I was reflecting on the demonstrations of Deep Mind against Go champion Lee Se-dol, along with Watson at CeBIT and other artificial intelligence (AI) developments. It soon becomes apparent that we are evolving rapidly to a state where data learning through data analytics will be the battleground. In fact, it’s clear that the battle over data is already won by those who have data architectures fit for AI. Going back to my favorite chart:
If you don’t recognise this chart, please read the series of blogs I wrote in 2014 about such things.
In this chart, I outlined the structure of a bank as front, middle, and back office (or retailer, processor, manufacturer), and that this structure is being attacked by technologies. Front office is being reinvented by mobile and intelligent devices in the Internet of Things (IoT), middle office is being reinvented by real-time APIs, and back office is being reinvented by cloud, data analytics and the blockchain.
This is the chart for the open source bank, and when you have an open source bank, you can move really fast. You can incorporate any other fintech into the open source bank, and, just as powerfully, you can connect the open source bank into any other fintech. I have a strong feeling that this chart defines the architecture of a new bank called solarisBank, which last week announced it had gained a banking licence in Germany that can now be ‘passported’ across the whole of the EU.
I will probably blog more about solarisBank, with whom I’m meeting next week, but the key to its vision is that it is a bank-to-business-to-consumer structure. In other words, it can plug and play into any other fintech, payments or other players. In doing this, and combining this with the themes of re-architecting the bank for open sourcing, I can see one particularly powerful play: the AI bank.
Today and tomorrow
This has been alluded to for a while, and has some crude illustrations such as BankAmericard Rewards. Using ‘Cardlytics’, Bank of America can push you a reward coupon via its mobile app at the point of relevance (eg as you’re walking past one of your regular stores). That’s powerful today, but will be seen as dumb tomorrow.
Equally, we see powerful capabilities today such as UBS (Switzerland) and DBS (Singapore) using Watson to analyse terabytes of data, nonstop and in real-time, to push knowledge to its high net worth customers. Personalised investment portfolios are issued every morning, with analytics on every dollar held with the bank. That’s powerful today, but tomorrow …
I guess my vision of the near-term tomorrow is where a bank has cleansed its data into an enterprise architecture that’s separated from processing. The enterprise data store is held in a private cloud and has nonstop, real-time analytics. These analytics enable the bank to delve deep into the psyche of its clients, and use neural networks to proactively predict their needs, advisory services and support mechanisms.
These support mechanisms are provided in nonstop, real-time to my devices, which tell me what’s important, and transact and manage what’s not important. The delivery of knowledge to my devices is sometimes via the bank direct, but often through third party APIs that have plugged into my open source bank. As a result, my financial ecosystem is massively personalised at a micro level, and I stop thinking about questions. Who would ever ask ‘What’s my balance?’ or ‘Must remember to pay that bill’ when my system takes over all of those tasks for me? All I really need to know is ‘You are low on your deposit balance’ or ‘You should save more for that holiday this month’, and I just say yes or no depending on my mood and feelings at the time.
This means that banking has moved from being a pull industry, where I have to go and find my information and manage it, to being a push industry, where my bank tells my things what to do.
I love the idea of the open source bank and a financial ecosystem personalised to my lifestyle and managed for me. The problem we have today and right now is that banks have only just got to the point where they can take a debit and credit statement and plug it into a mobile app. An open source structure proactively pushing service to my IoT ecosystem is going to be a big stretch. Luckily, banks such as solarisBank (Germany) and PrivatBank (Ukraine) are developing these services anyway, so we can all benefit from this new structure of Banking-as-a-Service in the open source world.