7 areas of innovation for the digital future

Press release: 7 areas of innovation

In order to survive digital transformation and successfully secure its competitive edge in the long term, the Swiss economy will have to win out over a range of disruptive forces. In its whitepaper “Shaping Switzerland’s digital future”, KPMG outlines 7 areas of innovation and opportunity for Switzerland.

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Hailed as the fourth industrial revolution, digitization set out on its triumphal march years ago. Yet the pivot of this development is Silicon Valley. This represents a risk to the Swiss economy in that it is no longer able to make autonomous decisions relating to key developments, its future contribution and, ultimately, its attractiveness as a business location. In the coming years, Switzerland will therefore need to learn how to cope with disruptive forces and to transform them into opportunities. In so doing, the country will be able to fall back on its proven strengths, but will also need to take resolute action to tackle some key issues.

These disruptive forces include:

  • Race for the customer: Businesses are being forced to become more customer-centric in their activities to accommodate the changes taking place in demographics, behaviors and expectations.
  • Mobile economy: High-performance, low-cost devices that are linked via high-speed wireless and WiFi connections and apps are giving rise to a mobile economy.
  • Internet of Things: Networks of sensors in machines and other physical objects monitor, collect and exchange data via cloud computing.
  • Digital labor: Knowledge- and expertise-based professions are being revolutionized by cognitive systems, artificial intelligence and the automation of processes using software robots.
  • Platform business models: Digital marketplaces and auctions will radically transform the existing business models of a wide range of different industries, facilitate exchanges between business partners, reduce transaction costs and optimize resource and capacity deployment.

Switzerland is already capable of overcoming disruptive forces thanks to the country's renowned strengths as a business location – strengths such as political stability, its direct democracy, strict data protection regulations, its modern, tech-savvy society, a reliable legal system, a competitive tax system, a highly qualified workforce, flexible labor laws, a high living standard as well as leading universities and R&D activities.

Yet to safeguard its attractiveness as a business location, Switzerland will also have to work on overcoming its weaknesses, including high labor costs, an uncertain immigration policy in connection with the implementation of the mass immigration initiative and tax challenges that still act as a barrier for start-ups.

7 areas of innovation to ensure a viable digital future for Switzerland

KPMG has identified 7 areas of innovation that offer substantial opportunities for Switzerland:

  1. Digital workbench
    The global digital economy will give rise to an entirely new value chain. The appeal of outsourcing to low-wage countries is likely to fade since the demand for technical skills in areas such as data analytics will be on the rise. Switzerland is perfectly poised to become a digital workbench for the global economy: Its qualities include a well-developed infrastructure plus a high degree of stability, legal certainty and data protection regulations. Switzerland needs to step up its investments in education and research, however.
  2. Data custodians to the world
    Data are the currency of the digital age. Thanks to Switzerland's international reputation as a reliable, trustworthy partner, numerous data centers and other infrastructures are already located here. In order for Switzerland to safeguard its standing as a reliable data custodian going forward, the political realm needs to create the right conditions and strike a balance between the conflicting interests of data protection and the most liberal data usage possible.
  3. FinTech Valley
    Switzerland has what it takes to be a leader in the area of digital financial services: extensive experience in the banking and insurance industries coupled with technological expertise. Developments in the area of FinTech are presently too focused on the country's small domestic market which is why they are still largely under the radar internationally. High labor costs – and consequently lower productivity – are also putting a damper on Switzerland's competitive edge.
  4. Robust industrial controls
    Industry 4.0 is an interconnected force built on functioning control systems and defensive mechanisms. Without these security systems in place, the real world is at risk of breakdowns and even catastrophes as a result of cyber-attacks to critical infrastructure such as power plants. Switzerland is already a global leader when it comes to its cyber security expertise. The next step is to set the right liberal priorities in the country's educational and migration policies to prevent a shortage of professional engineers.
  5. Robotics in healthcare
    Technical advances in the area of robotics and our increasingly ageing society are two parallel developments in today's world. That demographic trend, however, is leading to rising healthcare costs that could potentially be mitigated through the increased use of robots in hospitals and care facilities. Outstanding research is taking place in Switzerland in the area of robotics, some of which can be found in institutions connected to ETH Zurich and Lausanne. Their innovative strength now needs to be successfully transferred to this forward-looking market.
  6. Switzerland as an incubator for design thinking and global innovation
    Human creativity, mediation between parties and constructive approaches to problem-solving will also be in high demand in the digital future, probably even more so than ever before. Switzerland is already home to a number of international organizations and events like the UN and WEF. If Switzerland wants to evolve in its position as a creative hub even under these new conditions, the right strategic course needs to be set and the exchange between the realms of economics, politics and science must be cultivated with the same urgency. This function’s major challenge lies in monetization.
  7. Direct democracy as an export
    In an era shaped by participatory social media, the Swiss system of direct democracy is more relevant than ever. Switzerland could offer “Democracy as a Service” (DaaS) to set an example for other countries and offer this successful model as an export – particularly in combination with the very latest technology. Yet to be credible, Switzerland first needs to make progress in its own e-government endeavors and push ahead with the launch of a national digital ID.

More innovation, positive corporate culture, pragmatic regulation

If Switzerland as a business location wants to be well prepared to tackle this challenging trend, players from the realms of business, politics and society need to take action now and set the right priorities. These efforts need to focus on education, entrepreneurial spirit and the regulatory environment. Digital awareness has to be promoted at each and every level of education. At the same time, this revolutionary phase requires a social and business climate that also understands how to deal with setbacks and emphasizes the positive aspects of digitization for the general population. What's more, a regulatory environment is needed that addresses the current challenges as pragmatically as possible.

Shaping Switzerland's digital future

Shaping Switzerland's digital future

7 visionary business opportunities for leading in a digital world.

© 2017 KPMG Holding AG is a member of the KPMG network of independent firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss legal entity. All rights reserved.

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