Coping with rising data inequality
Ling Hai looks at the rise of data inequality amongst New Zealand’s SMEs. It’s one of the long-term issues for business managers that are growing at a worrying pace. As the impact of COVID-19 continues to be felt across the world’s economies, supporting small and medium enterprises (SMEs) to maintain operations and employment is rightfully […]
Ling Hai looks at the rise of data inequality amongst New Zealand’s SMEs. It’s one of the long-term issues for business managers that are growing at a worrying pace.
As the impact of COVID-19 continues to be felt across the world’s economies, supporting small and medium enterprises (SMEs) to maintain operations and employment is rightfully the focus of policymakers and industry-leading businesses. SMEs need to remain top of mind in the months to come to ensure the vibrancy, diversity, economic stability, and creativity of all industries globally.
However, today’s focus on the most immediate SME needs risks taking attention from longer-term issues that are also growing at a worrying pace. One concern, in particular, needs renewed interest and attention: data inequality.
Data inequality encompasses not just access to data but also the ability to perform analytics and pull insights from that information. Just as having a bank account is not full financial inclusion for SMEs, if they cannot also access capital and other financial products, the act of owning data is not the same as data equality if SMEs do not have the tools and skills to use it.
The rising data economy was already challenged by significant inequalities before the pandemic. At the leading edge of today’s data economy, well-digitalised companies are shaping data into state-of-the-art virtual models across commercial life – creating retail shoppers, product prototypes, marketing campaigns and others – to optimise business outcomes and swiftly adjust to COVID-19.
But on the edges of that same economy, poorly digitalised companies – largely SMEs – are still struggling to implement the basic technology needed to grow towards more mature data use and analytics. Between the two are millions of companies developing their data capabilities at different stages and rates.
As the backbone of New Zealand’s economy, SMEs cannot be left behind to solve the data and insights gaps themselves. SMEs infuse countries with fresh ideas, energy and innovation. Local businesses build and support communities with tailored products and services, and opportunities for employment. They must be better supported and protected.
The situation for many of these SMEs is now precarious at best and dire at worst. COVID-19 has hit the markets at a time when commerce is already hyper-customised. Local businesses that have created this experience through in-person channels suddenly need to do the same online. Businesses with existing online strategies suddenly need to scale up even faster to manage their profitability.
In this environment, less digitally-resourced players are struggling to adapt and risk falling dangerously out of touch with their markets – and the information embedded within. As the effects of COVID-19 wear on, their challenges will only compound. With fewer digital tools comes less enterprise resilience and strength. The further these companies fall behind, the less competitive they’ll become and the more distance that will open between them and players with stronger tech.
To help these SMEs, the prevailing wisdom around how to bring them into the digital economy needs to be reexamined.
For years, large technology companies have focused primarily on building access to consumers and delivering this access to SMEs through large retail, sharing economy and delivery platforms. This strategy has driven much digital transformation around the globe but has not fully prepared SMEs for the next generation of digital commerce in which they need more than just virtual storefronts. They also need the ability to better understand their customers, react to insights and build new information into their business operations.
To solve this in New Zealand and across the Asia Pacific requires networks of private-private and private-public partnerships across the region, all committed to the following four objectives:
- Accelerating the democratisation of technology: Big technology players need to continue developing platforms where SMEs can gain skills, analyse data and leverage information for their businesses – with Mastercard’s Simplify platform for SMEs being one such example. Much in the same way web development has moved from being solely in the hands of programmers to more accessible platforms, so should today’s more sophisticated data analytics and artificial intelligence tools become widely available. The more people who can understand and use these tools, the more positive impact they can have on economies.
- Supporting skills training: While much is already being done by policymakers and private players to impart SMEs with the digital skills they need to survive COVID-19, more is still needed. These efforts need to include all enterprise types – from micro businesses to NGOs to governments – and extend beyond the pandemic. A more digitalised economy is a more robust and resilient economy, and that strength can only be built by the individuals who use the technology. Programmes such as Mastercard’s Digital Acceleration, a one-stop resource site to support digital transformation of SMEs, are initiatives to help SMEs plan for their long-term success and equip them with digital skills.
- Streamlining trade: As SMEs begin recovering from this first wave of COVID-19, they will be looking to protect their businesses from subsequent shocks by building more agile and efficient supply chains and broadening their access to consumers. At the heart of both these economic activities is trade. To better support SMEs in their effort, more needs to be done to make this activity easier and faster, especially across borders.
- Strengthening cybersecurity: As digitalisation expands, so do the associated cybersecurity risks. To protect the digital ecosystem and maintain the confidence of SMEs and people in the digital economy, all enterprises should be given access to cybersecurity tools and the knowledge they need to secure their businesses. Larger technology players should also set and encourage the highest industry standards for all players. As part of our own efforts, Mastercard is currently giving free access to RiskRecon, our cybersecurity protection tool, to healthcare service providers globally.
In short, for data inequality to not worsen during and after COVID-19, those with strong data and the associated technology capabilities should make a more concerted effort to ensure those without do not get left behind.
This is not a matter of corporate social responsibility but one of economic necessity and opportunity. The successes of all businesses, large and small, are intertwined in today’s uncertain environment. Increasing access to the technology tools and skills that SMEs need to be resilient is one of the most powerful ways to ensure enterprises not only recover from COVID-19 but go on to have an even brighter digital future.
Ling Hai (pictured) is Co-President, Asia Pacific for Mastercard.