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The pandemic spurred the need for an economic rebuild and fundamentally changed how we work. A slew of economic stimulus packages was launched to restart the economy. Their implementation is now under scrutiny in terms of execution and impact, with an emphasis on both sustainability and social protection.
Economies are transitioning to hybrid work models, and changes in the definition of the workplace call for strong identity and security protection mechanisms.
Such an impactful implementation requires a citizen-centric approach that is targeted and personalised. Cross-agency data collaboration, advanced analytics, and artificial intelligence (AI) capabilities are keys to enabling this.
Economies are transitioning to hybrid work models, and changes in the definition of the workplace call for strong identity and security protection mechanisms. Hybrid work has an impact on business continuity and inclusive value creation, as well as on the taxation base with real-estate, mobility and e-commerce patterns changing. Social protection and fostering a culture of long-life learning have become more important than ever with these new ways of working.
Following the pandemic’s impact, recent geopolitical unrest has put an even stronger emphasis on ensuring security, resiliency and sustainability.
Collectively these forces are generating economic headwinds that are stronger than ever:
- Pressure on currency reserves. In April 2020, the International Monetary Fund was tracking more than USD 9 trillion in global fiscal support measures to fight COVID-19. In 2022, as the economy slows down and public debt mounts, many countries are identifying new financing avenues to alleviate the impact on national reserves.
- Supply chain shocks. Supply chains have faced multiple shocks, resulting in growing supply-demand imbalances and contributing to inflationary pressures and economic uncertainty. Tax incentives and/or penalties around sustainability are also contributing to a radical rethink of global supply chains.
- Acute energy crisis. Geopolitical unrest has resulted in energy supply shortages and increased energy costs globally, driving the need for sustainable energy resources. Governments have been compelled to allocate funding, including reallocating stimulus funds, to protect households against the surge of energy prices.
- Surge in financial- and cyber-crime. An estimated USD 84 billion in the United States and EUR 800 billion in the European Union from COVID-19 recovery funds are susceptible to fraud risk. Cybercrime, including cryptocurrency-based crime and ransomware attacks, have reached new all-time highs. Open-source supply chain attacks increased 650% over last two years.
- Food security crisis. In March, the United Nations Food and Agriculture Organization warned that food prices could rise as much as 22% due to the war in Ukraine. A severe drop in exports is devastating global food security, and could add up to 13.1 million people to the existing 6 million undernourished or starving population.
To deal with all these challenges, governments are focused on increasing transparency and efficiency, making their services easily accessible to all and improving public revenue flows to finance inclusive economic development, while combating fraud, waste and abuse of public funds. Technology has evolved to cater to these needs for security, sustainability and resiliency, at scale and in compliance with privacy requirements.
In our view, these are the top three areas where digital transformation has global impact:
- Enabling financial stability, efficiency and inclusion. Financial stability requires strong capabilities to detect and prevent financial crime, fraud and corruption. Examples include AI and Machine Learning to detect anomalies in e-invoicing data or tools that combine beneficial ownership registry data with real-world behavioural data, as well as Confidential Computing to cater for the secured and privacy-preserving data collaboration needed to enable strong anti-money laundering strategies. Financial inclusion and resiliency are important mandates across the globe, and embracing open finance powered by an Application Programming Interface (API ) economy and Central Bank Digital Currencies have the potential to contribute to them. Trust-based technology, such as the Confidential Consortium Framework, are a pre-requisite for these financial shifts.
- Enabling economic resiliency, security and environmental sustainability. Resilient, proactive services require cross-agency data collaboration to allow for outcomes-driven decisions, with strong risk mitigation capabilities fueled by real time insights. Machine learning, AI, advanced analytics and low-code automation technologies are poised to enable supply chain resiliency. Precision agriculture, enabled by such technology innovation as utilised by the U.S. Department of Agriculture, can help address the urgent question of how to sustainably feed a growing global population.
In a digital economy, cyber security becomes a priority, and adopting a Zero Trust Framework approach helps organisations to effectively mitigate threats. In a global economy, cross-country co-operation will help improve collective capabilities to deter, detect, defend against and disrupt foreign cyber threats.
Technology can help tracking, integrating, analysing, and real-time reporting on data from large datasets to develop actionable plans to meet environmental sustainability goals, mitigate risks and uncover new opportunities.
Governments understand their role in becoming more proactive, collaborative and transparent.
- Enabling value creation and mitigating labour shortages. Digital payments, paperless services, immersive omnichannel experiences, data marketplaces and e-commerce are driving new value creation and easier access to a global market for all players, whether small businesses, independent workers or enterprises. An aging active workforce puts high pressure on business continuity and drives an acute war on talent. Public-private partnerships to enable a culture of life-long learning and building digital skills, as well as democratising access to technology through low-code/no-code capabilities, all contribute to alleviating this pressure.
Governments understand their role in becoming more proactive, collaborative and transparent. Transparency builds trust and trust drives compliance, catering for true public-private co-operation. To accelerate the move to a culture of greater transparency and accountability, governments are embracing digital transformation as the foundation for data-driven decisions towards the economic rebuild.