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In line with the UK-Israel Tech Hub’s TeXchange 2020, Leumi UK’s “Game of Thrones: How to survive the trending battles in global technology”, organised alongside the group’s technology banking arm, LeumiTech, took place on the 5th February. Convening a number of influential figures from across the industry – including senior representatives from Google, Facebook and Amazon – the event fostered an open discussion on the trends and challenges shaping the tech landscape in 2020. Yifat Oron, CEO at LeumiTech, moderated the discussion.
Kicking off the event, Leumi UK CEO Gil Karni highlighted the strength of the UK tech sector. While over recent years many British businesses have been gravely impacted by Brexit uncertainty, the technology sector has thrived. Certainly, investment into the UK tech sector reached a new record in 2019 – hitting £10 billion – demonstrating the UK’s prominence and importance in this space. Offering expertise, flexibility, and a genuine willingness to support sectoral growth, Karni stressed Leumi UK’s preparedness to play a fundamental role in further advancing this industry. He concluded his speech by introducing Yifat Oron, CEO at LeumiTech, to share her views on the ever-changing tech ecosystem in 2020 and beyond.
Oron opened her presentation by highlighting the needs of early-stage tech companies, stressing the importance of focused, innovative finance in providing these businesses with the support they need to survive in today’s fast-paced, high-growth environment. Certainly, having a finance provider that is flexible enough to move with the times is vital – not least due to the sheer amount of competition start-ups in this industry face. However, finance is not the only area presenting challenges for technology businesses.
For almost two years, fierce competition between the world’s two largest economies – the US and China – has seen rising tensions affect commerce internationally, and the tech sector has not been exempt. Certainly, explains Oron, America’s tendency towards protectionism has led businesses investing in, selling to and buying from tech companies in both countries to question whether current, largely open trade practices are sustainable. For instance, where previously a company with a large Chinese investor would have been in a positive position for growth, today, this could present barriers to the company’s development. If the business owner was to sell the company, American corporates would not even consider it viable due to Chinese involvement. As such, while Chinese investment in Israel has previously been significant, levels have now dipped as a result of trade tensions in the run up to 2020.
Amazon is bigger than a nation
Amazon is bigger than a nation, says Oron. In terms of online retail, no other competitor comes close – even though companies like Microsoft are making efforts to engage more customers by working with start-ups. For Oron, the key here lies not in Amazon’s technological dominance, but in its fulfilment service – whereby Amazon stores, packages, and ships the seller’s goods – giving the company free reign to control the markets in which it operates. What’s more, Amazon’s capabilities as a media company have been fundamental to strengthening its retail dominance. Access to Prime Video and Prime Music streaming services along with the appeal of free one or two-day delivery on millions of products has turned a growing number of consumers into Prime loyalists. A senior representative from Amazon corroborated this point, highlighting Amazon’s prominence in the media industry – with Prime Video now owning its own studios and competing among the industry’s largest providers.
Yet many analysts are claiming that Amazon is getting too big. The company has expanded into new domains such as food and pharma, which has led to collaborations between competitors to try and keep up with the colossal retailer – both in terms of its control of the market and the speed at which it releases new products. So far, however, nothing has come close.
The high street must innovate to survive
Oron redirects the discussion to address the future of retail. Will everyone convert to online shopping? Only one thing seems certain – stores are closing down rapidly, and physical retail will either dissolve or must change form in order to survive. Certainly, 2019 presented dismal figures for UK physical retail – with 1,234 more store closures than openings in the first half of the year and high street giants such as Debenhams and Patisserie Valerie going into administration. From a tech point of view, however, there is light at the end of the tunnel.
Giant retailers are increasingly coming to Israel for technology to modernise their physical stores. Such technology has the potential to enhance customers’ shopping experience, creating a smarter environment and leading to fewer employees working on the floor. This suggests that when it comes to large retailers at least, ecommerce is not going to completely eradicate the need for physical stores. Instead, it will foster the creation of much more innovative, technologically based solutions.
The spotlight is on Artificial Intelligence
As the conversation progresses, Oron turs to cybersecurity, noting Israel’s strength in this sector. While cybersecurity is a huge market in itself, it is among the biggest challenges companies face right now – particularly when entering into new partnerships. Once data leaves an organisation it can’t be controlled and the company sharing its information becomes susceptible to being hacked. As a result, Israel has prioritised cybersecurity as one of its key industries in recent years and is now a world leader in cybersecurity exports – accounting for 10% of the global market.
Moving into the new decade, Israel has now turned its attention to Artificial Intelligence (AI), explains Oron. As an infrastructure-type technology, AI lends itself to a number of different industries. In healthcare, for example, algorithms and specialist software are used to analyse complex data, minimising the need for human input. Certainly, AI is where the spotlight is shining, and statistics from 2019 demonstrate this, with US$3.6 billion of the US$8.6 billion invested in Israel’s tech sector going to AI businesses.
Stars aligned for digital health
When asked about the opportunities of implementing technology in the health sector, Oron described them as “huge”. From diagnostics to management, counselling, education and support, there’s seemingly no end to custom healthcare software development. But the triggers behind its production are difficult to decipher. Do the needs of the market foster the development of technological solutions, or is the technology released for the market to implement in response? This is an area that certainly needs addressing and, as such, tech players are investing a huge amount in research in this space.
Undeniably, the stars are aligned for digital health. Hospitals and caregiving organisations have reached the point where they are starting to process vast quantities of data, employing existing technology to extract information and using it to make predictions – for instance, on a patient’s condition – in real time. Moving forward, this will see healthcare providers streamline their processes and edge closer to the reality of personalised medicine.
The ongoing evolution
To conclude the discussion, Oron addressed attendees on the universal need for tech in business – be it banks, retail stores, real estate or consulting companies. Why? Because tech is where the money is. Of course, there are sectors which might take longer to fully embrace technology – the construction industry being one of them. But long-term, tech will be fundamental to business survival. Moving into 2020, Oron believes the tech sector’s international growth will be unstoppable – remaining resilient to geopolitical challenges and continuing to permeate new industries.
Bank Leumi (UK) plc is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority.