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How do we make technology rise to our aspirations?

Part of the great reset, as companies and countries envision a post-COVID-19 future, is rethinking how technology can serve our needs. Science-fiction scenarios may depict computers developing minds of their own, but the work of updating algorithms, adjusting risk models, and deciding how data will be leveraged is still very much a human job. This week, McKinsey made the case for why open-data ecosystems for finance is the next frontier and examined the technology rethink required in retail, insurance, banking, automotive, photonics, and biotech.

Robust digital financial infrastructure proved its worth during the COVID-19-crisis, helping governments cushion people and businesses from the economic shock. The McKinsey Global Institute discusses the next step: economies that embrace data sharing for finance could see GDP gains of between 1 and 5 percent by 2030, with benefits flowing to both consumers and financial institutions. The research examines 24 use cases in banking and payments, focusing on the European Union, United States, United Kingdom, and India (exhibit).

The retailer of the future will harness the power of data, quantum computing, artificial intelligence, and augmented reality, says serial entrepreneur and senior adviser to McKinsey John Straw on the McKinsey on Consumer and Retail podcast. The biggest mistake retail companies make? Unwillingness to invest in something that doesn’t automatically feed the bottom line. The biggest win: using cutting-edge technology to give consumers a way of envisioning their lives if they go ahead and buy.

In a McKinsey Quarterly interview, Bart Schlatmann, the CEO of Allianz Direct, discusses how to build a scalable, new, digital business inside of an older, more established company. The direct-to-consumer insurance business inside financial-services giant Allianz serves multiple European markets on a single platform. The CEO’s first move was to put himself under pressure: with approximately 70 engineers, he promised to launch a business in two markets within 18 months.

The COVID-19 pandemic created significant challenges for financial institutions in both modeling and model-risk management. Institutions should use six strategies to update their models, including using agile modeling, upgrading data architecture, and embracing automation.

Batteries and fuel cells get the attention, but hydrogen combustion is a nascent zero-emissions technology that some automotive OEMs, component suppliers, and start-ups are reconsidering. Low capital-expenditure requirements for combustion engines, decreasing hydrogen prices, and the relative efficiency of some types of vehicles are making this technology, once considered too expensive, increasingly relevant.

Another technology ripe for reinvention is photonics. Although the laser market has steadily increased since the 1970s, innovation and revenue growth have slowed over the past decade. The creation of integrated devices combining lasers, sensors, and optics could usher in a new age of opportunity.

Europe’s biotech industry has remained resilient through one of the worst economic crises in decades. Despite a brief downturn in 2020, share-price evolution has been positive overall since the beginning of the pandemic, and funding continues to grow at a record rate. Future success will depend on improving the translation of research into new companies, raising more capital, cultivating entrepreneurial talent, and building global networks.

Here are some other key findings from our sector research this week:

• A McKinsey Global Institute survey of 18,000 people in 15 counties identified 56 foundational skills that can help future-proof workforces. One revelation: though numerous skills are associated with having a university degree, for “self-confidence,” “courage and risk-taking,” and “empathy,” there is no such association. Scholars can puzzle over this: more education was associated with lower proficiency of some valuable traits, such as “humility.”
• The combination of increased burnout among women and the hold placed on diversity and inclusion initiatives has put consumer-goods and retail companies at a greater risk of losing diverse talent. Companies should ensure flexible work and employee well-being and create programs to promote diverse hiring and promotion.

Our most recent edition of McKinsey for Kids introduces younger audiences to mangrove forests and explains why building a “business case” for mangroves can help protect Bengal tigers and king cobras. For more perspectives, please see the full collection of our coronavirus-related content, visual insights from our “chart of the day,” a curated collection of our first 100 articles relating to the coronavirus, our suite of tools to help leaders respond to the pandemic, and how our editors choose images that help readers visualize the impact of an invisible threat.

This briefing note was edited by Katy McLaughlin, a senior editor in the Southern California office.