February 20, 2019
Digital Identity: The Key to Boosting Digital Maturity
Posted February 27, 2018
There’s growing evidence that digital maturity is rapidly becoming the determining factor of a business’s growth potential in virtually every industry—and that digital identity-centric systems may be an increasingly important driver of this growth.
According to new research from Bain & Company, revenue for digital leaders grew 14 percent during the past three years, more than double the performance of digital laggards in their industries. Indeed, 83 percent of the leaders saw increases in margin, compared to less than half of laggards.
But as it turns out, achieving that kind of success isn’t just about your business’s level of maturity. It’s also about how fast you get there—and what you aim for in the first place.
Disruption is Not Enough
Netflix. Lemonade. Uber. Amazon. No matter the industry, digital-native entrants are continually rising up to challenge incumbents by delivering a new level of efficiency and consumer convenience through digital innovation.
This can quickly put pressure on the revenue and profits of legacy players. But according to a recent industry study, this dynamic usually results in incumbents reactively launching their own digital initiatives to short-circuit the threat, which sometimes cuts into yet more revenue and profit growth.
A survey of 2,000 companies found that the return on this kind of digital initiative can be as low as 10 percent, which barely covers the costs. Meanwhile, established brands that fail to react to digital at all can see half of their revenue growth and one-third of earnings growth evaporate.
Often what separates digital leaders from their more reactionary counterparts is an offensive posture rather than a defensive one. Companies with bigger, bolder and more aggressive strategies aligned to their core strengths stand the greatest chance of success.
These brands typically aren’t just trying to maintain share by streamlining existing processes and customer-facing operations. They’re seeking to out-execute the competition, build sustainable growth and even redefine their industries.
The Customer Digital Journey Comes First
Central to this digital maturity is a focus on the customer journey.
After all, today’s digital consumers want what they want, which often means providing them with personalized services that are also mobile and secure.
Indeed, according to Forrester Research, identity-centric approaches that enable both personalization and security will prove especially powerful in the year ahead.
Companies that have deployed cognitive, digital identity-based solutions are able to do more than just offer customers a seamless experience across all digital channels. They can also block the kind of cyberattacks that lead to the theft of personal assets and data, as well as seriously damage the brand.
According to the Definitive Guide to Digital Identity, even organizations at the lower end of the Digital Identity Maturity Map can use digital identity to authenticate around 94 percent of new and returning customers, understand the context for each interaction, and make accurate, real-time trust decisions at the point of each transaction. Best of all, they can reserve extra, friction-causing security measures for the estimated 6 percent of transactions that typically warrant it.
Forrester estimates that, in 2018, 30 percent of companies will fail to develop identity-centric digital services with this kind of ease, convenience and security—putting their brands at risk.
It’s a Winner-Take-All Economy
According to McKinsey, scale and network effects matter too—especially in terms of how quickly a business can establish them before competitors do. Think of how Amazon towers over competitors, or how the iPhone dominates smartphone profits.
The problem is that this dynamic is quickly creating a power curve—what McKinsey calls “winner-take-all-economics”—in which the brands that are fastest (and nearly-as-fast) to a substantive level of digital maturity can achieve double the earnings growth of the bottom three-quarters of all companies.
In short: Winning through a meaningful level of digital maturity pays well.
Check out The Definitive Guide to Digital Identity, an online resource designed to further understanding of digital identity and the critical role it plays in digital transformation initiatives.