PwC weekly media briefing - 20 January

20/01/21

How Virtual Reality (VR) is providing a more impactful and immersive work experience

Jeremy Dalton, Head of Extended Reality (XR) at PwC UK, said:

  • Demand for VR as a collaboration tool has remained high, with requests coming from multiple industries including financial services, pharmaceuticals, oil and gas, and more. It offers an immersive, engaging and effective solution to the challenges we’re facing as a result of the COVID-19 crisis and the increase in remote working.
  • Virtual reality is a powerful collaboration tool as it goes further than video conferencing in connecting individuals, allowing them to feel like they are sharing the same environment and experience. 
  • In addition, employees being trained using VR are more emotionally connected to their environment and more immersed in the tasks they’re working on because there are fewer distractions compared to the physical world. 
  • Last year, PwC published results of a large soft-skills study examining the impact of using VR to train and improve diversity and inclusion behaviours. This is an important part of PwC’s compulsory unconscious bias training that will help in the development of our leaders.

o   Selected PwC employees from a group of new managers took the same training in one of the three following settings: Classroom (face to face learning), E-learning (online learning), V-learning (training using VR). 40% of the V-learners saw an improvement in confidence compared to classroom learners and 35% improvement over e-learners to act on what they learned after training in VR.

o   V-learning is the most cost-effective way of learning when it’s done on a large scale. At 375 learners, VR training achieved cost parity with classroom learning. At 1,950 learners, VR training achieved cost parity with e-learn. At 3,000 learners, VR costs become 52% less than classroom.

o   V-learners felt 3.75 times more emotionally connected to the content than classroom learners and 2.3 times more connected than e-learners.

o   PwC has run collaboration sessions in virtual reality with over 200 people so far and this is growing by the day.

 

Good Growth for Cities - the impact of COVID-19 on UK cities and towns and what recovery looks like

The latest Demos-PwC Good Growth for Cities report focuses on the economic impact of COVID-19 and recovery prospects for the UK’s largest towns and cities in 2021 and beyond. Commenting on the report, Karen Finlayson, regional lead for government and health industries at PwC, said:

  • New analysis shows that the UK cities and towns hardest hit by the economic fallout from the pandemic are likely to make the fastest recovery, but are expected to be worse off than at the beginning of the pandemic compared to more resilient places. 
  • Cities and towns hardest hit during the pandemic, such as Bradford, Liverpool and Southend have seen their economies decrease by more than 12.5% in 2020, yet are among those with the strongest projected GVA growth rates for 2021. These cities are predicted to recover faster than others in 2021, with growth rates of 5.3% and higher. 
  • As the business sectors most impacted by restrictions reopen, the cities most negatively affected due to their sectoral mix will see faster recoveries. However, a return to pre-pandemic conditions will not necessarily instigate a dramatic upturn in economic activity and these city economies will still be smaller in 2021 than they were in 2019.
  • As the UK looks to ‘build back better’ from the pandemic, ensuring that the recovery lays the foundations for building resilience against future shocks will be vital.
  • Lessons can be learned from cities, such as Oxford, Leicester, Leeds and Edinburgh, which have performed more strongly over the longer term pre-pandemic, in areas such as jobs, health and skills, which drive more sustainable economic growth across the UK.
  • The pandemic has made us more acutely aware of existing economic and social inequalities and why it is so important to ‘level up’ across the UK. It reinforces our view in Good Growth for Cities of the necessity to look beyond GDP and headlines about the North-South divide to focus efforts on tackling the issues that really matter to the public - and local economies - such as skills, sustainable income and health and wellbeing.
  • A broad brush approach to levelling-up will not address the challenges facing the places that have been hardest hit. We need a precise approach which takes into account the strengths and needs of individual towns and cities to build more resilience and drive a fair recovery across the UK. 

Survey shows optimism is up amongst Financial Services firms, but current restrictions may temper future positivity

Isabelle Jenkins PwC Head of Financial Services, said:  

  • Optimism improved amongst Financial Services (FS) firms  in the three months to December (+44% from +9% in September), no doubt due to the healthy business volumes we are seeing across the sector. 
  • However, this survey was carried out before the move back into a national lockdown and the tightening of restrictions. This is likely to temper the positive outlook in future surveys.
  • Nevertheless, growth picked up to its fastest since June 2017 (+34% from +1%) and was seen in banking, general insurance and investment management. 
  • Profitability is also up 30%, however this pace is set to slow down next quarter with growth predicted to rise by a slightly lower 21%.
  • Finally, the value of non-performing loans has continued to increase with growth up 12% this quarter, and despite the slightly lower pace, values are set to accelerate in the next quarter. 
  • This means that firms should continue to ensure that they are focusing on the areas that will help them withstand any potential shocks, such as upskilling their people and embracing digital transformation.

Outlook for UK M&A activity in the TMT (Technology, Media & Telecom) sector

Commenting on the findings in PwC’s Global M&A Industry Trends in Technology, Media and Telecommunications report, Nick George, PwC’s UK TMT deals leader, said:

  • TMT is set for a further surge in mergers and acquisitions this year after a strong performance in the second half of 2020.
  • The deal appetite reflects the growth potential in an increasingly virtual world with further impetus coming from the abundance of available capital, both from within TMT and from private equity buyers.
  • Technology is the sector with the strongest momentum with deal targets including digital platforms such as online marketplaces and consumer comparison. Buyers are also looking for acquisitions to help keep pace with developments in areas such as artificial intelligence, cloud software and Internet of Things.
  • Some of the challenges in the technology sector include competition and pressure coming from investors to put dry powder to work will keep prices high. Also regulators and legislators have set their sights on tech companies whether it be for national security reasons or concerns over their influence, market dominance or tax contribution.
  • In telecoms, M&A is set to play a key role in strengthening capacity and future-proofing capabilities in areas such as the fibre optic roll out and creating a 5G enabled infrastructure. Consolidation of network providers may eventually follow (e.g. as was the case with the fragmented cable sector of the 1990’s eventually coming together as Virgin Media).
  • In media, deal activity has been strongest in growth markets such as gaming and streaming. Other sectors such as conferences could see some consolidation in the year ahead.
  • To gain an edge, businesses will need to have clear strategic objectives, target opportunities for transformation and ensure purpose and trust are central to their deal strategy.
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