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The region’s Digital Startups and Fintechs grow and prosper

The region’s Digital Startups and Fintechs grow and prosper

In MENA’s Maturing Ecosystem dated September 3, 2019, author Chloe DOMAT says that “as the region’s digital startups and fintechs grow and prosper, they must learn to scale, despite a highly fragmented economy.”

The region’s Digital Startups and Fintechs grow and prosper

Once again this year, the digital economy of the Middle East and North Africa is set to break records. The first half saw $471 million in total funding and 238 deals, according to the latest report from Magnitt, a Dubai-based entrepreneurs’ network. That’s a 66% increase over the dollar volume in the first half of 2018 and 28% more deals.

Digital startups barely existed in the MENA region a decade ago. Now, fintech is a thriving sector embracing hundreds of new companies, jobs and investors. As the ecosystem expands with tens of newcomers each year, funding tickets get bigger and bigger.

“If we look back a few years, a deal at $2 million or $3 million would have made the headlines; today, we have multiple $10 million-plus deals,” says Omar Christidis, founder and CEO of Arabnet, a Beirut-based events and research company specializing in the region’s digital economy. “This is an indicator of the increasing maturity of the market.”

Major deals so far this year have included a $100 million capital injection in Dubai-based Emerging Markets Property Group (EMPG); a $65 million Series A round for Yellow Door Energy, also in Dubai; and $42 million for Egypt’s Swvl, a transportation app.

There is still a disconnect, however, between the growing demand for funds at all levels and the capital currently available to satisfy it, industry insiders say. Money is expected to keep pouring in, as an increasing number of international institutions enter the region. Big names like Endeavor Catalyst (US), Vostok New Ventures (Sweden), MSA Capital (China), Global Founders Capital (Germany) and Kingsway Capital (UK) already make up a third of the Middle East’s investor list.

Aiming to attract even more foreign capital, countries including Bahrain, Saudi Arabia and the United Arab Emirates (UAE) have also started establishing funds of funds.


CompanyActivityCountryFunding ($ Mil.)
EPMGReal EstateUAE100
Yellow Door EnergyEnergyUAE65
SwvlTransportEgypt42
AWOKe-commerceJordan30
Mawdoo3e-commerceJordan23.5
Jamalone-commerceJordan10
Noon Academye-learningSaudi Arabia8.6
Spriie-commerceUAE8.5
JustCleanServicesKuwait8
yallacompareFintechUAE8
 

For the first time, numbers of local companies are successfully reaching the end of the startup lifecycle and exiting through mergers or acquisitions. In March, Uber bought Careem, a Dubai-based ride-hailing application, for $3.1 billion, in a deal that marked the region’s first unicorn exit.

The pace has only picked up. At least 15 Middle Eastern startups have performed exits since January, including digital fashion platform Namshi, sold to Dubai’s Emaar Malls in February; the purchase by Majid al Futtaim, a Dubai-based shopping mall and retail operator, of Saudi Arabian online grocery store Wadi in May; and EMPG’s purchase of Jumia House, a property portal for Morocco, Algeria and Tunisia, in June.

These exits leave a new generation of former staff members with a lot of means. After Careem’s exit, 75 ex-staffers cashed out over $1 million each. That financial capital, as well as the beneficiaries’ acquired knowledge and expertise, will allow a number of them to start new business ventures.

The Imperative to Scale

While tech companies grow larger, entrepreneurs face new challenges.

“As mature startups move to larger funding rounds and raise interest for acquisitions, they need to scale operations, whether vertically with new business lines or geographically,” says Philip Bahoshy, CEO and founder of Magnitt.

Navigating across the region’s approximately 22 countries, each with its own complexities, is not easy, however. From Morocco to Iraq, Arab states differ dramatically from one another in size, population, wealth, laws, digital infrastructure and business culture.

“Seeing the MENA region as one big market is to a certain extent a misrepresentation because our markets are superfragmented,” says Christidis. “A company that wants to grow from Lebanon into Jordan into Iraq into Kuwait into Saudi Arabia has to enter five separate markets.”

The UAE is clearly driving the game. In the first half of 2019, the Emirates received 66% of the money invested in all MENA startups and captured 26% of the deals, according to the Magnitt report. Dubai has by far the most developed ecosystem, with a concentration of global firms’ regional headquarters, major funding institutions and accelerators.

The UAE, and Dubai itself, have worked to build an advantage. In 2017, the UAE became one of the first countries in the world to appoint a minister of artificial intelligence. Dubai’s Crown Prince Hamdan bin Mohammed bin Rashid al Maktoum has promised that the government will go 100% paperless by 2021.

“The UAE has been leading from the front,” says Amol Bahuguna, head of payments and cash management at Commercial Bank of Dubai (CBD), which just launched a new e-invoicing service. “Everything that has to do with the government is going digital. You have a real top-down approach to innovation and things move fast.”

Much will hinge on how the UAE, and Dubai in particular, manage their response to the current economic slowdown. Recent government data show that real estate, financial services and tourism—the pillars of the economy—are in a slump. In 2018, Dubai also recorded its biggest net loss of jobs since the global financial crisis.

The Emirates have competition, too, from Saudi Arabia, the biggest emerging market in the region with over 34 million people and high purchasing power. The authorities there are keen to diversify their oil-based economy, including promotion of the digital sector.

Riyadh set up a fund of funds to attract foreign investors to support startups. Saudi authorities will invest dollar-for-dollar as a limited partner in any new fund that commits to investing in the kingdom. They have also promised to streamline the licensing process for foreign startups so that they can settle in Saudi Arabia easily.

New Saudi-based funds such as Saudi Telecom’s $500 million ST Ventures, Vision Ventures and Hala Ventures, that have emerged in the past three years, are becoming large players in the regional venture capital game, leading $10 million-plus investment rounds.

On the other side of the MENA map, North Africa is also showing strong digital growth potential. Morocco, Tunisia and Egypt are investing heavily in the development of their own high-tech ecosystems, aiming to become the bridge to Europe and the gateway to sub-Saharan Africa. Tunisia recently passed laws supporting tech innovation; and in September, Tunis will welcome Afric’Up, a large pan-African startup-pitch competition.

Fintech’s “Gold Mine”

Although it hardly shows in this year’s top deals, fintech remains the fastest growing sector within MENA digital economy. In the first half of this year, fintech accounted for 17% of all deals, up 9% from 2018. Interestingly, almost 90% of the total $24 million funding went to early stage startups, underscoring that the sector is still in its infancy.

The data also reveals enormous potential. Arab countries are home to over 380 million people, half of them under age 26. Financial inclusion is among the lowest in the world, with only 52% of men and 35% of women owning a bank account as of 2017. The vast majority of those with bank accounts, however, own a mobile phone (86% of men and 75% of women).

By mid-2018, the whole MENA region, including North Africa, had 381 million unique mobile subscribers, according to GSMA Intelligence, a mobile industry trade body. Smartphones accounted for 52% of all connections and are expected to grow to 74% by 2025.

“These figures highlight the tremendous opportunity,” says Nameer Khan, founding board member of the newly established UAE-based MENA Fintech Association. “The region is literally a gold mine.” The lure for fintech investors and entrepreneurs is the chance to enter an untapped market in which hundreds of millions of users could leapfrog from the cash economy to the digital.

Fintech subsectors widely thought to hold growth potential include insuretech, robo-advisory wealth management and sharia-compliant services. But payment services, not surprisingly, stand out prominently for both the number of startups and the value of deals. Mobile payment, money transfer and lending platforms remain the main focus; while more-sophisticated technologies such as blockchain, the cloud and artificial intelligence still lag.

Egypt’s Fawry is one of the biggest success stories in payments. Launched in 2008, the company raised $122 million; its initial public offering on August 8 sold 36% of its share capital for $97 million.  Also attracting notice in the sector are PayTabs, a Saudi Arabian online payment facility that announced in August that it had raised $20 million to support its expansion in the region and into Southeast Asia, India, Africa and Europe; and the Dubai-based peer-to-peer lending platform Beehive, with a total capital injection of $15.5 million as of March 4.

The payment landscape looks to change rapidly, however, as larger players seek their share of the fintech market. Careem, for instance, claims over 30 million users in the region and is currently rolling out its Careem Pay e-wallet. If the service succeeds, Uber-owned Careem could become one of the biggest MENA fintechs.

Digital Banking Multiples

Banks and financial institutions view the fintech surge as an opportunity to outsource innovation and digitization. From simple online banking and mobile applications to investment platforms and e-wallets, most MENA lenders are seeking partnerships with startups. Some have even rolled out fully fledged, branchless digital neobanks, including Emirates NBD’s Liv., Mashreq Neo, and Gulf International Bank’s Meem.

These operate under a conventional lender’s license, however. Since they were developed by traditional banks, they are not industry disruptors, like startups Revolut and N26; rather, they act like new-business verticals, intended to seduce tech-savvy youth and target the unbanked. For a digital banking startup to seriously challenge the major players would be a monumental task.

“Banks in the Middle East are very large; what we are seeing recently is market consolidation, so they are getting even bigger,” says Arabnet’s Christidis. “I don’t think any of the startups really want to take them on, head to head. I’m not sure either that there would be investors ready to bankroll that kind of an investment. Furthermore, I question what kind of industry lobbying bite the banks would put on if they really started seeing that kind of thing emerge.” Christidis believes only an already established player from outside the region would have the financial muscle to give it a chance to compete.

Such a competitor might come from outside the financial sector entirely, however. Abu Dhabi Global Market, a key Emirati financial center, announced in July that it is ready to issue digital-banking licenses to nonbanking firms “with innovative value propositions.”

As this suggests, while the MENA digital economy is developing faster than ever, legal and regulatory frameworks need to adapt for growth to be sustained. Procedures to register a company, licensing and liability laws in case of business failure or bankruptcy are among the key differentiators governments will have to consider as they look to make themselves more competitive.

“Governments are showing concerted interest in building digital ecosystems for their countries,” says Magnitt CEO and founder Bahoshy. “There are still challenges to be overcome, but we can expect success stories to be more frequent, have higher value and have more impact in the coming years.”

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Tech can empower refugee communities

Tech can empower refugee communities

Tech can empower refugee communities – if they’re allowed to design how it works.

By Reem Talhouk, Newcastle University; Andy Garbett, Newcastle University, and Kyle Montague, Newcastle University.

In Lebanon, around 350,000 Syrian refugees don’t have access to enough safe and nutritious food. To stem the crisis, the World Food Programme (WFP) of the United Nations introduced an electronic voucher system to distribute food aid. People are given debit cards loaded with “e-vouchers” that they can use in certain shops to buy food.

But we found that Syrian refugees living in rural Lebanon often have to make difficult choices when buying essential items at the expense of food. Their e-vouchers can only be used in exchange for food, not other essentials like nappies.

Refugees have to engage in “grey-area transactions” that work around the e-voucher system, by asking shop owners to sell them the nappies and instead record on the system that they bought food. This places refugees in a vulnerable position – shop owners often charge higher prices for scanning non-food items as food, but refugees have no choice but to depend on shop owners to cooperate.

Using dialogue cards, Syrian refugees mapped out their experiences of food insecurity and their interactions with shop owners. Reem Talhouk, Author provided

Collective purchasing allows refugees to pool their cash and e-vouchers so that one person can buy non-food items for another and be repaid with food. This allows people a degree of autonomy – they don’t have to rely on shop owners to allow them to buy non-food items using their vouchers. Instead, the community can manage their resources and needs among themselves.

Unfortunately, the e-voucher system prevents refugees from buying goods in bulk. Shop owners are advised by the WFP that purchases by refugees should be typical of buying food for a family. If refugees want to buy enough rice for their community and benefit from a wholesale discount, then the shop owner can refuse the transaction. This makes collective purchasing – something refugees often prefer to do when they have cash available – more difficult.

The WFP is currently piloting blockchain technology to replace this e-voucher system in Jordan and Pakistan. This is an exciting opportunity to alleviate these problems and help to empower both refugees and the shop owners, but only if the refugees themselves are involved.


Food aid designed by refugees

Rather than using a debit card, under this new system refugees would have a digital wallet that is similar to a bank account that you can access online. And instead of it being hosted by a bank, it’s part of the blockchain.

A blockchain is a shared log of transactions, with each user being able to track how much money and goods have been exchanged. This is constantly updated as transactions of food aid and money transfers are agreed between the customer and the shop owner. Each transaction forms a block of new information. The digital ledger is an expanding chain of interconnected blocks of information – hence the name, blockchain.

The WFP is using blockchain technology to cut costs on currency exchange and bank transfers. But the blockchain still allows transactions between refugees and shop owners in the same manner as the e-voucher system. If this new and innovative technology mimics the model that came before, the restrictions on what refugees can do will continue and blockchain will mimic paternalistic aid models that focus on efficiently distributing aid, rather than empowering refugees to leverage their own ways of coping with food insecurity. But if aid is designed with input from refugee communities, the technology could give Syrian people in Lebanon more agency when buying the essentials they need to live.

A Syrian woman’s depiction of her community’s food insecurity. Reem Talhouk, Author provided

Blockchain can write smart contracts, which would allow people to buy items together. These are agreements whose terms are automatically enforced by an algorithm. Smart contracts act like a lock box with two keys that can be used to open it, one key is given for each party involved in the contract.

When the smart contract is created, both parties set the conditions that need to be met for them to be able to use the keys to open the lock box. Both keys need to be used for the lock box to open and for the money to transfer to complete the transaction. Before this can happen, both parties must agree that the conditions of the contract have been met. With this, refugee communities can negotiate collective purchases with shop owners and hold them accountable to the agreements they make.

Negotiating the terms of the smart contract means that refugees have more of a say over what they consider to be a fair deal. Once the smart contract is in place, the agreed sum of money for the purchase will be placed in a digital wallet – the lock box – that is bound by the terms of the smart contract. The value of items purchased by refugees is deducted once they’ve verified their identity with a retina scan, but the money will only be released to the shop owner if the refugees verify that they received the items.

We saw how these smart contracts could rebalance the power disparity between refugees and shop owners. Including refugees in the design process of humanitarian technologies and aid models can ensure they incorporate the values and practices of the people they’re supposed to help. Future innovations must be rooted in the daily lives of refugee communities. These technologies can empower people and make a real difference to their lives, but only if they’re allowed to design how they work.

Reem Talhouk, Researcher in Human Computer Interaction and Design, Newcastle University; Andy Garbett, Research Associate in Computing Science, Newcastle University, and Kyle Montague, Lecturer in Digital Civics, Newcastle University


This article is republished from The Conversation under a Creative Commons license. Read the original article.

Read more: Beyond Bitcoin: how blockchains can empower communities to control their own energy supply

How young people really feel about digital technology

How young people really feel about digital technology

Revolt on the horizon? How young people really feel about digital technology. It is already happening but on the other side of the Mediterranean. The 2011 raucous events liberally labelled ‘Arab Spring’ surfing on the then available Social Media did take their respective establishments by surprise in Tunisia and Egypt. Lately, it is Algeria’s as well as Sudan’s that no doubt are undergoing the same treatment. The almost full and deep spread of Digital Technology is definitely for something in the simultaneous and coordinated gatherings, for instance in every single town and village of all and far-flung 48 provinces of Algeria. Moreover, the impact of social networks has given a specific decantation process via all social media seems to help in delineating issues and decide ways to pursue each and to which end. Inevitable progress and/or technological advances in the digital hardware in hand is making it hard to predict where all this is leading.

Meanwhile here are Dr Mike Cooray, Hult International Business School and Dr Rikke Duus, UCL with their views on the matter this side of the English Channel.

File 20190521 23823 1t9fa9p.jpg?ixlib=rb 1.1
DisobeyAr/Shutterstock

As digital technologies facilitate the growth of both new and incumbent organisations, we have started to see the darker sides of the digital economy unravel. In recent years, many unethical business practices have been exposed, including the capture and use of consumers’ data, anticompetitive activities and covert social experiments.

But what do young people who grew up with the internet think about this development? Our research with 400 digital natives – 19- to 24-year-olds – shows that this generation, dubbed “GenTech”, may be the one to turn the digital revolution on its head. Our findings point to a frustration and disillusionment with the way organisations have accumulated real-time information about consumers without their knowledge and often without their explicit consent.

Many from GenTech now understand that their online lives are of commercial value to an array of organisations that use this insight for the targeting and personalisation of products, services and experiences.

This era of accumulation and commercialisation of user data through real-time monitoring has been coined “surveillance capitalism” and signifies a new economic system.

Artificial intelligence

A central pillar of the modern digital economy is our interaction with artificial intelligence (AI) and machine learning algorithms. We found that 47% of GenTech do not want AI technology to monitor their lifestyle, purchases and financial situation in order to recommend them particular things to buy.

In fact, only 29% see this as a positive intervention. Instead, they wish to maintain a sense of autonomy in their decision making and have the opportunity to freely explore new products, services and experiences.

The agency pendulum swings between the individual and technology. Who will take control? boykung/Shutterstock

As individuals living in the digital age, we constantly negotiate with technology to let go of or retain control. This pendulum-like effect reflects the ongoing battle between the human and technology.

My life, my data?

Our research also reveals that 54% of GenTech are very concerned about the access organisations have to their data, while only 19% were not worried. Despite the EU General Data Protection Regulation being introduced in May 2018, this is still a major concern – grounded in a belief that too much of their data is in the possession of a small group of global companies, including Google, Amazon and Facebook. Some 70% felt this way.

In recent weeks, both Facebook and Google have vowed to make privacy a top priority in the way they interact with users. Both companies have faced public outcry for their lack of openness and transparency when it comes to how they collect and store user data. It isn’t long ago that a hidden microphone was found in one of Google’s home alarm products.

Google now plans to offer auto-deletion of users’ location history data, browsing and app activity as well as extend its “incognito mode” to Google Maps and search. This will enable users to turn off tracking.

At Facebook, CEO Mark Zuckerberg is keen to reposition the platform as a “privacy focused communications platform”, built on principles such as private interactions, encryption, safety, interoperability (communications across Facebook-owned apps and platforms) and secure data storage. This will be a tough turn around for the company that is fundamentally dependent on turning user data into opportunities for highly individualised advertising.

Facebook is trying to restore trust. PK Studio/Shuttestock

Privacy and transparency are critically important themes for organisations today – both for those that have “grown up” online as well as the incumbents. While GenTech want organisations to be more transparent and responsible, 64% also believe that they cannot do much to keep their data private. Being tracked and monitored online by organisations is seen as part and parcel of being a digital consumer.

Despite these views, there is a growing revolt simmering under the surface. GenTech want to take ownership of their own data. They see this as a valuable commodity, which they should be given the opportunity to trade with organisations. Some 50% would willingly share their data with companies if they got something in return, for example, a financial incentive.

Rewiring the power shift

GenTech are looking to enter into a transactional relationship with organisations. This reflects a significant change in attitudes from perceiving the free access to digital platforms as the “product” in itself (in exchange for user data), to now wishing to use that data to trade for explicit benefits.

This has created an opportunity for companies that seek to empower consumers and give them back control of their data. Several companies now offer consumers the opportunity to sell the data they are comfortable sharing or take part in research which they get paid for. More and more companies are joining this space, including People.io, Killi and Ocean Protocol.

Sir Tim Berners Lee, the creator of the world wide web, has also been working on a way to shift the power from organisations and institutions and back to citizens and consumers. The platform, Solid, offers users the opportunity to be in charge of where they store their data and who can access it. It is a form of re-decentralisation.

The Solid POD (Personal Online Data storage) is a secure place on a hosted server or the individual’s own server. Users can grant apps access to their POD as a person’s data is stored centrally and not by an app developer or on an organisation’s server. We see this as potentially being a way to let people take back control from technology and other companies.

GenTech have woken up to a reality where a life lived “plugged in” has significant consequences for their individual privacy, and are starting to push back, questioning those organisations that have shown limited concern and continue to exercise exploitative practices.

It’s no wonder that we see these signs of revolt. GenTech is the generation with the most to lose. They face a life ahead intertwined with digital technology as part of their personal and private lives. With continued pressure on organisations to become more transparent, the time is now for young people to make their move.

Dr Mike Cooray, Professor of Practice, Hult International Business School and Dr Rikke Duus, Research Associate and Senior Teaching Fellow, UCL

This article is republished from The Conversation under a Creative Commons license. Read the original article.

MEA with world’s highest IP traffic growth – Cisco

MEA with world’s highest IP traffic growth – Cisco

Further to The responsibility for a sustainable digital future  after the World Wide Web turned 30, CommsMEA elaborated on the latest Cisco report in this article dated March 12, 2019.

Middle East and Africa poised for world’s highest IP traffic growth – Cisco report

12 March 2019

The Middle East and Africa is poised for major IP traffic growth, according to Cisco.

Cisco’s Visual Networking Index (VNI) Forecast predicts 4.8 billion Internet users to be connected globally by 2022 – out of which 549 million will be living in the Middle East and Africa.

At its “Cisco Connect: Say Hello to the Future” event on March 12, held at the Atlantis The Palm resort at the end of Dubai’s iconic Palm Jumeirah, Cisco celebrated 30 years of the World Wide Web by sharing insights from the VNI Forecast to predict trends and behaviours evolving in the digital landscape in the region and globally.

Cisco’s VNI Forecast predicts four key drivers of IP traffic growth in the MEA region by 2022:

1. A 9% increase in the number of Internet users

The number of people using the Internet will grow from 23% of the region’s population in 2017 to 32%.

Digitisation features high on the national agendas of most of the region’s countries. Cisco estimates that the MEA region will have approximately 549 million Internet users and account for the highest growth rate in IP traffic worldwide, with a 41% increase from 2017.

2. An increasing number of connections

Cisco predicts there will be approximately 2.5 billion devices connected to the network, equating to 1.4 networked devices per capita in MEA.

Non-PC devices will drive 91% of regional Internet traffic by 2022. With projected average mobile network connection speeds to grow by as much as 28%, smartphones in particular are expected to make up 79% of Internet traffic in MEA, with 1.2 trillion connected smartphones by 2022. Cisco anticipates the enhanced connectivity to create new possibilities for AI and machine learning across industries and in smart homes.

3. Faster broadband speeds

As broadband connection speed is a key enabler for IP traffic growth, Cisco predicts the speeds will increase more than two-fold, from 2017 to 2022.

Accordingly, it is expected that broadband speeds in MEA will increase from 7.8Mbps in 2017 to 20.2Mbps by 2022 – enabling businesses and individuals to operate with greater speed and efficiency. As this speed continues to increase, large downloads will go from taking hours to a matter of minutes and eventually, seconds.

4. More media-rich content and applications

In terms of rich media, data-heavy files and videos are anticipated to make up 81% of the MEA region’s IP traffic by 2022, up from 65% in 2017.

The predicted 16% increase in media-rich Internet traffic can be partially attributed to the rapid growth of OOT film, television and music streaming services in MEA. As online gaming also continues to grow in popularity, Cisco predicts that the region will experience a five-fold increase in Internet gaming traffic from 2017, making up 1 percent of total IP traffic in MEA by 2022.

Commenting on Cisco’s VNI Forecast and the changes predicted to affect MEA, Cisco Middle East and Africa vice president David Meads said: “It is undeniable that the Internet is growing at an exponential rate. As governments continue to invest in infrastructure, a faster and stronger Internet opens the doors to unprecedented opportunities for individuals and industry alike.”

He said more. “Digitisation is a critical force for economic growth, so businesses must adopt a mindset that is proactive, rather than reactive. DDoS attacks can represent up to 25% of a country’s total Internet traffic while they are occurring. By implementing the appropriate cyberdefence mechanisms, organizations can protect themselves throughout the full attack continuum – before, during and after an attack.”

Meads also added: “With nations such as the UAE championing innovation, the Internet has, and continues to change our lives in an infinite number of ways. Recognising the changes that are affecting MEA, government, policymakers and service providers must continue to unite in their efforts to create an accessible Internet that is available to the masses, underpinned by a secure framework to aid sustainable growth.”

Ensuring the future of a networked world

Ensuring the future of a networked world

Or as put by Mounir Mahjoubi, author of this article below, @mounir as “Ensuring the next thirty years of a networked world.”

The responsibility for a sustainable digital future

On March 12, 2019, we celebrate the 30th anniversary of the “World Wide Web”, Tim Berners-Lee’s ground-breaking invention.

In just thirty years, this flagship application of the Internet has forever changed our lives, our habits, our way of thinking and seeing the world. Yet, this anniversary leaves a bittersweet taste in our mouth: the initial decentralized and open version of the Web, which was meant to allow users to connect with each other, has gradually evolved to a very different version, centralized in the hands of giants who capture our data and impose their standards.

We have poured our work, our hearts and a lot of our lives out on the internet. For better or for worse. Beyond business uses for Big Tech, our data has become an incredible resource for malicious actors, who use this windfall to hack, steal and threaten. Citizens, small and large companies, governments: online predators spare no one. This initial mine of information and knowledge has provided fertile ground for dangerous abuse: hate speech, cyber-bullying, manipulation of information or apology for terrorism – all of them amplified, relayed and disseminated across borders.

Laissez-faire or control: between Scylla and Charybdis

Faced with these excesses, some countries have decided to regain control over the Web and the Internet in general: by filtering information and communications, controlling the flow of data, using digital instruments for the sake of sovereignty and security. The outcome of this approach is widespread censorship and surveillance. A major threat to our values and our vision of society, this project of “cyber-sovereignty” is also the antithesis of the initial purpose of the Web, which was built in a spirit of openness and emancipation. Imposing cyber-borders and permanent supervision would be fatal to the Web.

To avoid such an outcome, many democracies have favored laissez-faire and minimal intervention, preserving the virtuous circle of profit and innovation. Negative externalities remain, with self-regulation as the only barrier. But laissez-faire is no longer the best option to foster innovation: data is monopolized by giants that have become systemic, users’ freedom of choice is limited by vertical integration and lack of interoperability. Ineffective competition threatens our economies’ ability to innovate.

In addition, laissez-faire means being vulnerable to those who have chosen a more interventionist or hostile stance. This question is particularly acute today for infrastructures: should we continue to remain agnostic, open and to choose a solution only based on its economic competitiveness? Or should we affirm the need to preserve our technological sovereignty and our security?

Photo courtesy of Getty Images/chombosan

Paving a third way

To avoid these pitfalls, France, Europe and all democratic countries must take control of their digital future. This age of digital maturity involves both smart digital regulation and enhanced technological sovereignty.

Holding large actors accountable is a legitimate and necessary first step: “with great power comes great responsibility”.

Platforms that relay and amplify the audience of dangerous content must assume a stronger role in information and prevention. The same goes for e-commerce, when consumers’ health and safety is undermined by dangerous or counterfeit products, made available to them with one click. We should apply the same focus on systemic players in the field of competition: vertical integration should not hinder users’ choice of goods, services or content.

But for our action to be effective and leave room for innovation, we must design a “smart regulation”. Of course, our goal is not to impose on all digital actors an indiscriminate and disproportionate normative burden.

Rather, “smart regulation” relies on transparency, auditability and accountability of the largest players, in the framework of a close dialogue with public authorities. With this is mind, France has launched a six-month experiment with Facebook on the subject of hate content, the results of which will contribute to current and upcoming legislative work on this topic.

In the meantime, in order to maintain our influence and promote this vision, we will need to strengthen our technological sovereignty. In Europe, this sovereignty is already undermined by the prevalence of American and Asian actors. As our economies and societies become increasingly connected, the question becomes more urgent.

Investments in the most strategic disruptive technologies, construction of an innovative normative framework for the sharing of data of general interest: we have leverage to encourage the emergence of reliable and effective solutions. But we will not be able to avoid protective measures when the security of our infrastructure is likely to be endangered.

To build this sustainable digital future together, I invite my G7 counterparts to join me in Paris on May 16th. On the agenda, three priorities: the fight against online hate, a human-centric artificial intelligence, and ensuring trust in our digital economy, with the specific topics of 5G and data sharing.

Our goal? To take responsibility. Gone are the days when we could afford to wait and see.

Our leverage? If we join our wills and forces, our values can prevail.

We all have the responsibility to design a World Wide Web of Trust. It is still within our reach, but the time has come to act.

Mounir Mahjoubi is the French Secretary of State for Digital Affairs.

Top Image Credits: Anton Balazh (opens in a new window) / Shutterstock

Top 10 strategic technology trends for 2019

Top 10 strategic technology trends for 2019

Global research and advisory firm Gartner has highlighted the top strategic technology trends that organizations need to explore in 2019 in its special report titled “Top 10 Strategic Technology Trends for 2019”.
Gartner defines a strategic technology trend as one with substantial disruptive potential that is beginning to break out of an emerging state into broader impact and use, or which are rapidly growing trends with a high degree of volatility reaching tipping points over the next five years.

Top 10 strategic technology trends for 2019

Cearley: The Intelligent Digital Mesh continues as a major driver through 2019

“The Intelligent Digital Mesh has been a consistent theme for the past two years and continues as a major driver through 2019. Trends under each of these three themes are a key ingredient in driving a continuous innovation process as part of a Continuous NEXT strategy,” said David Cearley, vice president and Gartner Fellow.

“For example, artificial intelligence (AI) in the form of automated things and augmented intelligence is being used together with IoT, edge computing and digital twins to deliver highly integrated smart spaces. This combinatorial effect of multiple trends coalescing to produce new opportunities and drive new disruption is a hallmark of the Gartner top 10 strategic technology trends for 2019.”

The top 10 strategic technology trends for 2019 are:

Autonomous Things

Autonomous things, such as robots, drones and autonomous vehicles, use AI to automate functions previously performed by humans. Their automation goes beyond the automation provided by rigid programming models and they exploit AI to deliver advanced behaviours that interact more naturally with their surroundings and with people.

“As autonomous things proliferate, we expect a shift from stand-alone intelligent things to a swarm of collaborative intelligent things, with multiple devices working together, either independently of people or with human input,” said Cearley.

“For example, if a drone examined a large field and found that it was ready for harvesting, it could dispatch an “autonomous harvester.” Or in the delivery market, the most effective solution may be to use an autonomous vehicle to move packages to the target area. Robots and drones on board the vehicle could then ensure final delivery of the package.

Augmented Analytics

Augmented analytics focuses on a specific area of augmented intelligence, using machine learning (ML) to transform how analytics content is developed, consumed and shared. Augmented analytics capabilities will advance rapidly to mainstream adoption, as a key feature of data preparation, data management, modern analytics, business process management, process mining and data science platforms.

Automated insights from augmented analytics will also be embedded in enterprise applications — for example, those of the HR, finance, sales, marketing, customer service, procurement and asset management departments — to optimize the decisions and actions of all employees within their context, not just those of analysts and data scientists. Augmented analytics automates the process of data preparation, insight generation and insight visualization, eliminating the need for professional data scientists in many situations.

“This will lead to citizen data science, an emerging set of capabilities and practices that enables users whose main job is outside the field of statistics and analytics to extract predictive and prescriptive insights from data,” said Cearley. “Through 2020, the number of citizen data scientists will grow five times faster than the number of expert data scientists. Organizations can use citizen data scientists to fill the data science and machine learning talent gap caused by the shortage and high cost of data scientists.”

AI-Driven Development

The market is rapidly shifting from an approach in which professional data scientists must partner with application developers to create most AI-enhanced solutions to a model in which the professional developer can operate alone using predefined models delivered as a service.

This provides the developer with an ecosystem of AI algorithms and models, as well as development tools tailored to integrating AI capabilities and models into a solution. Another level of opportunity for professional application development arises as AI is applied to the development process itself to automate various data science, application development and testing functions. By 2022, at least 40 percent of new application development projects will have AI co-developers on their team.

“Ultimately, highly advanced AI-powered development environments automating both functional and nonfunctional aspects of applications will give rise to a new age of the ‘citizen application developer’ where nonprofessionals will be able to use AI-driven tools to automatically generate new solutions. Tools that enable nonprofessionals to generate applications without coding are not new, but we expect that AI-powered systems will drive a new level of flexibility,” said Cearley.

Digital Twins

A digital twin refers to the digital representation of a real-world entity or system. By 2020, Gartner estimates there will be more than 20 billion connected sensors and endpoints and digital twins will exist for potentially billions of things. Organizations will implement digital twins simply at first. They will evolve them over time, improving their ability to collect and visualize the right data, apply the right analytics and rules, and respond effectively to business objectives.

“One aspect of the digital twin evolution that moves beyond IoT will be enterprises implementing digital twins of their organizations (DTOs). A DTO is a dynamic software model that relies on operational or other data to understand how an organization operationalizes its business model, connects with its current state, deploys resources and responds to changes to deliver expected customer value,” said  Cearley. “DTOs help drive efficiencies in business processes, as well as create more flexible, dynamic and responsive processes that can potentially react to changing conditions automatically.”

Empowered Edge

The edge refers to endpoint devices used by people or embedded in the world around us. Edge computing describes a computing topology in which information processing, and content collection and delivery, are placed closer to these endpoints. It tries to keep the traffic and processing local, with the goal being to reduce traffic and latency.

In the near term, edge is being driven by IoT and the need keep the processing close to the end rather than on a centralized cloud server. However, rather than create a new architecture, cloud computing and edge computing will evolve as complementary models with cloud services being managed as a centralized service executing, not only on centralized servers, but in distributed servers on-premises and on the edge devices themselves.

Over the next five years, specialized AI chips, along with greater processing power, storage and other advanced capabilities, will be added to a wider array of edge devices. The extreme heterogeneity of this embedded IoT world and the long life cycles of assets such as industrial systems will create significant management challenges. Longer term, as 5G matures, the expanding edge computing environment will have more robust communication back to centralized services. 5G provides lower latency, higher bandwidth, and (very importantly for edge) a dramatic increase in the number of nodes (edge endoints) per square km.

Immersive Experience

Conversational platforms are changing the way in which people interact with the digital world. Virtual reality (VR), augmented reality (AR) and mixed reality (MR) are changing the way in which people perceive the digital world. This combined shift in perception and interaction models leads to the future immersive user experience.

“Over time, we will shift from thinking about individual devices and fragmented user interface (UI) technologies to a multichannel and multimodal experience. The multimodal experience will connect people with the digital world across hundreds of edge devices that surround them, including traditional computing devices, wearables, automobiles, environmental sensors and consumer appliances,” said Cearley.

“The multichannel experience will use all human senses as well as advanced computer senses (such as heat, humidity and radar) across these multimodal devices. This multiexperience environment will create an ambient experience in which the spaces that surround us define “the computer” rather than the individual devices. In effect, the environment is the computer.”

Blockchain

Blockchain, a type of distributed ledger, promises to reshape industries by enabling trust, providing transparency and reducing friction across business ecosystems potentially lowering costs, reducing transaction settlement times and improving cash flow.

Today, trust is placed in banks, clearinghouses, governments and many other institutions as central authorities with the “single version of the truth” maintained securely in their databases. The centralized trust model adds delays and friction costs (commissions, fees and the time value of money) to transactions. Blockchain provides an alternative trust mode and removes the need for central authorities in arbitrating transactions.

”Current blockchain technologies and concepts are immature, poorly understood and unproven in mission-critical, at-scale business operations. This is particularly so with the complex elements that support more sophisticated scenarios,” said Cearley. “Despite the challenges, the significant potential for disruption means CIOs and IT leaders should begin evaluating blockchain, even if they don’t aggressively adopt the technologies in the next few years.”

Many blockchain initiatives today do not implement all of the attributes of blockchain — for example, a highly distributed database. These blockchain-inspired solutions are positioned as a means to achieve operational efficiency by automating business processes, or by digitizing records. They have the potential to enhance sharing of information among known entities, as well as improving opportunities for tracking and tracing physical and digital assets. However, these approaches miss the value of true blockchain disruption and may increase vendor lock-in. Organizations choosing this option should understand the limitations and be prepared to move to complete blockchain solutions over time and that the same outcomes may be achieved with more efficient and tuned use of existing nonblockchain technologies.

Smart Spaces

A smart space is a physical or digital environment in which humans and technology-enabled systems interact in increasingly open, connected, coordinated and intelligent ecosystems. Multiple elements —including people, processes, services and things — come together in a smart space to create a more immersive, interactive and automated experience for a target set of people and industry scenarios.

“This trend has been coalescing for some time around elements such as smart cities, digital workplaces, smart homes and connected factories. We believe the market is entering a period of accelerated delivery of robust smart spaces with technology becoming an integral part of our daily lives, whether as employees, customers, consumers, community members or citizens,” said  Cearley.

Digital Ethics and Privacy

Digital ethics and privacy is a growing concern for individuals, organizations and governments. People are increasingly concerned about how their personal information is being used by organizations in both the public and private sector, and the backlash will only increase for organizations that are not proactively addressing these concerns.

“Any discussion on privacy must be grounded in the broader topic of digital ethics and the trust of your customers, constituents and employees. While privacy and security are foundational components in building trust, trust is actually about more than just these components,” said Cearley. “Trust is the acceptance of the truth of a statement without evidence or investigation. Ultimately an organization’s position on privacy must be driven by its broader position on ethics and trust. Shifting from privacy to ethics moves the conversation beyond ‘are we compliant’ toward ‘are we doing the right thing.’”

Quantum Computing

Quantum computing (QC) is a type of nonclassical computing that operates on the quantum state of subatomic particles (for example, electrons and ions) that represent information as elements denoted as quantum bits (qubits). The parallel execution and exponential scalability of quantum computers means they excel with problems too complex for a traditional approach or where traditional algorithms would take too long to find a solution.

Industries such as automotive, financial, insurance, pharmaceuticals, military and research organizations have the most to gain from the advancements in QC. In the pharmaceutical industry, for example, QC could be used to model molecular interactions at atomic levels to accelerate time to market for new cancer-treating drugs or QC could accelerate and more accurately predict the interaction of proteins leading to new pharmaceutical methodologies.

“CIOs and IT leaders should start planning for QC by increasing understanding and how it can apply to real-world business problems. Learn while the technology is still in the emerging state. Identify real-world problems where QC has potential and consider the possible impact on security,” said Cearley. “But don’t believe the hype that it will revolutionize things in the next few years. Most organizations should learn about and monitor QC through 2022 and perhaps exploit it from 2023 or 2025.”

Analysts will explore top industry trends at Gartner Symposium/ITxpo 2018 running from March 4 to 6, 2019 in Dubai, UAE.

Gartner Symposium/ITxpo is the world’s most important gathering of CIOs and senior IT leaders, uniting a global community of CIOs with the tools and strategies to help them lead the next generation of IT and achieve business outcomes. More than 25,000 CIOs, senior business and IT leaders worldwide will gather for the insights they need to ensure that their IT initiatives are key contributors to, and drivers of, their enterprise’s success.

TradeArabia News Service

Dubai, 3 days ago.