Be your digital self …

We all have at least one digital self, something representing us to engage in the technological world. Initially this may just be information about us and related data. But at some point, in time this digital footprint will learn and adopt our behaviors and become active.
We may have multiple digital selves – genuine and facades. The genuine self is the one which learns directly from our behaviors and mirrors our social identity. The facades are tailored for specific situations or may try to protect the genuine self.
The genuine digital self will become a mirror of you – most likely knowing more about you than you do yourself.
Is the genuine digital self a legal subject or just acting on behalf? Our genuine digital self will be able to act much faster considering more information than we can – if allowed. We must consider the level of responsibility and accountability on our physical self for what it does. Should this begin with a form of parent child relation and to evolve becoming a legal subject over time.  This evolved relationship enables the digital citizen to grow and learn over time to become of full legal age at some point.
Ethical standards for digital selves will become increasingly important – humans have ethical basic patterns which are inherited and part of the DNA. Before digital selves become widely adopted and increasing active, digital self will require such standards.
We will, as part of the evolution, need to revisit our standards of privacy. Are we able to pause our digital self and what would be the impact and disruption to our digital ecosystem?  Digital self-editing may sound funny but may soon become a serious issue when others detect discrepancies and lead to distrust. Observed digital selves – you observed by others – can be used to validate information or complement it. So, you need to become more yourself – which for most people is not a big issue.
We need to evolve our perspective of what we treat and define as sensitive information during this journey. Fundamental attributes such as name, birth date or social security number will be increasingly hard to protect. So, we will need to change the way how we see personal information during this journey. Many legacy constructs like credit card numbers are not suitable for the digital age and must be replaced – this is the essence of the ‘digital transformation’.
Obviously, the digital self needs to be well secured and protected. This includes integrity, availability and confidentiality. Initially you will be responsible to keep your true digital self secure. But at some point, this will change and your digital self starts to protect you – two evolutionary states of digital self defense.
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November on FINthinkers

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November 2017 was the first month for the FINthinkers blog. Below is a short summary of what covered so far
Change
Our blog started with Change is inevitable looking at diverse types of change ranging from evolution to revolution. We also touched on Conway’s Law which states that organizations designing systems are constrained to produce designs which are copies of the communication structures of these organizations. Following Conway’s law companies need to change the organization to create the systems required to stay relevant in the new normal. In Next stop – FinTechGiants ? we look at the available dimensions to outperform others and at the relevant structures which each company has. Many companies seem to apply a Tur Tur strategy to change looking giant from far away but very small if one gets closely.
Client Experience and Brand
Noisy Channel(s) to Channel-less highlights the need to think from the client’s perspective. No client talks about channels but we all like to have seamless and ubiquitous experience to reach the desired outcomes. So brand’s digital behaviour becomes vital when services are transparent in a digitally augmented world.
Security
Homomorphic Encryption started a series of posts on security and related topics.
We hope that the posts inspired you to think about the topics. The nest posts will follow soon … thanks for reading.

 

Digital Tur Tur

Be aware of signs of Mr. Tur Tur

Let me begin with a German children’s novel written by Michael Ende. Lummerland is the home to Jim Button and Luke the engine driver. On one of their adventures Luke and Jim gain a new friend, the giant Mr. Tur Tur. He is an apparent giant and only appears giant in size from far away but is normal when being close.

The apparent giant is of course an allegory – one that often comes to my mind when having discussions or reading about digital transformation. Many of the declared digitization strategies seem like Mr. Tur Tur in nature. The way things are presented and promoted as part of digital transformation initiatives seem impressive from a distance – labs established, digital officers nominated, technology declared to be multi speed, problems to be solved via agile and innovation formalized. But upon looking closer, not so much has really changed.

Digitization is about rethinking value propositions from the core based on digital paradigms with the clients in focus. The generated revenues reflect the result of excellent value propositions. These value propositions must fit not just into any but into the client’s networked world. Digitisation necessitates the redefinition of the core value propositions and transformation of the business model. A high degree of automation and digital assets are qualities of such a model, but a high automation of processes or the replacement of paper with web forms do not imply successful digitisation.

Many value propositions will become ubiquitous as they happen behind the scenes transparently integrated to create the outcomes desired by the client. This will happen though the integration of interfaces to services into user journeys or skills into client’s personal smart assistants. Highly scalable and continuously available interfaces, also known as, APIs are key building blocks to enabling these impending capabilities.

To brace the digitisation journey, a company must encompass all dimensions of skills, organization and technology (see Next stop – FinTechGiants ?). To date only a few incumbent companies have approached the challenge and adopted its fundamental way. Rule of thumb indicates that incomes erode by 50% while a dominating player emerges during the digital transformation of an industry. The question for digital laggards becomes how long they can sustain against the trend in the market – trying to catch up does not work. Agility and scalability are imperative and key to survive in the digital world – qualities that must be regained or even re-learned by many organizations.

Look out and be aware of signs of Mr. Tur Tur in your environment. Digitisation requires fundamental changes and cannot be achieved incrementally – underestimating them or creating a perception through marketing campaigns will impede and be detrimental to your business.

Importance of a brand’s digital behaviour

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As the digital landscape and mediums expands, the ways people experience and expectation of a brand’s digital behaviour have significant grown higher and become more complex.
Brand is the holistic sum of customers’ experiences, composed of visual, tonal and behavioral brand components, many of which are shaped through interactive mediums. The complexity of the digital landscape introduces the challenges of overcoming digital distrust and must be preserve by fostering digital engagement, showing empathy, and working with transparency and authenticity.
The emotional impact of a brand is the strongest and most reliable assets. A brand must radiate their core emotions on every digital platform at any touchpoint
Constant brand value reassessments by staying relevant requires keeping your digital behaviour up to date. Understand through assessing customer behavior and moving fast and being smart about every decision regardless minor or big.
Digital behaviours differs between generations (Millenials, Gen Xers and Boomers) and a brand needs to clearly understand its customers ( or intended customers) and its value proposition. For example millenials have the highest social networking penetration of any generation and they account for most in consuming digital content through various mediums ( eg digital video)
Change is the new constant is also relevant in the digital behaviours of customers. The dynamic rate of change will significantly increase and the need to monitor and understand the different becomes very important in a time dependent manner.
This introduces the shift from persona profiling to behavioural segmentation. Persona behavioural segmentation focuses lesss on who the individual is and more of his/her distinct actions in regards to the product or service. The need to correlate the emotional aspects become signifcantly important. Knowing whether a particular product or service becomes more relevant due a strong emotional impact. Or are consumers posting emotional responses that shows the receptiveness to a certain brand offering? Does it relate to certain moment(s)?
Persona profiling base on simplistic and static demographic data points are no longer sufficient and are poor predictors of actual persona behavior. The goal should be to get rid of generalised segmentation and replace it with data enabling hyper-personalised products and services offerings in order to maintain the relevance of a brand’s digital behaviour.

Next stop – FinTechGiants ?

Next stop – the collaboration and integration of FinTech and Tech Giants provisioning of classical banking services to their large user base?

FinTech in its broadest definition stands for technologies used and applied in the financial services sector. Progressively, FinTech has started to represent technologies that disrupts traditional financial services. There is a lot of debate about Fintech diminishing typically based on success criteria coming from incumbent companies. Let’s take an unfamiliar perspective and look at companies from a structural context. All companies can only choose to change in limited dimensions when adapting to the environment or when deciding to shape the future. Ultimately it is the users who decide if such changes are successful or even disruptive when they start to massively consume new services or products in preference over others.

Company Structure

Each company has three core dimensions available to implement change:

  • skills
  • organization
  • technology

The first dimension is skill(s) available to the company. The applied skills, not knowledge, are valued and becomes the decisive factor. Knowledge is increasingly easy to access while skills are hard and time consuming to build up. An example, chess – lots of people have an excellent knowledge about chess and its rules but only a few can play it exceptionally well. Gaining expert level skills requires time and practice. Many things will go wrong on the journey to mastership. The ambition and journey to become a master requires passion, persistence and an environment which allows to practice, fail and learn. These are essential to make progress.

The second dimension is the organization a company has composed. It defines how the individuals work together and apply their specific skills as a team. Many will immediately think about titles, positions and careers in a hierarchical structure. Within each organization there is not just one but three structures:

  •  a formal structure of power, required to perform business and ensure regulatory compliance
  •  an informal structure of social networks and communication paths
  •  a value creation structure which solves problems and produces the value for clients

Unfortunately, there is no choice and it exist in every company. The challenge of each company is to balance them in a clever way to create the maximal value for the clients, shareholders, employees and the society. Most companies focus on the formal structure, the hierarchy of power a paradigm left over from the industrial age. Employees compete in the company to make career and gain position power over other employees while the true competition of the company happens at the boundary where the interaction with the environment takes place. The value creation structure, where the income, but more importantly trust and reputation, built up for the company is not well understood.  The highly dynamic informal structure where influence takes place, is often underestimated or even ignored. The company’s culture is a result of the experiences the employees define in these structures.

The third dimension is technology – the available technology was always a decisive factor throughout human history. Now it has become essential, as the technical progress has exponentially increased. Today the need to unlearn outdated practices and learn new ways is challenging the workforce, especially the formal structure. The technology progress demands paradigm changes for things which worked well in the past leads to the opposite effect tomorrow.

The Tech Force

Now let’s revisit the term FinTech. It is an amalgamation of Financial Services and Technology. Financial Services companies have always used technology to improve service efficiency and convenience and will continue to do so. But many incumbents have the problem that they cannot focus on technology as a differentiator. They need to manage a landscape of accumulated technical organizations as they are not used to replacement ng the technology base regularly. The heterogeneous landscape binds a lot of resources and increases complication in an already complex business.  FinTech companies typically look at a few well selected value propositions and then seek for solutions using the best available technology. They may not yet feel competitive from a career and salary perspective, but offer fascinating challenges, the possibility to become a master in modern technology and to have impact in the industry. This makes them attractive for talents creating highly skilled teams and high degree of automation using modern infrastructure enabling an efficient and agile work style.

The is a significant difference between incumbents and Fintech companies in technology- the biggest difference being the organizational dimension.  Large incumbent organizations with a focus on complex formal and hierarchical structures were ideal for large labor-intensive projects which required the coordination and top-down management of big teams. The complicated landscapes forces incumbents towards centralization aiming for scale effects to achieve efficiency gains. But the future is likely to follow the structure of the internet – it is distributed, technology driven and an interconnected mesh of services. Building and running such services can be done by small teams which efficiently combine the skills to reach a shared vision. A network of smaller loosely coupled but interconnected units, each producing a specific value, fits better in such an environment than big, monolithic and complicated organizations. Such a network of self-contained units is also more flexible to adapt to the environment, to deal with complexity and to survive changes where some of its units may lose value and disappear.

Many of today’s highest valued companies – the so-called tech giants – have assumed an organization which leverages the combined power of the formal, informal and value structure by shifting focus to client value creation and offering space to cultivate the informal structure. These companies may lack the skills of financial services companies now – but they can build on a modern technology base, an extremely high degree of automation and a dynamic and empowered organizational culture. These companies also have immediate access to a vast number of users which may become clients of new service offerings.

The argument, that these companies do not want to become banks, is misleading. These companies have their customer in focus and will do what helps them to achieve their goals. They will not become banks in the classical sense but are integrating and offering financial services. When financial services are required by their customers they have or will apply for a banking license and its services are regulated like an incumbent bank. Their core focus is client value reach and each service are integrated and offerings are immediately widely available. The broad valued offerings and usage results in accumulation of valuable data insights which can be directly using to evolve their business – an example considering a platform company running shops and logistics for clients’ companies. It has deep insights and can grant credits in a much leaner and efficient way. It can choose the most promising client companies and leave the others to the wider market. If the client company grows, it benefits participating in the success of the shop and its logistics.

Conclusion

Financial services incumbents will need to perform a significant step change in more than one dimension to adapt to the new normal. A difficult transformation for status quo environments of those who currently have the power and are the ones who fear to lose most. An alternative to consider is the collaboration and integration of FinTech and Tech Giants provisioning of classical banking services to their large user base. Clients may be used to attaining certain services from companies today – but this can change very fast at any moment.

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Conway’s Law – Change or Fail?

We were recently discussing Conway’s Law in the context of the ongoing transition towards solutions which are digital in their core. The law is named after programmer Melvin Conway who first introduced it in 1967 and said: ‘ organizations which design systems … are constrained to produce designs which are copies of the communication structures of these organizations.’  If Conway is right, then this means that implementing a new inherently digital solution requires organizations to change structures or at least their ways to communicate.  Sounds like change is inevitable … 
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Noisy Channel(s) to Channel-less

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From single channel to omni channel the intent was to enable enterprises to seamlessly engage with their clients across them, improve client experience by ensuring context and history are in all channels seamlessly. To date there are 3000 apps available for download from the Apple App Store.  Do we really need an exuberance of micro capabilities of each app across different channels in order to interact/ fulfill our daily lives? And if so how many are truly interconnected and contextualised? Or should the importance be of maintaining the social-connectedness from the events happening around the client’s ecosystem in order to ubiquitously interact and communicate? Channel-less is simply a window into the core client experiences.
With the exponential increase in the sophistication and proliferation of technology current communication are just not adapted to the client’s needs. Some require an intensive publishing cycle and don’t provide the necessary features as offered by other platforms. At the same time multitude of information sources makes it difficult to fill them all. Rather than adding more channels creating subsets of it, enterprises should think about orchestrating the experience base on the client’s interaction.
Defining personalized touchpoints for the client represents the journey a client engross in association to the brand which reflects precious insightful moments of truth. Regardless of channel(s), the interaction(s) be it via a channel or an IOT appliance or VR or AR, the interaction(s) should continuously be able to recognise and support the concurrency in which a client can be interacting through multiple mediums at the same time or span across but it is as if he/she is interacting as one.
In the forseable future digital assistant(s), which are permeable and omnipresent, will share and perform the responsibilities of the physical client. Acitivities will be perform by many digital assistants representing the client taking place concurrently in the various interaction mediums. E.g. a client maybe in front of a digital device performing a transaction while at the same time his/her digital assistant discusses wealth planning with a financial advisor while another is engaged with other administrative activity. Or be be it starting an activity through one interaction and finishing the same activity in another.
Simplicity is the key to remain flexible and able to rapidly change as the next wave of digital disruption takes hold. What the client wants is to connect/interact seamlessly in their ecosystem. It is not about a channel(s) it is is about providing and making the connection seamless and ubiquitous.