Mariame McIntosh Robinson | Reflections from Davos 2019
The following are First Global Bank CEO Mariame McIntosh Robinson’s reflections from the Annual Meeting of the World Economic Forum - Davos 2019in January this year.
Attending the Annual Meeting of the World Economic Forum (the ‘Forum’) in Davos Switzerland (the ‘Annual Meeting’) earlier this year was inspirational and somewhat difficult to put in words. Three thousand delegates officially attended this intimate gathering of world leaders, leading academics and CEOs, however very few attended from small island nations. I was invited to attend as a World Economic Forum Young Global Leader. The only other attendees from the Caribbean were: a Global Shaper (World Economic Forum community for young leaders under the age of 30) from Suriname; and the Premiere of Bermuda.
The mood in Davos this year was a somber one. It was widely recognised that our planet is in crisis on so many levels. This current state of affairs can be characterised by three main trends:
1. Climate change
2. Rapid progress into era of the Fourth Industrial Revolution (the “4IR”)
3. Rising nationalism and declining trust
As such, the theme for this year was Globalization 4.0 which includes an emphasis on inclusive, human-centred growth with no one left behind. There is a recognition that the acute problems we face today in democracies around the world is in part due to an unprecedented level of growth enjoyed globally, however many were left behind. In fact, with each industrial revolution, which is happening now in shorter cycles (we are at the fourth one), the risk of leaving persons behind is always present. So what can we do and what are the implications for Jamaica and other small island nations in our region?
Trend #1: Climate Change
Climate change is arguably the single largest risk facing the Caribbean region today, with far-reaching adverse consequences for economies and residents in the future if not properly addressed. Although governments across the region have been responding with policy changes (ban on single-use plastic; diversification into renewable energy technologies etc.), the dialogue and behavioural changes are taking place primarily among the experts and lawmakers. The urgency is not being felt more widely across society. According to the Forum at this year’s Meeting, the planet has 12 years to address climate change in a meaningful way before the change becomes harder to reverse.
Ideally, every Jamaican would recycle, conserve, and learn about the impact of climate change. The private sector in the Caribbean, in partnership with their governments, should play a leading role in helping to change behaviour of all residents. Succeeding at bringing about this behavioural change can be a game-changer and will become increasingly urgent for our region. This will require putting in place infrastructure, incentives, funding and effective ongoing communication. For example, in our household, we drop off our recyclables at my son’s preparatory school weekly because they have a recycling programme; there is no state-level garbage collection for recyclables. Globally, a G20 taskforce is leading a coordinated shift in development bank business models from direct lenders to risk mitigators for private investment. Development financial institutions continue to give funding support to our region in this area, including disaster resilience, and a couple corporate foundations in Jamaica are doing more to increase the awareness and activities targeting a broad-based audience (e.g. GraceKennedy Foundation leads frequent beach cleanups and hosted their recent Annual Lecture on Climate Change and its Impact). However, so many still remain on the sidelines with limited awareness hypothesised as one of the main reasons. When will our region feel the urgency to address this issue at all levels?
Trend #2: Advent of the Fourth Industrial Revolution (“4IR”)
I attended a number of panels and plenary sessions on themes related to technology and the 4IR, with key takeaways most relevant for our region below.
(A) Digital transformation - Many companies will undergo digital transformation as they seek to remain relevant and win with consumers and shareholders. At the core of digital transformation is being able to discover and address a raw customer need (not solely about automating and making processes more efficient). A company undergoing digital transformation is similar to “building a better, faster horse while at the same time imagining the car”. Cultural transformation is also a key ingredient, including the upskilling of teams. Examples cited and shared include:
1. Netflix: the company redefined itself multiple times over the years to address the raw need of “helping people to find movies that they love”.
2. Dominoes Pizza: its digital transformation focused on the raw need of “speed”. Dominoes became a technology company that enables pizza to be ordered and delivered.
3. IKEA: its CEO shared their current digital transformation journey of making products accessible 24/7 by migrating from its flagship store model to the digital era.
As expected, digital transformation relies heavily on using data to make decisions. However, emerging markets are typically characterised as having a scarcity of data. As such, companies in Jamaica and our region must invest in ensuring that data capture, quality and storage are efficient, accurate and easy to navigate.
(B) Importance of Data - There was rich debate and discussion around data as its use and importance accelerates with the move into the 4IR.
Provocative questions were raised such as:
1. Who owns the data – the individual or the entity? Europe, for instance, has decided that the individual owns the data hence the creation of the EU General Data Protection Regulation (“GDPR”).
2. How do we create rules to regulate and govern data globally? There needs to be a global set of data rules versus the current practice of the courts setting the rules around the world. The framework must also restore the low trust in governments and companies.
3. How do we effectively deal with cybersecurity? This problem is particularly acute for banks.
The world is currently in the infancy stage of the data economy. It was widely felt at the Annual Meeting that this data economy must be positive for mankind and humanity. As an example, the CEO of AIG shared details of a pilot under way where predictive data is used to provide micro insurance to farmers in Zimbabwe. There are many opportunities in Jamaica to use our data to drive inclusive, human-centred growth, some of which are already being pursued by both the government and private sector. Are we doing enough at the right pace?
(C) The Gig Economy- The gig economy, defined as freelancers connected to jobs via technology platforms, is growing. This growth is supported by technology; millennials’ preferences to work outside of the traditional 9-5 job; and employers’ shift to flexible work arrangements. Data is the key currency. The gig economy is more prevalent in emerging markets in sales, creative industry, etc. Interestingly, the gig economy in developed countries consists primarily of drivers e.g. Uber, Lyft, Amazon team members. The World Bank predicts that 750 million persons will join the gig workforce by 2025. Infrastructure support for the gig economy is expected to strengthen further with the migration to 5G.
Young people living in our region can benefit from this growing gig economy, whether the opportunities are local or global, and should prepare themselves with these skills at a minimum:
1. Digital literacy
2. Ability to negotiate, for example with customers, colleagues, employer etc.
3. Customer service skill set
A key complication of the gig economy is how to ensure the tax code evolves to support this sector. Overall, the gig economy can create opportunities particularly in emerging markets, and employers can benefit by understanding and getting ahead of this growing trend.
(D) Biggest tech risks on the financial horizon - The revised financial infrastructure put in place after the global financial crash of 2008 has strengthened the banks across the globe. However, there was discussion about whether a new crisis could be averted given new trends.
i. Fintech & e-payments: The rise of fintech and growth of non-banking financial sector represent tectonic changes in the financial services sector. In China, Alibaba and Tencent have gained millions of users by providing e-payment services to those who lacked access to traditional banking. Technology has democratised investing and lowered the cost of innovation; but it has also created vulnerabilities to the international financial system. Questions persist on how and how much these new sub-sectors should be regulated.
ii. Cybersecurity: Cybersecurity forces a frank look at whether our system can withstand outages of core services. While Cloud computing can help to distribute the risks, most executives are hesitant about migrating their technology for core services to the Cloud. They trust the privacy and reliability of traditional servers and data centres.
iii. Social media: Most companies are a tweet away from a social disaster. As such, there is increasing pressure on firms to generate short-term profits as well as long-term social impact. Given the current low levels of trust, defining and executing on ‘profit with a purpose’ is a must-do for companies.
Trend #3: Rising nationalism/declining trust
Despite a tripling of global GDP since the 1990s, inequality has increased. With every industrial revolution, a social revolution must follow to ensure the inequality gap does not widen. Open global markets, free movement of capital, and the technology revolution has generated a large pay off as expected, but not for all. This has resulted in the rise of populism and a trend towards de-globalisation.
Jamaica, a small open economy, has to navigate this dynamic landscape which has seen events such as Brexit; US policy changes on trade and climate change; and Venezuela. It is clear that a radical re-think of regional institutions is needed to ensure that this current version of globalisation delivers sustainable, human-centered development. We are living in interesting times and must ensure we continue to have a “seat at the table” as a small island nation and region, and we continue to be a people of ‘action’.
- Mariame McIntosh Robinson is CEO of First Global Bank