A boardroom perspective on digital transformation ... A boardroom perspective on digital...

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  • A boardroom perspective on digital transformation and emerging technologies #FutureOfTax

  • Speaker

    Shamus Rae Partner, Head of Digital Disruption

    © 2018 KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of Rethinking tax independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

    Document Classification: KPMG Public

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  • A shifting landscape Shrinking profit pools, increased competition, savvy consumers and rapidly evolving technologies

    © 2018 KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with Rethinking tax KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

    Document Classification: KPMG Public

    3

    Paradigm Shift

    Decline in trust/ Increased

    competition

    Decline in institutional trust

    Non-traditional alternatives

    Tech giants disrupting traditional markets

    Non-traditional players entering the market

    Technology driven innovation/

    improvements

    Start-up collaboration

    Platform-based business models

    Unprecedented speed 5G Networks

    Traditional players leveraging technology

    New channels/ changing customer

    behaviours

    Willingness to adopt new technology

    Less loyalty, more cherry-picking

    The internet of me

    Growing advice from peers

  • 4

    Document Classification: KPMG Public

    © 2018 KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ( KPMG International ), a Swiss entity. All rights reserved.

    Rethinking tax

    Margin compression and a frictionless world Sector-wise summary – Margin compression

    *Adjusted for inflation

    Food Retail (%) 2008 2017

    Profit Margin (Adjusted) 5.8% 1.9%

    Pharma (%) 2008 2017

    Profit Margin (Adjusted) 24.8% 15.4%

    Banking (%) 2008 2017

    Profit Margin (Adjusted) 38.1% 24.2%

    Telecom (%) 2008 2017

    Profit Margin (Adjusted) -11.6% 4.6%

    Big 4 UK (%) 2008 2017

    Profit Margin (adjusted) 34% 22%

    2/3’s of legacy firms are suffering long term margin compression

    Focus is on friction removal and platforms

    Move to utility models differentiated by brand

    © 2018 KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of Rethinking tax “ ”independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

    Document Classification: KPMG Public

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    Document Classification: KPMG Public

    © 2018 KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ( KPMG International ), a Swiss entity. All rights reserved.

    Rethinking tax

    What do the public think? KPMG surveyed 2,000 members of the general public to assess their attitudes towards AI

    We asked 19 questions covering general attitudes to AI and its application in the NHS

    We have split survey respondents into five distinct groups, based on awareness and use of AI in their everyday lives:

    Disconnected

    4% Uninformed

    13%

    Aware

    47%

    Users

    24%

    Enthusiasts

    12% Percentage of UK population:

    I know what AI is and use

    it regularly

    I know what AI is and use it sometimes

    I know what AI is but do not use it

    I have heard of AI but don’t know what it is

    I have never heard of AI

    Percentage university educated:

    Percentage under 35 years old:

    40% 17%

    45% 39% 32%

    53% 23% 23%

    20% 8%

    47 % know what AI is, but don’t use it

    51 % are worried about

    data privacy in light of AI

    31 % think the greatest

    benefit from AI will be less human error in decisions

    Which of the following do you most associate with AI?

    Associate AI with robots Associate AI with Google Search

    54%

    6%30% 4%

    81% 72%

    41%

    23% 15%

    58%

    Enthusiasts Users Aware Uninformed Disconnected

    Respondents who feel they don’t understand AI or who don’t use it much, are more likely to associate it with robots, rather than services they use in everyday life

    Are you worried or relaxed about your data privacy as the use of AI increases?

    Percentage of respondents who are worried

    26% 33% 38%

    45%

    25%

    Enthusiasts Users Aware Uninformed Disconnected

    Respondents who have heard of AI but don’t understand it are the most concerned about its potential impact on their data privacy

    Respondents with low awareness and usage of AI are also the most pessimistic about the impact on their job

    Are you worried or relaxed about AI technology taking your job?

    3%

    -10%

    -26% -25%

    -3%

    Enthusiasts Users Aware Uninformed Disconnected

    R el

    ax ed

    W or

    rie d

    © 2018 KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of Rethinking tax “ ”independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

    Document Classification: KPMG Public

    5

  • Trust is gone… Respondents are more likely to share their personal data with their hospitals than any other organisation, followed by banks and the police Which, if any, of these organisations would you be willing to share your personal data with if it meant an improved service or capabilities?

    56% Hospitals

    47% Banks

    33% The police

    24% None of the above

    22% Government

    Pharmaceutical companies 15%

    11% Charities

    Internet companies

    Media companies

    Political organisations

    8%

    8%

    7%

    © 2018 KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of Rethinking tax independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

    Document Classification: KPMG Public

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  • (There are) Myths around what is causing people to be left out, for example many more jobs are lost to automation than they are by the redistributional impact of trade but knowing this is not good enough unless there is action, unless there are policies to address inequalities of income but more importantly inequality of opportunities then it will be difficult to rebuild that trust

    Word Bank Chief, Kristalina Georgieva 18 April 2018 on CNBC

    © 2018 KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative Rethinking tax (“KPMG International”), a Swiss entity. All rights reserved.

    Document Classification: KPMG Public

    7

  • The conjecture that every aspect of learning or any other feature of intelligence can in principle be so precisely described that a machine can be made to simulate it

    John McCarthy 1956

    Duplex

    2018

    Level 5 automation

    2022

    1956 2020 2045 Thought vectors

    If someone describes to you the world of the mid twenty-first century and is sounds like science fiction, it is probably false. But then if somebody describes to you a world of the mid twenty-first century and it doesn’t sound like science fiction – it is certainly false

    Yuval Noah Harari 2018

    © 2018 KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of Rethinking tax independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

    Document Classification: KPMG Public

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  • From muscle to brains to AI Services under pressure Artificial Intelligence unlocks the automation of services at a faster potential speed than manufacturing.

    Premium advice

    Judgement

    Transactional

    Data

    Premium advice

    Data driven insight

    Automated services

    Firm data

    Client data

    Public data

    © 2018 KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

    Document Classification: KPMG Public

    Rethinking tax 9

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    Document Classification: KPMG Public

    © 2018 KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ( KPMG International ), a Swiss entity. All rights reserved.

    Rethink