Digital transformation is no longer a futuristic goal—it’s a present-day necessity. Yet, across Europe, the pace of digitalization remains slow. According to the European Commission’s 2024 Digital Economy and Society Index (DESI), Europe is still behind global leaders in advanced digital tech adoption, including AI and cloud computing. While the rest of the world races ahead, many European businesses risk being left behind, struggling to compete with new, agile challengers or faster moving competitors that are embracing AI and digital-first strategies. AI will change everything, giving competitive edge to those fast movers.

John Kåristad, Group CEO with Monica Tvedt, Group CTO.

The Private Sector: Facing Disruption from All Sides

A McKinsey report (2023) found that:

• Companies that fully integrate AI across their business processes are twice as likely to outperform their peers in revenue growth.

• Yet, only about 20% of European firms have adopted AI at scale, compared to 31% in North America.

European businesses must wake up to a new competitive reality accelerated by AI. Emerging companies—often born in the digital era and powered by artificial intelligence—are leaner, faster, and more responsive to rapidly changing consumer expectations. These new players aren’t just competing on price or product—they’re delivering smarter, personalized, tech-enabled experiences that today’s consumers increasingly demand.

A Salesforce survey (2024) revealed:

• 73% of global consumers expect companies to understand their unique needs and preferences.

• 62% have switched brands in the past year due to poor digital experiences.

Consumer behavior itself is evolving under the influence of technology. From how people shop to how they consume media, access services, and even interact socially, expectations have shifted. Businesses that fail to keep pace will lose relevance—and revenue.

 The Public Sector: Doing More with Less

The public sector faces its own urgent challenges. Demographic shifts—such as aging populations and shrinking workforces—are placing enormous strain on public services. At the same time, citizens expect seamless, efficient, digital-first interactions with government, similar to what they receive from private companies.

From Eurostat (2023):

• By 2030, over 30% of the EU population will be aged 65 or older, significantly increasing the burden on healthcare and social services.

• Meanwhile, the working-age population is shrinking, leading to fewer public service workers per capita.

But with fewer people available to deliver these services, the only viable path forward is smarter, more effective digital infrastructure. Public institutions must embrace digitalization to increase their efficiency to meet rising demand in the years ahead.

The European Commission’s 2023 eGovernment Benchmark ranked Estonia, Denmark, and Finland at the top, with:

• Over 90% of services fully digitized.

• Countries with strong digital governments reported higher citizen satisfaction and lower administrative costs.

Some countries have more mature digital services than others, but also those leading in digitalization see challenges due to demographic changes with less people available to provide public services to an aging population. Digital innovation is much needed, especially in healthcare.

 What Leaders Must Do—Now

For Business Leaders:

• Make AI a core strategy, not an experiment. Those who embed AI across operations and customer experience will lead—not lag.

• Invest in talent and training. Future-readiness means having employees who can adapt, think digitally, and innovate fast.

• Think like a tech company. Even traditional industries must adopt agile, tech-first mindsets to compete and survive.

• Partner for speed. Collaborate with startups, universities, and governments to accelerate transformation without reinventing the wheel.

For Policymakers:

• Prioritize digital infrastructure investment. High-speed internet, cloud platforms, and AI capabilities must be widely accessible, especially for small businesses and rural areas.

• Simplify regulation to foster innovation. Support startups and tech adoption by removing red tape and creating agile legal frameworks for data, AI, and digital identity.

• Double down on digital education and reskilling. Equip both the current and future workforce with the digital skills necessary to thrive in tomorrow’s economy.

• Lead by example. Make public services fully digital by default—not as a convenience, but as a strategy to cope with shrinking public sector resources.

Whether in business or public service, the message is clear: the digital race is on—and Europe cannot afford to come in last. Europe’s window to lead in digital transformation is still open—but narrowing fast.

Together with Joachim Bader & Christof Zahneissen, Managing Partner's At Forte Central Europe

Examples: The Impact of Digital Readiness

1. Business: Klarna vs. Traditional European Banks
Swedish fintech company Klarna has rapidly grown by offering seamless, AI-driven "Buy Now, Pay Later" services. In contrast, many traditional European banks have struggled to modernize their digital offerings, losing younger customers who expect fast, mobile-first experiences. Klarna’s success highlights how embracing digital tools can disrupt entire industries.

2. Consumer Shift: Zalando and Online Retail
Berlin-based Zalando, once a small online shoe retailer, leveraged data analytics and user personalization to become one of Europe’s leading fashion platforms. Their tech-first approach allowed them to adapt quickly to changing consumer habits—something many brick-and-mortar stores failed to do, especially during the COVID-19 pandemic.

3. Public Sector: Estonia’s Digital Government
Estonia stands out as a digital leader in the EU. With over 99% of public services available online, Estonians can vote, pay taxes, and access health records digitally. This has enabled the government to operate more efficiently despite a small population and limited resources—precisely the kind of innovation more European countries now urgently need.

4. AI and Public Services: The Netherlands’ Predictive Maintenance
In the Netherlands, cities like Rotterdam use AI-powered predictive maintenance to manage infrastructure such as bridges and roads. This proactive approach not only saves money but also reduces downtime and improves public safety—demonstrating how smart digital investments can amplify efficiency.