What to watch in 2017: predictions for the year’s biggest trends

By Lee Naik, CEO TransUnion

As we close the 2016 chapter behind us and usher in the New Year, we can all marvel at some of the influences and changes that have impacted business. 2017 will be no different and some of the trends of 2016 will mature and evolve to become even more impactful. The following five trends will continue to drive innovation, efficiencies and even more insight, enabling businesses to fully leverage their digital transformation initiatives.

1. The wisdom of the Crowd

One of the biggest inhibitors to entrepreneurship remains access to capital. Without funding, so many great, creative business ideas never emerge from being merely plans on paper.

Crowdfunding and social lending are concepts on the cusp of taking off, set to gain significant momentum in 2017. In a similar model to Venture Capitalism, crowdfunding platforms enable individuals and businesses to invest in entrepreneurs with a promising growth potential, and potentially receive outsized returns (better than those of equity markets or than cash interest, for example).

For the entrepreneur, they’re able to access the capital necessary to kick-start their businesses, without the lengthy delays, stringent requirements, and onerous interest payments usually demanded by traditional banks.

Crowdfunding platforms employ ‘pooling’ mechanisms designed to dilute the risks of the capital providers, and ensure they are not over-exposed to any single entrepreneur within the network. Of course, in a successful crowdfunding system, accurate credit and affordability scoring is the foundation.

Expected peak: 3-5 years

Industries most impacted: Supply chain

Impact on Society: High

Impact on Business: High

2. Forget Big Data, think ‘Alternative Data’

This brings us to our second major trend: alternative data in credit scoring. Assessing credit risk has traditionally been performed based on a narrow set of predefined criteria, often global best-practices. But more and more financial services firms are understanding that South Africa is a unique country with some very unusual dynamics.

For instance, the millions of South Africans that do not have title deeds to their residences (particularly in township areas) are technically unable to raise capital against the value of their properties – to start their own businesses, or further their educations, for example.

By considering new information sources – such as cellphone contracts, rental agreements, or even social media data, lenders could start assigning risk profiles to individuals currently classified as “thin file” consumers: people who do not yet have any formal credit record.

In 2017 we will start to see a more nuanced and pragmatic approach to risk assessment, as lenders start to make small amounts of financing more easily available to those who do not yet have a formal credit record, allowing them to build their credibility and access more financing over time. This would ultimately drive a shift away from informal lending channels (such as loan sharks), towards a more formalised lending environment.

Expected peak: 1-5 years

Industries most impacted: Banking/Retail/Telco

Impact on Society: High

Impact on Business: Medium

3. The Science of your Data

Data is the new oil, some say. Others venture further, saying data is fast becoming the new currency of the information age. One thing’s for sure: data is becoming an extremely important asset within any organisation.

The astonishing rise of asset-light, data-rich companies – like Uber, Whatsapp and Alibaba – reflect the importance of having strong data capabilities. So it makes sense that in 2017 we’ll see increasing numbers of firms developing data science teams.

The key conversations will be around leveraging that data to create superior (even personalised) customer experiences, re-imagining business processes, creating new revenue streams by monetising the data in interesting ways, and making smarter decisions using advanced modelling and predictive analytics.

Expected peak: 1-5 years

Industries most impacted: Banking/Retail/Telco/Insurance/Commercial/Public Sector

Impact on Society: High

Impact on Business: High

4. “The Democratisation of Machine Learning”

The topic of Data science leads us neatly into our next trend: machine learning tools that are becoming increasingly accessible. We could call it the consumerisation, or democratisation, of machine learning.

While the concept has been circulating for decades, only in the past few years has machine learning has become a business reality – in the form of sophisticated, bespoke and highly expensive systems. But with machine learning capabilities becoming more openly available, from the likes of Amazon, Google, IBM and Microsoft, now almost anybody can integrate machine learning into their organisation.

The services include advanced features like image processing, facial recognition, text analytics, speech recognition, prediction, sentiment analysis, and pattern recognition. These can have powerful effects on one’s business, no matter what industry they may be in.

Though these consumerised machine learning systems may not completely replace the data science function that we mentioned in our previous trend, they could certainly augment and support the data scientists within the organisation.

Expected peak: 2-4 years

Industries most impacted: All industries

Impact on Society: Medium

Impact on Business: High

5. Bringing entrepreneurial mindsets into the corporate

Traditional ‘command-and-control’ corporate management principles, where the goal was to standardise and reduce variables wherever possible, is quickly giving way to a far more dynamic philosophy.

The new trend, which we could term ‘Corporate Entrepreneurship’ is to encourage more fluid operational structures and processes, where individuals are encouraged to innovate, collaborate in new and interesting ways, and run their jobs and their portfolios as if they were an independent in their own right.

This trend will perhaps have the most pervasive impact on business in 2017 and beyond. For firms to truly re-invent themselves, they’ll need to rely on people that are more agile, multi-skilled, self-sufficient and with a level of business maturity to understand the balance between maintaining the core of a business, while at the same time breaking down traditional approaches to business.

Expected peak: 2-5 years

Industries most impacted: Banking, Insurance, Automotive

Impact on Society: High

Impact on Business: High