Every crisis is an opportunity. Already one month into the pandemic, it became evident that digital businesses will benefit. Now, several months later, we can look at the facts. Does COVID accelerate digital trends, and what does that mean for Liechtenstein?
The COVID-crisis has changed the way people interact in many ways: Consumer behavior has changed, schools and universities had to switch to a digital format, and companies had to get used to their staff working from home. As a result, businesses, private households, and governments had to get accustomed to using digital technologies in their everyday lives – also in Liechtenstein.
“Even though I had already participated in video-conferencing before, I have had a steep learning curve in this regard during the crisis,” said Liechtenstein’s Prince Alois in an interview. “I believe, existing trends like digitalization will accelerate as a result of this crisis.”
Jan vom Brocke, Director of the Institute of Information Systems at Liechtenstein University, agrees. He believes this crisis is an opportunity for digital businesses, and digitalization has received a tailwind during the past weeks.
The impact of the crisis on digital business models is best seen in the stock market. Amazon stocks are at an all-time high, and Shopify has become Canada’s most valuable company as per market capitalization during the crisis. Zoom Communications has been flying high as well and corporate software providers like Slack have seen their user bases exploding.
But that’s large international companies. What about Liechtenstein?
There is no doubt that Liechtenstein has also seen a spike in the use of digital services. But many of these services are not actually provided by Liechtenstein-based companies, at least not today. Hence, while the general trend towards more digital products and services will benefit Liechtenstein’s economy in the long-term, there is not much of an immediate effect on Liechtenstein-based businesses.
Another challenge of Liechtenstein’s digital industry is that many businesses are startups or small businesses. Those companies were hit hardest during the crisis, as they usually don’t have a large cash base to survive a prolonged recession.
Price Alois believes there will be a recession in Liechtenstein, and it’s not possible to predict today how quickly the economy will recover. The speed of recovery will depend on the further spread of the virus and the ability to contain this spread. It will also depend on the efficiency of economic relief measures not only in Liechtenstein but also in other countries.
Government investments will ease the pain
On the bright side, Liechtenstein is well-aware that its digital economy will play a significant role in the country’s future success. As the government recognizes the importance of the digital economy, it will continue to improve the legal framework and invest in infrastructure.
“Considering the increasing importance of digitalization for our economic and social life, we should improve our data infrastructure and its stability and security,” says Prince Alois. “I am thinking, for example, about protection from cybercrime and, in general, the security of our infrastructure.”
Jan vom Brocke says another question is how digital trends will continue in the future. What happens after COVID? Will people keep working from home or return to their offices? Will they keep using e-commerce channels or return to local shopping malls? For digital technologies to be successful, it needs people who are ready to use them. Today, we are all more ready to use digital tools compared to the time prior to the pandemic. That creates opportunities for digital businesses, also in Liechtenstein – at least for those who survive the coming months.