Why PwC’s New FinTech Lead Won’t Rock the Blockchain Boat
#PwC’s new US #FinTech director reveals how the firm is being transformed by #blockchain.
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Interview with David Kenny, GM @IBM Watson, on AI, Blockchain and Design Thinking in banking
A few weeks ago, at Viva Tech’s International Summit in Paris, I bumped into David Kenny – one of my heroes. I will tell you why: David is a man with an entrepreneurial mindset who has deserved every bit of success that he has achieved. Currently, he is General Manager of #IBM Watson tasked to build Watson into “artificial intelligence as a service”.
I have been following David’s career since he was CEO of Digitas, a very successful digital media company acquired by Publicis Group in 2006 for $1.3 billion. At that period, I was running a small digital media company called Art House Media and, therefore, all of their moves were of great interest to me.
After that David moved to other demanding positions, but he is probably best known as Chairman and Chief Executive Officer of The Weather Company. I, on the other hand, moved into the financial services sector.
The Weather Company was acquired by IBM for more than $2 billion at the beginning of this year, and that’s when David was transferred to IBM’s Watson team.
The reason why I told you this story is to emphasise that running a marketing and #technology agency that was helping businesses adapt to the digital age, with more data and more analytics, 10-15 years ago; as well as more recently connecting hundreds of millions of sensors to produce more than 20 terabytes of data daily for The Weather Company’s apps and websites, definitely required a clear vision of the future driven by digitisation and innovative technologies.
So, what did we talk about?
Since I work for one of the big European #banks, our discussion started with three early things AI can be used for in the financial services industry.
The first area is understanding data and rules, something Watson is really good at. When dealing with compliance, fraud detection, money laundering and all other processes commonly known as KYC, Watson is capable of looking at all the data in the public about each customer in a very private and secure way. Essentially, that ensures that banks fully respond to their responsibility of knowing everything they need to know about each customer.
David also mentioned that Watson was learning about #banking regulations and laws in different countries to help global banks deal with the compliance issue. Especially nowadays with Brexit, there is a new problem: Do you know that there are 10,000 rules between EU and Britain in banking? Well, Watson too needs to learn all these rules!
David then moved on to the second area: customer connection, that is, the ability to use AI for managing text messages and Twitter accounts. In that way, Watson becomes a virtual agent that enormously helps the customer service agents by supplementing them.
The third is predictive models. Banks need to predict what the customer might need next and what information they might find useful. This is about personalisation – but with structured data. With Watson, it is possible to process so much more data; find out what is happening in someone’s business, in their environment, in their economy, in their life – so that banks can be ready to help them.
Inevitably, our next topic was #blockchain. David told me that IBM had invested literally billions of dollars in research. They think that blockchain is really an important technology since it enables us to keep track of absolutely every transaction – banks in particular need to know that data or currency is in the right hands. Another advantage is that the sender and the receiver can be verified at an enormous scale!
IBM thinks that blockchain needs to be baked into all of the Watson systems we have mentioned here because they do not do AI from search – which is very much about public knowledge. They are Watson for private data and, thus, need blockchain to make sure the data stays private and is only exchanged and secured by the right person on the other side.
Please note that IBM donated all of their blockchain technology to the Linux foundation because they want it to be an open source and they want everyone to use it. The aim is to make data more useful so that AI can work on private data, rather than just on the data available in the public search grid.
And, why is data so paramount? For two reasons. Firstly, the higher the quality of the data, the better AI algorithm results are. Secondly, that, in turn, helps us make much better decisions. Therefore, the data banks possess provides true competitive advantage!
I learned that 80% of the world’s data was held within companies and organisations! Only 20% is stored on the Internet. Did you know that?
Can you see now how we can improve our business significantly by employing new AI technologies to access data from all three: proprietary, third-party and public sources?
Of course, I could not let David go without asking him about his view on design thinking. In my previous post “How to ignite creativity and flair for innovation?”, I talked about a large-scale transformation IBM had undertaken to replace the company’s engineering and sales culture with the innovation mindset by bringing in design thinking.
David revealed to me that he himself was also a great believer in design thinking, and explained that it was the belief of Ginni Rometti that we were moving to a world in technology that was no longer B2B, but rather B2I (business-to-individual), that led to IBM’s transformation.
All this is highly relevant to us in the financial services sector as well, but I will leave if for one of my future posts. In the meantime, think of B2I as marketing on the individual level. The philosophy behind it is that companies should better tailor not just their products, services and go-to market strategies, but also their whole business models to the individual buyers’ wants and needs due to the rapidly shifting digital market and buyer behaviour.
David said that it was already possible to see that new approach in how they were working with Watson. Today at IBM, they actually start every project with design thinking to make sure they know the persona of the user and that their technology fits the user’s life.
They begin the design thinking process with the following questions: “How are our clients using the product? How is their day spent? What is the right way to connect with them? What is the right content to connect with them?”
As a result, as David pointed out, although their main task is to show how AI can help their clients, they are also making sure that technology itself is not a barrier, that they are communicating in a normal language, that it is easy to find the next thing and that they are not overwhelming people with too much information.
Thanks to design thinking, in Watson’s case, they took into consideration the end user – the retail customer; the decision maker; and the growing group of developers. Since the banks are increasingly bringing in tech people to work on machine learning, IBM made Watson easier for them. All they have to do is just take an API and use it. As straightforward as plug-and-play!
At the end, I asked David to tell me what he thought about the use of design thinking in banking. Without hesitation, David stated that design thinking was actually essential! Then he explained it further: “The banks are built on trust. Your reputation is very trustworthy. Trust will grow if you bring it all together – if you look for business solutions from various perspectives, empathise with users, and address various stakeholders. Design thinking is used to build trust.” – What a fine answer!
[linkedinbadge URL=”https://www.linkedin.com/in/deandemellweek” connections=”off” mode=”icon” liname=”Dean Demelweek”] is Agent of Change & Innovation Catalyst | Tech London Advocate and this post was originally published on linkedin.
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Public Blockchains: The Community vs The Ecosystem
In this opinion piece, author William Mougayar breaks down the term “#community” and what it means for #blockchain governance.
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IBM Building Blockchain Dispute Resolution System
IBM could launch a finance-oriented #blockchain solution as early as this fall. According to The Wall Street Journal, IBM’s Global Financing unit is looking to kick off a project that would focus on resolving transaction disputes. The #system reportedly won’t replace the Global Financing unit’s existing systems, at least not in the near term. Rather, it will […]
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Anonymous Blockchain Micropayments Advance With ‘Bolt’ Proposal
CoinDesk outlines a new #proposal that would seek to anonymize #micropayments carried out on #blockchain networks.
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Children’s Aid Organization UNICEF Seeks Blockchain Lead
The United Nations #Children’s Fund is seeking a software developer and consultant who can help shape the #organization‘s #blockchain strategy.
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Alibaba Affiliate Taps Blockchain for Charity Payments
#Alibaba #affiliate Ant Financial has created a private #blockchain that seeks to help make charities more transparent and accountable.
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Individual Identity Rights
I wrote about new business opportunities for financial services incumbents, specifically #banks, in my previous post. More notably, I posited that 1) because banks were in the Trust Business 2) they have an opportunity to expand their offerings by 3) protecting their customers’ #IDENTITY and DATA much like they protect customer’s money today.
Soon after I published that post, I came across a short video by Tyler Cowen (see here) in which he discusses the importance of trust in the banking relationship. He points out that trust is made possible by a shared understanding that #individual property #rights exist and will be enforced by the state. A bank that takes customer money can’t just keep it, and has legal obligations to protect it. Tyler&8217;s video reminded me the multifaceted aspects of trust and that I had only touched on the trust between a bank and its customers.
Given that I believe in how #technology is and will enable individuals to utilize their identities contextually and enable them to monetize their own data, that video spurred me to think about data and identity ownership. To be clear, this post is not about exploring new business models, rather it is about understanding what data means legally to us and the implications of ownership and rights associated with data.
Our lives are increasingly defined by the electronic data stored in third party databases that is generated by day to day activities, for which limited records existed even a decade ago. Drive your car, by groceries, visit a web-site, pay a toll electronically – data is harvested, data is stored. When aggregated, these prosaic electronic breadcrumbs have massive economic value. Indeed, considering that our economies are undergoing a massive realignment and restructuring, moving away from the industrial age towards the digital age, it is easy to realize that the data and metadata we generate (about ourselves, our behaviors, our habits, our consumptions) or that of our own physical assets generate will be increasingly valuable.
And the amount of data we generate is increasing, not decreasing. If our data and our identities are already valuable today, they will be more so tomorrow. At this particular historical moment, the commercial value of consumer data is a one-way street. Once a business has your data, they may have legal obligations to you, depending on the state or country where you live (HIPPA and Graham Leach Bliley are two U.S. examples). But you don’t have a financial stake in the data. Say, (for example) that an advertiser makes money by sending an ad targeted to you because of knowledge about your purchasing preference. You’re not going to receive a commission for the use of or reliance on your data. Where does personal data fit into the framework of traditional property law? This is an admittedly broad question, but we can make some general observations. Why does this matter? Most economists – or so I hope &8211; agree that a strong protection of property is one of the most important vectors driving economic activity and wealth creation. Western industrial capitalism is premised on the understanding that individuals have the right to enjoy their private property without fearing it being stolen or misappropriated by a third party, let alone a government.
Generally speaking, there are two types of property. Tangible property, refers to physical things, (a house, a plot of land, a car, physical cash, gold…). Intangible Property, refers to incorporeal assets (intellectual property (“IP”, copyrights, patents, trademarks), corporate good will, securities, security interests, and dematerialized investments, money, &8230;).
So – what is “personal data”, the stuff that makes up our identities. It’s definitely intangible, but it is certainly not a dematerialized investment or money. Could it and should it be considered and individual’s IP? The answer is most probably not. Could it be a corporation’s IP? Maybe so. The lack of clarity on data and its ownership is indeed tricky.
The Merriam-Webster dictionary defines IP as &8220;something (such as an idea, invention or process) that comes from a person&8217;s mind&8221;. Modern IP laws arose out of the need to protect personal creation. The printing press, mass media, the internet are technology vectors that increased the value of one’s creation. Commercial interests required strong protection and licensing laws. As such, traditional IP comes out of active creation.
Can we say the same of all the data and metadata associated with our health our payments history, our interactions with our social media/networks, our apps, our smartphones and IoT? Or are we faced with passive creation. Would these types of data and metadata be treated as IP or are they in a class of their own? My non-legal-expert view is that we are dealing with a new class of property borne out of new ways to create it, enabled by new technologies and ultimately supporting new economic activity which demands new legal constructs.
The same questions and comments apply to our Identities &8211; physical, digital, private, health, financial.
Clarity on what personal data is leads to clarity on what types of rights can be associated with it, and to the extent there are gaps, what types of rights should be developed.
Ownership is equally important. Who owns our data? In some instances we do, in others we cede control as part of a Term of Service we barely read, and in yet others we probably wade in a grey area where those that use and monetize our data are more than content to keep the status quo and not explicitly spell out ownership.
I strongly believe data ownership frameworks need to be brought up to the level of sophistication of data privacy laws. How our data can be used, how it should be protected data is a national and international discourse our governments, the corporations we interact with and ourselves are engaged in continuously and for many good reasons. No one can use or misuse private information without prior consent, no one can handle our private information carelessly. We already have the right to digital seclusion (i can restrict access to my Facebook or Twitter identity to a handful of trusted friends, or altogether shut it completely) and are slowly gaining the right to be forgotten digitally.
Rights associated with having, owning and securing a personal identity are intertwined with self-determination, basic human rights and freedom of speech.
Up to now the sum total of rights associated with data, which I label Individual Identity Rights have not coalesced into a systemic societal issue. Too many interested parties want their hands on our data with as little friction as possible. Enterprises because of monetization potential, Governments because of their thirst for transparency and control. The early stage of the digital age have mirrored the industrial age from a centralization point of view. Large intermediators such as Ebay, Facebook, Amazon or Google have dominated &8211; and will continue to do so for many years to come. Be that as it may, the potential of #blockchain technology is enabling decentralized business models to emerge. Soon we may have the choice to conduct our private business (sharing with friends, buying, selling, creating) with a decentralized marketplace, a decentralized social network, a decentralized search engine &8211; the list goes on. The data we generate on these platforms will be our own, and we better have ownership rights that reflect such an unequivocal fact.
Up to now the ways and frequency we have needed to produce a form of identity to gain access to a service, a product or a place has been limited. Both will increase and with them the complexity of provisioning and managing our identities. The multiple identities we will create and inhabit better have the same ownership rights that reflect how central identity will be in our post-industrial world.
Up to now we have not paid much attention to our data and have been more than content to cede its monetization to third parties in exchange for convenience or entertainment. As data will rise as one of the central vectors of our economic and social engines we will want to control and share in the wealth creation, we will demand more transparency with regards to who will use our data, for how long and in what capacity, and we better have ownership rights that reflect these value chains.
Individual property rights have been essential to wealth creation in the industrial age. Individual identity rights will be essential to wealth creation in the digital age.
I would like to thank Stephen Palley for helping me think through my arguments, providing invaluable feedback and editorial support.
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Bitcoin Testing Matures as Global Universities Join BSafe Network
An effort is underway to encourage more researchers and academics to investigate and test #bitcoin and other #blockchain tech.
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US Senators Seek Blockchain Guidance From CFPB, Federal Reserve
Twenty-two US #senators sent a leader to senior government officials and the #Federal #Reserve requesting information about the regulation of #blockchain.
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