Multipurpose Traverse

IMG_6890

As today’s business challenges span across boundaries within and external so too must leadership. The ever-increasing complexity of today’s world calls for a critical transformation in leadership from managing and protecting boundaries to boundary spanning ( see Never fail to fail, Giving Direction, Dance on the VUCAno) With that it’s business model reflects towards a multipurpose traverse offerings supporting the client’s dynamic behaviors and journeys ( Banking evolution: Service Innovation, Banking Today)

Under the context of digital offering(s) is its simplicity of a single-purpose business model/ offering/ app the wave of the future?

WeChat, or Weixin in Mandarin, is quickly becoming one of the most popular multi-purpose platforms, not just in China, but the world. Released in 2011 by Chinese internet giant Tencent, With nearly 800 million active monthly users, its user base has grown consistently in every single quarter to date. More importantly the point that I would like to focus is it’s actual embodiment of the app.

It’s safe to say that the most ardent of technophiles have at least 100 apps on their smartphone e.g. Facebook Messenger, WhatsApp, Telegram, Skype, Google Hangouts and Duo for instant messaging. Uber, Lyft, Citymapper, Waze, Tripadvisor, AirBnB and Skyscanner for directions/maps. In addition for gastronomy related: Deliveroo, Just Eat, OpenTable, Zomato, Yelp or Urbanspoon. That’s 19 apps to cover three essential functions. WeChat includes capabilities above and more.

WeChat lets users do everything you’d expect it to – instant messaging, sharing life events and chatting to family members. But its feature list extends far beyond custom emojis and profile pictures. WeChat allows you to arrange a catch-up with a friend, pre-order food from a restaurant, book a taxi to the restaurant, get directions on foot, pay for the meal (or split amongst your friends at the time of payment), check movie times and book tickets, and also purchase other items. All without hitting the home button.

The possibilities for brand-to-consumer engagement on WeChat are almost unparalleled anywhere else in the world, and this is almost entirely due to the way the app manifests itself in as many aspects of daily life as possible. By knowing a person’s current location and when they usually have dinner, all in one app, fast-food brands can hyper-accurately target consumers when they’re most inclined to purchase. And by tapping into the app’s data on payments and money transfers, marketers can get a good idea of when, where, how and why users spend their money, before using this to hyper-accurately target their audience when they’re most likely to buy. With such understanding of a client’s behaviour enables to proactively provide financial wealth services be it from suggesting dynamic relevant payment methods to making recommended investments, wealth management and advisory, etc…

The need for banks to traverse beyond its current boundary is imperative to regain expediency with the new paradigms ( see Digital Tur Tur).

Banking evolution: Service Innovation

IMG_6870

Not so long ago we introduced banking capabilities (see “Towards a digital barter economy?”). Then came the pursuit of product offerings from basic to highly exotic types. With globalisation and increasing market competitiveness banking institutions must now drive innovativeness in their operation to gain sustainable competitive advantage. We are now in an era of competing, not only with incumbents but new challengers outside the financial sector, on the basis of services rather than on the basis of physical products as it is hard to distinguish between products of competing brands in a given product category. It is the services offered by the banks that manifest true value. Differentiation in services must be based on the need to have a vision (see “Giving Direction“) … and not ‘just’ innovation but with the sense of purpose.

Service innovation involves intangible resources for a more innovative service(s) that challenges the conventional attribute-based view of services delivery designs. This requires going beyond current restrictions of product innovativeness that involves assimilation of improved service processes by means of designing and redesigning service delivery capabilities. The pervasive influence of information and communication technology has revolutionised the means of social interaction which will impact how banks will integrate in the client’s ecosystem.

As services become more important for society and customer’s demand more complex and personalized solutions the need to understand and build up innovative processes is vital. Globalisation, information on demand, and ubiquitous communications are pushing innovative services to become more open, flexible, integrated, complex, multi-actor, and networked-oriented).

There are various models of service innovation:

  • “4Ps model by Bessant and Todd (2011)” – 4Ps represents product innovation, process innovation, position innovation, and paradigm innovation. All four aspects formulated for “innovation space.”
  • “Six Dimensional Service Innovation Model by den Hertog, van der Aa and de Jing (2010)” – this defines services innovation as a new service experience or service solution that consist of one of the following six dimensions: new service concept, new customer interaction, new value system, new revenue model, new delivery system and technological.

Can banks use these models as a baseline to evolve future service innovation models?

Nevertheless we need to work towards sustainability competitive advantage and embracing service innovation as an integral part of the bank’s strategy in order to move continuously towards being customer-centric and services-centric. Although there will still be a wave of financial product innovation based on programmable money we should not be limited to product and/or related process innovations but we must emphasise on business model innovation, market innovation, and most importantly paradigmatic innovations.

Ubiquitous Computing

IMG_6601

The term is not at all a new trend or technology. Previously known as pervasive computing where due to technological advancement and cost feasibility the trend of embedding computational capabilities into everyday objects. This makes them effective in communication as they are network interconnected and performing activities of the end users without a centralised system.

Ubiquitous computing integrates via different devices, industries, environments, applications (e.g. wearable devices, appliances, fleet management, sensors). The goal of it is to make devices “smart” in the form of creating a sensor network capable of collecting, processing and sending data via the context and activity that it is under.

We had seen first phases of such capability involving wireless communication and networking technologies, mobile devices, and RFID tags. With the exponential advancement in internet capabilities, usage of voice recognition and artificial intelligence, the growth and adoption of embedding ubiquitous computing significantly increases now often associated and known to be the internet of things (IOT)

Gartner predicts approximately 8 billion connected objects to be use by the end of 2017 and it appears to be growing. In order to cope with the growth of IOT a heavy incorporation of artificial intelligence (AI) fueled autonomy will be required. An AI-driven era of IOT becomes the key building block to herald an increasingly seamless experience and hyperconnectivity as users and their digital counterparts concurrently transpose from one medium/device to another, between multiple environments, the physical and digital ecosystem.

Banking Today

IMG_6860

The word bank immediately depicts the picture of queuing in branches, limited quality products, and legacy processes ( e.g. time to process transfer or payments, etc…). The list goes on and on whether it is overdraft charges, processing/ service fees, overseas call centre. Although in the past, prior to the digital revolution, communication and processing were performed physically and was an important valued service appreciated by its consumers (Change is inevitable, Importance of a brand’s digital behaviour). However in the digital age, this will change with the introduction of financial capabilities not through new capabilities from existing incumbent banks but by new players outside the financial sector.

What will these players offer? Will they offer radically different products, new approach(s) to customer service and radically different ways of integrating to the customer’s ecosystem offering customers genuine and value added financial services? Or will these new ventures, like many of our existing banks, simply pay lip-service to such ideas?

What would we expect these new ventures to provide? To say the least the following:

  1. Fewer but relevant and value-based products base on the customer’s preferences. Keep it simple, make it fun, empower the customer.
  2. Financial services anywhere anytime (Omni-digital). Ubiquitous and available when we need any forms of financial services through the customer’s ecosystem. Services that interstate with their connected life.
  3. Personalized services and recognition. Knowing the customer personally. Listening to the customer
  4. QR code a standard for payments where payments happens instantly with limited to no infrastructure required
  5. Work the way customers work. Be where they are, be there all hours, respond now.
  6. Be the kind of financial services that I want to work with: be involved.
  7. Rate and fee sensitive/ free
  8. Be the overall financial caretaker. True advisory relationship.

What are your expected capabilities?

Simplicity in a complex environment possible?

data-2899901_1280

In all of our sophistication(s), humans react to the world in simple ways as our ability to cope with its complexity is limited. Do we seek simple solutions that hide or ignore the complexity?

Human senses are constantly producing far more data than their brains can process. Our brains cope with complexity by identifying important features and filtering out unnecessary detail(s). An example such as on seeing that the space you enter has four walls, a floor and a ceiling, you know you have entered a room and usually ignore the details. As individuals we deal with complexity by removing or hiding it. Our mental schemes are one way of doing that. Habits are another.

We also simplify complex decision-making by using received wisdom (e.g. advice of others, conforming to the beliefs and attitudes of what we may be associated to).

Society has many ways of managing complexity, one common approach is “divide and rule” approach to management which leads to hierarchical division of large organisations. Hierarchical breakdown introduces its own issues as the need to define early what are the decisive factors. Although structural changes can take place but only of rather limited value. Such systems have a tendency to go for the local optimum in each branch (see “The first step is key…”).  Another approach is to define laws, rules, commercial standards which creates limits and restrictions.

New technologies are usually introduced to simplify our lives, but inevitably they have unexpected side effects on society. An example is the introduction of robotics/ labour-saving systems set off cascades of social change, such as the decline of the nuclear family. In addition instead of addressing and replacing the complex systems with more efficient adaptable ones, we add additional layers of complexity by keeping legacy systems and integrating them with the so-called new and simpler ones. On top of that there is a continuous addition of business process which makes consolidation almost impossible. It makes life simpler to rely on others to provide solutions to complex problems.

This inability to fathom complexity leads to a belief that any worthwhile solution to a situation must be simple. Any change introduces complexity into people’s lives. Rather than face issues that are complex, some retreat into denial, preferring to believe in a simpler future in which there is no change and continue with their paradigms.

In an era of post-truth and pseudoscience, avoid dismissing uncomfortable facts out of hand. Complexity arises from the richness of interconnections between things. Can we continue to ignore the wider context and the side effects of actions and ideas? The continuous adoption and extension of programs are vital to humans over time.

“Our brain is not to think – it is to keep us alive”

 

Towards a digital barter economy?

IMG_6649

Barter is a system, used since many centuries ago, of exchange where goods or services are directly exchanged for other goods or services without using a medium of exchange, such as money.<

Thus a barter economy is one where money does not exist or has ceased to be functional. It means consumers have to gain goods or services through exchange. Limitations introduced are:

  • Difficulty to produce or find the demand of specialised goods only wanted by a proportion of the population
  • Indivisibility of some goods/services
  • Seasonal; perishable
  • Subjective means to judge how much good and services actually are

Then came the development of using commodity money whose value comes from a commodity of which it is made (e.g. cigarettes, gasoline, precious metal, etc). The system of commodity money eventually evolved into a system of representative money as gold/silver merchants or banks would issue receipts to their depositors – redeemable for the commodity money deposited. Eventually these receipts became generally accepted as a means of payment and were used as money. To date most countries adopted fiat currencies that were initially fixed to the U.S. dollar as it was fixed to gold. However in 1971, the U.S. government suspended the client convertibility of the U.S. dollar to gold and many countries have thus de-pegged their currencies from the U.S. dollar. In our current state most of the world’s currencies became unbacked by anything except the government’s fiat or legal tender and the ability to convert the money into goods via payment.

Can the use of fiat currencies continue to sustain in the forthcoming digital ecosystems? Would money evolve to become cryotofiatcurrencies? There is the notion of “private money” set out by the noted Maltese “lateral thinker” Dr Edward de Bono which he argues that companies could raise money just as governments now do – by creating it from thin air. The idea of private currency was treated as a claim on products or services producers by the issuer. An example is company x can issue “ Company x currency” that would be redeemable for its products and services but also tradable for other companies’ currency or for other assets in a liquid market. According to Dr de Bono, to make such a scheme work, the company needs to learn to manage the supply of money to ensure that the monetary base and its capacity to deliver are matched and that inflation does not destroy the value of their creations.

This will introduce a new financial market where companies instead of issuing equities, it issues money that is redeemable against future services. In the case of startups, this money would trade at significant discount to take into consideration the risks inherent in the venture. But once it passes this state, the value of the money will rise provided products/services are available and more importantly used and preferred by consumers. With potential tens of millions of such currencies in circulation either being traded on futures, options, foreign exchange markets this leads to the question of usability and extremely complex transactions that people can not comprehend. The notion is that an individual’s “digital me” will be conducting these transactions with other digital representation of the physical individuals.

“Digital me” (see Be your digital self …) will be entirely capable of handling complex transactions and/or negotiations with other such as matching demands and supplies of financial assets, determine prices, or make settlements. Communications will be in real time and activities take place instantenously.

Will digital tokens be the form of “private money” described above to be the defacto in the marketplace? There will not be any centralisation to manage new forms of money. Tokens won’t only be issued by companies and tokens that implement on the values of communities will become prominent in the transactional space.

“Every day, in every way, the future of money looks very much more like its past” – Dave Birch

 

Self Sovereign Digital Identity

Before we explain what is self sovereign digital identity, let us first define identity, then elaborate on digital identity which inherently leads to the final form of digital identity management where each user controls their own digital identity.

  • Identity is a uniquely human concept. It is that ineffable “I” of self-consciousness.
  • We all have a Social identity – the qualities, beliefs, personality, looks and/or expressions that make us a person

But how do we proof our identity when interacting with others? Lets look at an example:

You interact with a person who claims to be John Smith and wants to do some transactions with you. John gives you his passport (or a in some countries his driver’s license) as a proof of his identity claim. You attest John’s claim by looking at the passport, determining whether that it is authentic and then comparing attributes captured in the passport with the person in front of you.

This process includes the following concepts:

  • claim – a claim that an actor would like to consider true
  • proof(s)- evidence that something is true, often based on a trusted certificate
  • attestation – verification by an independent party that a claim is true

You may now create a record in your system with a customer identifier, a copy of the passport and additional attributes such as address, date of birth by further verification either through utility bills or other formalized evidences. This record is a digital identity and represents relevant aspects of the social identity and is now the basis for your business interactions with John.

This may all sound simple and rather straight forward, but

  • Attestation is typically a manual process where unstructured data is captured and verified against the available proofs which must be collected and stored
  • Only a subset of the captured information is constant. The captured attributes may get out of sync with reality
  • The presented proofs may be faked, and the quality of the attestation depends on your skills to identify such issues
  • Wherever John wants to have additional interactions, a similar process is required leading to the creation and attestation of another digital identity
  • Whenever information changes, John must provide updates to all relevant parties
  • John has no control what happens with his data and who is accessing it

Juridical persons and things can also have a digital identity – however in this post, we will continue to only focus on natural persons and look at ways such digital identities can be managed.

Identities

Digital Identity Management started with centrally managed approaches. The authority, of such approach, that manages the digital identity data becomes the guardian and qualifies the digital identities. As networks evolved, federated approaches were adopted where multiple authorities jointly manage digital identities. User-centric identity is expanding where a user has more control over his digital identity and decides whether to share an identity from one service to another. Such sharing capability is based on standards like OpenID (2005), OpenID 2.0 (2006), OpenID Connect (2014), OAuth (2010), and FIDO (2013). It’s important to note that all these approaches are centralised but the user has more influence as to how the information is shared.

The concept behind self-sovereign digital identity is to give the user full control over his/her digital identity. It is a distributed identity management approach where a person creates a unique identifier for their digital identity, places claims and asks others in the network to perform attestation. Claims and attestations can be secured using cryptography with the public and private keys of the involved parties.

  • An actor can encrypt a claim with his private key
  • The actor can use the public key of the attestation authority to keep attestation private
  • The attestation authority can decrypt the message with its private and the users public key
  • The attestation authority can verify the presented proof and sign if using its own private key
  • The attestation is then sent securely back to the user

The user now has an attribute with a digitally secured attestation and with proof of a verified authority claim(s). Over time network of users builds up, where identities are maintained and trusted through attestation of proofs given by others in the network. Attestation authorities can be official authorities, organizations and other users. The quality of an identity in such a system depends on the quality of the involved authorities. Ideally this approach will introduce a single user-managed digital identity which can be used in the network when required and becomes the core of the genuine digital self (please see Be your digital self)

Christopher Allen has defined ten principles to ensure the user control that’s at the heart of self-sovereign identity

  1. Existence – users must have an independent existence
  2. Control – users must control their identities
  3. Access – Users must have access to their own data
  4. Transparency – Systems and algorithms must be transparent
  5. Persistence – Identities must be long-lived, ideally last forever
  6. Portability- Information and services about identity must be transportable
  7. Interoperability – Identities should be as widely usable as possible
  8. Consent – Users must agree to the use of their identity
  9. Minimalization- Disclosure of claims must be minimized
  10. Protection – the rights of users must be protected

It is important that the private keys need to be well protected as they grant full control of the digital identity.

So far, this post discusses the creation of a digital identity. In a future post we will look at how do we bridge between the real and the digital world. How can a system verify the user is who they claim to be?

Conclusion

As the world becomes hyperconnected (please see “No ‘OFF’ Switch“), digital identity and security will continuously gain importance. As there will be, in the foreseeable future, no worldwide authority to manage digital identities, the world will converge towards a self-sovereign identity system where users own their data and various actors perform attestation in a mutual way. The system, in its nature, follows paradigms of earlier times where trust was the result of a social network. The introduction of Digital changes the proximity requirements allowing applicability of such system on a global scale.

References: