Georgios Ierodiaconou

Thomas A Singlehurst, CFA

Mark May

Catherine T O’Neill

Dan F Homan

John Bowman

Jan Wittrodt

Ingvild Næss

Alexander Hanff

Telefonica

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Thomas A Singlehurst

In our first Citi GPS report on ePrivacy and Data Protection (Who Watches the Watchers?, March 2017), we highlighted that the focus on data privacy is on the rise and forthcoming changes to regulation in the European Union (this year), will fundamentally alter the risk/reward of using data and, with it, alter the perception of the long-term opportunity from data. In this follow-up GPS report, with Europe’s General Data Protection Regulation (GDPR) less than a month away, we consider how prepared consumers, corporates, and regulators are for the tightening regulatory landscape. More broadly, we consider what the potential implications could be as we move from an environment where organizations have become accustomed to untrammeled access to data, to one where data minimization and transparency presides, consumers are empowered to take more control of personal data, and organizations are forced to think carefully about their use of data. To investigate this we surveyed those involved in implementing the GDPR across a range of organizations and conducted a series of interviews with industry experts from Telefónica, Schibsted, Zalando, and specialist consultancies. The majority of companies believe they will have to change how consumer data is used which brings with it rising costs (i.e., of compliance). Trust plays a fundamental role and unless consumers believe the value trade is beneficial, access to personal data could fall as consumers are prepared to use their enhanced rights. The application of the regulation (unintentionally) favors those closest to the consumer and large companies vs. small companies. Murky data supply chains are set to see a shakeout. Advertising funded models have been one of the key planks supporting the Internet’s development and the online advertising industry appears to be right at the heart of the challenges that regulation presents. As one survey respondent commented: “The range of plausible outcomes includes total destruction of the online ad ecosystem in Europe all the way to a minor blip.” Companies claim to be well prepared for the EU regulation change. The 25th of May is D-Day, when the regulation will come into effect, but this is not going to be the end of the process. In fact, it may well be the start of a step change in the approach to data protection regulation globally. We worry corporates and investors are being complacent about the risks. Authors: Catherine T O’Neill,Thomas A Singlehurst, CFA,Dan F Homan,Georgios Ierodiaconou,Mark May,John Bowman,Jan Wittrodt,Ingvild Næss,Alexander Hanff,Telefonica,

In our first Citi GPS report on ePrivacy and Data Protection (Who Watches the Watchers?, March 2017), we highlighted that the focus on data privacy is on the rise and forthcoming changes to regulation in the European Union (this year), will fundamentally alter the risk/reward of using data and, with it, alter the perception of the long-term opportunity from data. In this follow-up GPS report, with Europe&rsquo;s General Data Protection Regulation (GDPR) less than a month away, we consider how prepared consumers, corporates, and regulators are for the tightening regulatory landscape. More broadly, we consider what the potential implications could be as we move from an environment where organizations have become accustomed to untrammeled access to data, to one where data minimization and transparency presides, consumers are empowered to take more control of personal data, and organizations are forced to think carefully about their use of data. To investigate this we surveyed those involved in implementing the GDPR across a range of organizations and conducted a series of interviews with industry experts from Telef&oacute;nica, Schibsted, Zalando, and specialist consultancies. The majority of companies believe they will have to change how consumer data is used which brings with it rising costs (i.e., of compliance). Trust plays a fundamental role and unless consumers believe the value trade is beneficial, access to personal data could fall as consumers are prepared to use their enhanced rights. The application of the regulation (unintentionally) favors those closest to the consumer and large companies vs. small companies. Murky data supply chains are set to see a shakeout. Advertising funded models have been one of the key planks supporting the Internet&rsquo;s development and the online advertising industry appears to be right at the heart of the challenges that regulation presents. As one survey respondent commented: &ldquo;The range of plausible outcomes includes total destruction of the online ad ecosystem in Europe all the way to a minor blip.&rdquo; Companies claim to be well prepared for the EU regulation change. The 25th of May is D-Day, when the regulation will come into effect, but this is not going to be the end of the process. In fact, it may well be the start of a step change in the approach to data protection regulation globally. We worry corporates and investors are being complacent about the risks. Authors: Catherine T O&rsquo;Neill,Thomas A Singlehurst, CFA,Dan F Homan,Georgios Ierodiaconou,Mark May,John Bowman,Jan Wittrodt,Ingvild N&aelig;ss,Alexander Hanff,Telefonica,

Privacy Matters: Navigating the New World of Data Protection

“We’ve lost control of our personal data”, Sir Tim Berners-Lee, inventor of the World Wide Web, said in March 2017. The widespread collection of data has led to the rise of data asymmetry and, consequently, consumer trust is low. Some would argue that it has led to the prioritization of profit over privacy. Consumers believe cybersecurity and privacy risks are amongst the biggest risks facing society. The ramifications should not be overlooked by corporates and investors.

ePrivacy and Data Protection

Ashwin Shirvaikar

Walter H Pritchard

Dalibor Vavruska

Mark Kelley

An MIT Sloan Management Review report in 2015 bears this out. Forty-three percent of surveyed companies indicated that a lack of appropriate analytical skills is a key challenge. And why is this? It is of course because the opportunity from big data, data analytics, machine learning, artificial intelligence, and the Internet of Things is perceived to be enormous and data scientists are the potential key to unlocking it. But for data scientists to exist, we must have data. Indeed all of these opportunities rely on continued untrammeled access to significant underlying data sets — an assumption that we think investors can no longer fully take for granted. In this report we look at how consumers are tracked, and how the data that is collected and analyzed is then used by organizations. We then look at how consumers themselves perceive the topic of privacy and why regulators increasingly feel the need to intervene. Finally we conduct a series of case studies with third-party contributors such as Vodafone, Aviva, and even Citi to assess the challenges associated with adapting to the new landscape. The conclusions are quite stark. Focus on privacy and data protection is on the rise and forthcoming changes to regulation in the European Union (EU), to be implemented in 2018, will fundamentally alter the risk/reward of using data and with it, alter the perception of the long-term opportunity from data. It’s important to say that this does not necessarily unwind the longer-term upside from big data, data analytics, artificial intelligence, and machine learning. But we do think the path will be muddied by new regulation and that from a corporate perspective, this will require a systemic change of approach with respect to ePrivacy and data protection. And this is not, for the moment, properly understood or appreciated by many corporates or investors. Authors: Thomas A Singlehurst, CFA,Mark Kelley,Ashwin Shirvaikar, CFA,Catherine T O’Neill,Mark May,Walter H Pritchard, CFA,Dalibor Vavruska,

An MIT Sloan Management Review report in 2015 bears this out. Forty-three percent of surveyed companies indicated that a lack of appropriate analytical skills is a key challenge. And why is this? It is of course because the opportunity from big data, data analytics, machine learning, artificial intelligence, and the Internet of Things is perceived to be enormous and data scientists are the potential key to unlocking it. But for data scientists to exist, we must have data. Indeed all of these opportunities rely on continued untrammeled access to significant underlying data sets &mdash; an assumption that we think investors can no longer fully take for granted. In this report we look at how consumers are tracked, and how the data that is collected and analyzed is then used by organizations. We then look at how consumers themselves perceive the topic of privacy and why regulators increasingly feel the need to intervene. Finally we conduct a series of case studies with third-party contributors such as Vodafone, <a href="http://www.aviva.co.uk">Aviva</a>, and even Citi to assess the challenges associated with adapting to the new landscape. The conclusions are quite stark. Focus on privacy and data protection is on the rise and forthcoming changes to regulation in the European Union (EU), to be implemented in 2018, will fundamentally alter the risk/reward of using data and with it, alter the perception of the long-term opportunity from data. It&rsquo;s important to say that this does not necessarily unwind the longer-term upside from big data, data analytics, artificial intelligence, and machine learning. But we do think the path will be muddied by new regulation and that from a corporate perspective, this will require a systemic change of approach with respect to ePrivacy and data protection. And this is not, for the moment, properly understood or appreciated by many corporates or investors. Authors: Thomas A Singlehurst, CFA,Mark Kelley,Ashwin Shirvaikar, CFA,Catherine T O&rsquo;Neill,Mark May,Walter H Pritchard, CFA,Dalibor Vavruska,

Who Watches the Watchers? – How Regulation Could Alter the Path of Innovation

If The Graduate were to be re-released today it is almost certain that the career advice from Mr. McGuire to the film’s main protagonist – recently graduated Benjamin Braddock – would be different. Indeed, we would go one step further and argue that it is almost certain that the one word offered by the 2017 version of Mr. McGuire would be ‘data’.

ePrivacy & Data Protection

Graeme McDonald

Carl Benedikt Frey

Martin Wilkie

Chinchih Chen

Ji Cheong

Nick Coulter

Paola Mello

Masashi Miki

Anthony Moulder

Gareth M Phillips

Alicia Yap

This report, the third in the Technology at Work series, focuses on the automation driven by e-Commerce for physical goods. We look at the technology needed to automate order fulfillment, inventory management, and delivery when consumers shop online and examine the implications in a wide range of areas for industry, retailers, supply chains, real-estate, and transportation, looking too at the impact on labor and employment. Growth in e-Commerce is the main driver of warehouse automation, a driver which itself will increase with broadband and mobile device penetration. In Japan, 32% of all goods bought on the Internet were bought on smartphones in 2016, up from 27% a year earlier. Millennials, those most likely to shop online, will soon enter their peak spending years. Global e-Commerce sales have grown at a compound annual growth rate of 20% over the last decade, and online retail sales have gone from ~2% of total to ~8%%. While technology is not yet either capable or cost effective in all cases, this is likely to change. Our estimates show that that 80% of jobs in transportation, warehousing, and logistics are susceptible to automation as a consequence of the trends we observe in technology. Retail is one industry in which employment is likely to vanish, but unlike manufacturing jobs which are highly concentrated, the downfall of retail employment will affect every city and region. U.S. companies employ 2 million people just to do stock and order fulfillment work and over 90% of warehouse picking is currently done by hand. Migrating to automated picking gives productivity gains of 2x–3x that as compared to pick-to-conveyor operations and 5x–6x as compared to manual pick-to-pallet fulfillment centers. The adoption of technology is by no means uniform. While one-hour delivery is available when buying online in some parts of the U.S. and Europe, the average promised delivery time in Brazil is nine days. While e-Commerce penetration is 87% in the U.K., it is only 18% in Romania. By end industry, penetration is highest in clothing and sporting goods. The virtual world is also subject to physical constraints. Warehouse availability is now at an all-time low in the U.S. and land availability for warehouses is already a problem in London, where 60%–70% of industrial sites sold are “lost” to residential development. Online business models need 300% more warehousing space compared to store-based fulfillment. Based on forecasts from Euromonitor for global e-Commerce growth, over 2.3 billion square feet of new warehousing space will be required by 2035. Road traffic is a challenge too — kilometers traveled by light goods vehicles in the U.K. were 47% higher in 2015 compared to 2000, while kilometers traveled by passenger cars were only 5% higher. Authors: Martin Wilkie,Carl Benedikt Frey,Chinchih Chen,Ji Cheong,Nick Coulter,Dan F Homan,Mark May,Graeme McDonald,Paola Mello,Masashi Miki, CFA,Anthony Moulder,Gareth M Phillips,Alicia Yap, CFA,

This report, the third in the Technology at Work series, focuses on the automation driven by e-Commerce for physical goods. We look at the technology needed to automate order fulfillment, inventory management, and delivery when consumers shop online and examine the implications in a wide range of areas for industry, retailers, supply chains, real-estate, and transportation, looking too at the impact on labor and employment. Growth in e-Commerce is the main driver of warehouse automation, a driver which itself will increase with broadband and mobile device penetration. In Japan, 32% of all goods bought on the Internet were bought on smartphones in 2016, up from 27% a year earlier. Millennials, those most likely to shop online, will soon enter their peak spending years. Global e-Commerce sales have grown at a compound annual growth rate of 20% over the last decade, and online retail sales have gone from ~2% of total to ~8%%. While technology is not yet either capable or cost effective in all cases, this is likely to change. Our estimates show that that 80% of jobs in transportation, warehousing, and logistics are susceptible to automation as a consequence of the trends we observe in technology. Retail is one industry in which employment is likely to vanish, but unlike manufacturing jobs which are highly concentrated, the downfall of retail employment will affect every city and region. U.S. companies employ 2 million people just to do stock and order fulfillment work and over 90% of warehouse picking is currently done by hand. Migrating to automated picking gives productivity gains of 2x&ndash;3x that as compared to pick-to-conveyor operations and 5x&ndash;6x as compared to manual pick-to-pallet fulfillment centers. The adoption of technology is by no means uniform. While one-hour delivery is available when buying online in some parts of the U.S. and Europe, the average promised delivery time in Brazil is nine days. While e-Commerce penetration is 87% in the U.K., it is only 18% in Romania. By end industry, penetration is highest in clothing and sporting goods. The virtual world is also subject to physical constraints. Warehouse availability is now at an all-time low in the U.S. and land availability for warehouses is already a problem in London, where 60%&ndash;70% of industrial sites sold are &ldquo;lost&rdquo; to residential development. Online business models need 300% more warehousing space compared to store-based fulfillment. Based on forecasts from Euromonitor for global e-Commerce growth, over 2.3 billion square feet of new warehousing space will be required by 2035. Road traffic is a challenge too &mdash; kilometers traveled by light goods vehicles in the U.K. were 47% higher in 2015 compared to 2000, while kilometers traveled by passenger cars were only 5% higher. Authors: Martin Wilkie,Carl Benedikt Frey,Chinchih Chen,Ji Cheong,Nick Coulter,Dan F Homan,Mark May,Graeme McDonald,Paola Mello,Masashi Miki, CFA,Anthony Moulder,Gareth M Phillips,Alicia Yap, CFA,

Automating e-Commerce From Click to Pick to Door

Our Technology at Work series serves to highlight the implications of the disruption brought by the digital revolution. As we have shown in previous reports, 47% of jobs in the United States are at risk of automation over the forthcoming decades and similar shares have been estimated for other countries. This means the effects of the digital revolution are yet to be seen. In a recent interview in April 2017, Jack Ma, founder and Chairman of Alibaba, expects “decades of pain” as the Internet disrupts traditional businesses leading to “all sorts of industries and walks of life.”

Technology at Work v3.0

Johanna Chua

Ebrahim Rahbari

Michael Osborne

Robert Garlick

Peter Chalif

Elizabeth Curmi

Craig Holmes

In this new report, Oxford Martin School academics; Dr. Carl Benedikt Frey, Associate Professor Michael Osborne and Dr. Craig Holmes expand their theories on the changing nature of innovation and work and the associated implications for the future of employment and society more widely. Based on their methodology that predicted 47 percent of U.S. jobs were at risk from automation, the authors now look at the probabilities of jobs at risk across the world as well as the disparities of job risk between cities. To protect against jobs being eliminated due to automation, it is important to recognize which characteristics are most likely to be associated with a given job being automated — perception and manipulation, creative intelligence, and social intelligence are the three bottlenecks to automation. Cities and regions that have invested in skilled industries remain relatively safe from automation and technological dynamism will remain the best way to maximize employment and to benefit positively from new technologies. Education is also a very important tool that policymakers will need to leverage in preparation for the effects of accelerated technological change. Throughout this report, Citi Research analysts drill deeper into specific industries to highlight a number of sectors already feeling the effects of automation as well as areas where technology is helping to create new jobs. The Citi Research Economics team investigates whether traditional measurement tools are failing to capture the productivity and GDP improvements as well as the subsequent inflation effects that come from accelerated technological change. Finally, we look to identify adequate policy responses for the issues highlighted in this report. We hope that you enjoy this Citi GPS report. We look forward to sharing the results of the exciting collaboration between Citi and the Oxford Martin School in future reports. Andrew Pitt Global Head of Research Citi Ian Goldin Director of the Oxford Martin School Professor of Globalisation & DevelopmentUniversity of Oxford Authors: Carl Benedikt Frey,Michael Osborne,Craig Holmes,Ebrahim Rahbari,Robert Garlick,Graeme McDonald,Elizabeth Curmi,Johanna Chua,Peter Chalif,Martin Wilkie,Authors: Carl Benedikt Frey,Michael Osborne,Craig Holmes,Ebrahim Rahbari,Robert Garlick,Graeme McDonald,Elizabeth Curmi, PhD.,Johanna Chua,Peter Chalif,Martin Wilkie,Authors: Carl Benedikt Frey,Michael Osborne,Craig Holmes,Ebrahim Rahbari,Robert Garlick,Graeme McDonald,Elizabeth Curmi, PhD.,Johanna Chua,Peter Chalif,Martin Wilkie,

In this new report, Oxford Martin School academics; Dr. Carl Benedikt Frey, Associate Professor Michael Osborne and Dr. Craig Holmes expand their theories on the changing nature of innovation and work and the associated implications for the future of employment and society more widely. Based on their methodology that predicted 47 percent of U.S. jobs were at risk from automation, the authors now look at the probabilities of jobs at risk across the world as well as the disparities of job risk between cities. To protect against jobs being eliminated due to automation, it is important to recognize which characteristics are most likely to be associated with a given job being automated &mdash; perception and manipulation, creative intelligence, and social intelligence are the three bottlenecks to automation. Cities and regions that have invested in skilled industries remain relatively safe from automation and technological dynamism will remain the best way to maximize employment and to benefit positively from new technologies. Education is also a very important tool that policymakers will need to leverage in preparation for the effects of accelerated technological change. Throughout this report, Citi Research analysts drill deeper into specific industries to highlight a number of sectors already feeling the effects of automation as well as areas where technology is helping to create new jobs. The Citi Research Economics team investigates whether traditional measurement tools are failing to capture the productivity and GDP improvements as well as the subsequent inflation effects that come from accelerated technological change. Finally, we look to identify adequate policy responses for the issues highlighted in this report. We hope that you enjoy this Citi GPS report. We look forward to sharing the results of the exciting collaboration between Citi and the Oxford Martin School in future reports. Andrew Pitt Global Head of Research Citi Ian Goldin Director of the Oxford Martin School Professor of Globalisation &amp; DevelopmentUniversity of Oxford Authors: Carl Benedikt Frey,Michael Osborne,Craig Holmes,Ebrahim Rahbari,Robert Garlick,Graeme McDonald,Elizabeth Curmi,Johanna Chua,Peter Chalif,Martin Wilkie,Authors: Carl Benedikt Frey,Michael Osborne,Craig Holmes,Ebrahim Rahbari,Robert Garlick,Graeme McDonald,Elizabeth Curmi, PhD.,Johanna Chua,Peter Chalif,Martin Wilkie,Authors: Carl Benedikt Frey,Michael Osborne,Craig Holmes,Ebrahim Rahbari,Robert Garlick,Graeme McDonald,Elizabeth Curmi, PhD.,Johanna Chua,Peter Chalif,Martin Wilkie,

The Future Is Not What It Used to Be

It is a pleasure to introduce Technology at Work v2.0: The Future Is Not What It Used To Be. This report is the third in a long-term series of Citi GPS reports co-produced by Citi and the Oxford Martin School at the University of Oxford in order to explore some of the most pressing global challenges of the 21st century. The report further explores the concepts introduced in our February 2015 report, Technology at Work: The Future of Innovation and Employment, which marked the introduction of the Oxford Martin Programme on Technology and Employment, a long-term program of research at the University of Oxford supported by Citi that will focus on the implications of a rapidly changing technological landscape for economies and societies.

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