investing in a range of digital transformation strategies such as tech incubators, in-house mentoring, intrapreneurship schemes (behaving like an entrepreneur while working in a large organisation), challenge competitions and innovation centres. (Source: Nesta)
Scotland has established tech start-up communities in Edinburgh, Dundee and Glasgow. Edinburgh in particular is seen to be leading the field - this year readers of the European Business Magazine voted Edinburgh the best European city to locate a technology company, in the face of strong competition from Amsterdam, London and Barcelona.
Codebase, the UK’s largest technology incubator, is based in Edinburgh, and a number of Edinburgh-based tech businesses such as TV Squared, Administrate and Cog Books have brought products and applications to market that demonstrate the strength of Scotland’s digital tech community.
Over the next four years, worldwide spending on digital transformation technologies and services is expected to grow from around 2.4 trillion USD in 2016 to more than 2.7 trillion USD in 2020, with financial services, manufacturing and healthcare sectors leading the growth. (Source: IDC)
Fintech - powering financial transactions
Over the next three to five years, the cumulative investment into the fintech market is estimated to be worth 150 billion USD globally. (Source: PWC)
Changes in market dynamics, especially around regulation, will cause the financial services sector to focus on developing a range of digital services.
Some of the priorities for the key financial services sectors will be:
- Asset management - data analytics
- Banking - operational simplification
- Insurance - self-directed services
- Payments - identity authentication and protection
Laws and regulation can often be seen as a barrier to innovation. However, one local business, Amiqus Resolution, has seen an opportunity in regulation. It has developed a proprietary platform, AmiqusID, that allows users to do anti-money laundering compliance online. It has also developed technology that uses machine learning to provide dispute resolution and mediation.
Due to the pace of change in the industry, collaborative partnerships are increasingly important as traditional financial organisations seek to scale their services. The powerful combination of new business models and innovative technology has created a fintech market that is focused on improving the customer journey.
Collaborating with corporates can help emerging tech start-ups scale their business more quickly. Collaboration has been a key catalyst for Edinburgh-based Nile, a service design agency that works with a range of leading financial services businesses including Prudential Insurance, Royal London and RBS.
AI - adding insight to data
AI offers companies an opportunity to create value by removing time-consuming, administrative tasks.
Forrester predicts investment into AI platforms will grow 300% in 2017, compared to the amount spent in 2016. (Source: Forbes & Forrester)
Through the use of advanced analytics and machine learning technologies, insights created from the analysis of data will drive faster business decisions in marketing, e-commerce and product management.
Backed by a leading group of transatlantic investors, Glasgow-based Big Data for Humans (BDFH) has recognised the value that can be produced from data and has developed an automated customer insights engine. Using networks to analyse retail customers, BDFH’s customer graph solution allows marketing departments and data scientists to generate more revenue from data.
The potential of the future applications of AI and data technologies has helped to create the Edinburgh Centre for Robotics and Edinburgh Data Science, two initiatives focused on bringing the data community together to share best practice in data science.
Industrial Internet of Things - making industry mobile
The Internet of Things (IoT) is the concept of connecting any device to the internet.
The development of IoT-enabled services is governed by a series of open standards, including those being developed by the International Standards organisation. These standards have led to the emergence of a new market sector for IoT called the Industrial Internet of Things (IIoT). Alternatively known as Industry 4.0, IIoT focuses on combining cloud computing, low power wide area communications, analytics and business intelligence systems to create new human-to-machine interactions.
Building on the Scottish Government’s commitment to making the country a leader in IoT technologies, Stream Technologies, Semtech Inc and Boston Networks have collaborated with the Scottish Innovation Centre for Sensor and Imaging Systems – CENSIS – to establish a Scotland-wide IoT network. An advanced IoT network based on the LoRaWAN™ (low power wide area network specification), the network provides businesses with an opportunity to develop IoT products and technologies using the latest standards.
It is predicted that an estimated 24 billion IoT-enabled devices will be installed by 2020. (Source: Business Insider) Analysis from Strategy Analytics indicates that the size of the IoT market in 2016 is 150 billion USD and could grow to 550 billion USD by 2025. (Source: Strategy Analytics)
Virtual and augmented reality - the interactive experience
Consoles and PCs used to be the dominant video game platforms, but the development of iOS and Android platforms have led to more games being played on smartphones and tablets. In fact, the total revenue from games played on mobile platforms has surpassed that for consoles and PCs combined. Revenue from mobile games now accounts for 37% of the total gaming software sales worldwide. (Source: Games Industry.biz)
For many years, the video games sector has been focused on creating a variety of immersive experiences for its players. In the next few years we can expect to see e-sports, gaming through virtual reality (VR), massive multiplayer online games and augmented reality (AR) dominate game design, with AI, data science and cloud storage improving interactivity and gameplay.
Creating an immersive experience for users is key to the growth of VR systems, all of which require a mix of digital technologies. Facebook recognised Scotland as a leader in this field when it acquired Two Big Ears, a student spin-out from University of Edinburgh, which developed the 3DCeption Spatial Workstation for creating interactive 3D audio applications and tools for VR and AR devices.
Digi-Capital estimates that by 2020, AR could become the dominant reality platform. (Source: Digi-Capital)
Security - maintaining our identity
The security and privacy of personal data are major technology issues that have an impact on the adoption of new online services. The increase in security incidents and identity theft points towards a gap in cyber security expertise and skills.
Identity verification is now a vital component in the security procedures of financial services organisations. DirectID, a product created by Edinburgh-based ID Co, combines bank-verified identities and live financial data into a single platform that helps organisations increase lead conversions, reduce fraud and make more accurate decisions.
Security services that prevent data loss will continue to show strong growth in a market that is estimated to reach 81.6 billion USD in 2016. (Source: Garter)
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