DIGITAL INTERACTIVE SERVICES
Why you should let the rumoured US recession impact your digital strategy
Any business cycle is prone to peaks and troughs. So is a nation’s economy; what with the continuous expansions and contractions in the economic cycle. Yet, the fear of the contraction phase – the recession – is ever-present. But instead of fearing it, what if we could tackle it head-on with our digital arsenal?
Understanding the ramifications of a recession
Let’s dig more into the concept. A period of expansion is categorized as a boom in the economy while contractions bring about a lull. A recession is a phase followed by an economic peak that begins with a decline in a nation’s economy. This phase can be categorized by a decline in several major economic indicators, such as consumer demand, employment levels, prices, and the overall GDP.
Recession and expansion are two faces of the economy, with inverse economic impacts and differing durations. As an aspiring society, every individual and entity aim to prolong the economic boom through sustained financial efforts, and delay recession. Take for example the US Federal Reserve, which is taking precautionary steps by amending interest rates to fight inflation and ensure price stability.
After the severe financial crisis of the 2008 credit bubble, any mention of a recession is enough to send jitters among governments, corporates, and individuals across the world. However, recession remains an inevitability. Today, the economic experts are divided into two groups, one predicting an upcoming recession in the US, and the other standing opposed. This has led to widespread apprehension among financial institutions about the cascading effect of such a recession and its impact on businesses.
The most pressing concern for such institutions is that the news of a possible recession in the next twelve to eighteen months may potentially alter consumer behaviours, government policies, and business decisions negatively. It may trigger lower consumer and business spending, which if left unchecked, could work to strengthen a mild recession and hold larger ramifications across various sectors.
Think savings, think digital
The last couple of years have witnessed a rising digital upheaval in the financial sector, with rigorous efforts aimed to intensify this digital transformation in the future. A sudden recession can send these existing digital strategies for a toss, leading to a loss of valuable investments made so far, and could also bring about technical and infrastructure challenges when they resume in the future.
A plus point here can be the fact that adversity is the prerequisite for creativity. While a taxing situation like a recession has its pitfalls, it can also empower individuals to be innovative and leverage their digital capabilities to their full potential. This approach could give birth to more sustainable and inventive business and operating models that could provide a competitive advantage and enable a superior customer experience.
Plugging in digital solutions that streamline the existing processes by automating manual and redundant tasks and enabling businesses to channel their resources in another direction could help optimize operations. Such optimizations could deliver innovative products and service offerings at lower costs – and what more do customers want?
As per a recent study by McKinsey, this rumoured recession in 2022 is different from others in the past. This is because most financial institutions are empowered with healthy cash reserves accumulated in the pandemic, and several digital strategies on their “TO-DO” lists. Hence, this is the perfect time for companies to revisit their strategies, aim for innovation and achieve their desired digital status. These digital investments could be instrumental in establishing a leader and staying a step ahead of the competitors during the economic boom.
So, instead of sitting around and worrying about an imminent recession, organizations should gear up for the fight, think ahead and take the digital win.