This blog was first posted on the IAB website
From colour scheme obsession to data-driven holism
Omnichannel is the new black in marketing and every enthusiast has already drafted his own definition. Several proponents point out the importance of similar interfaces, colours, pictures and feelings across all devices or touch-points. This is a limited and outbound approach of marketing nonetheless, probably dating from the billboard times when one-to-many advertisement was the only viable strategy. The core of omnichannel, in contrast, is to adopt an inbound approach, putting consumer preferences at the core of every strategic decision instead of throwing the brand at them. It’s the same ocean of difference between dynamite fishing and choosing the right bait for the right fish.
Omnichannel’s end goal is an effective one-to-one relationship constantly enriched by subsequent brand-consumer interactions. Its signature move is to blur the lines between different channels and create a holistic strategy that builds on various sources of consumer preference data. Its genius lies in leveraging third parties, as innovative retailers realize it’s often not their in-house applications or even their advertisements that lead consumers in-store. Just as customers land on an e-commerce store after going through a blog or an affiliate website, in-store purchases are often the result of several motives and diverse exogenous incentives the retailer often does control.
From isolated efforts to 3rd party levies
One instance is mobile check-in services which enable retailers to track consumers in-store and liaise that information with data from the social platform they used. Third parties’ role is larger than an accessory data source however. Take loyalty as an example. In a study by SAS (Business analytics leader) and Conlumino (global retail research company) surveying 2,100 consumers and some 100 UK retailers, 80% of consumers declared that an emotional engagement will increase loyalty while 40% said they are less likely to do business with a brand not having a loyalty scheme.
It seems clear loyalty is a large under-tapped opportunity. But even worse is the fact that it’s a misunderstood and ill-exploited opportunity. A study made by Colloquy – LoyaltyOne’s research group – points out that while there were 1,035,114,000 retail loyalty memberships in 2012, only 44% of these were active. This large pool of un-used loyalty efforts is the very reason why tired loyalty programs have soared lately (the more you spend, the more benefits).
In the same SAS / Conlumino study, it appears 40% of consumers actively opt into retailers’ marketing material and believe they benefit from the offers. However, 50% of consumers also say personalized offers would make them more likely to be loyal to a retailer. Just as emotional engagement hinders loyalty efforts, personalisation seems to be the barrier to higher offer adoption. How can an omnichannel strategy, through data mining, intelligent targeting, and third party capabilities, boost retail offers and loyalty then?
From dumb data sets to actionable insight
Consumers are already embracing digital convergence through the use of mobile devices, e-commerce and constant connectivity. Their behaviour is effectively bridging the online and offline world. They get frustrated when retailer technologies lag behind: “Why can I not use the coupon I received by email for Imaginarystore.com inside Imaginary’s Oxford Street stores?”
These behavioural changes and new technological advances are an opportunity for omnichannel marketers to create new experiences at the intersection of online and offline media. These two channels will no longer be distinct but rather interlinked and interconnected, adapting to each other and providing insights at the junction of consumer behaviour and conversion, online versus offline.
Through convergence of the online and offline channels and new and improved technologies, it is in fact possible to gather the data needed to give consumers an integrated experience. However, omnichannel is about the insight one can draw from this data and how actionable the latter can be. Omnichannel is about making sense of the tale the consumer behaviour tells.
From silo-ed initiatives to contextual operations
Thus the value of omnichannel lies in the convergence of data from all channels, put in context, leading to a marketing strategy. And just like big data is dumb data if not connected, so is consumer data. The value is derived when it is connected, combined and integrated. This is the prerequisite for an omnichannel strategy. Put into context, big data brings value in terms of knowledge and ideas, which spring from a deeper understanding. One retail challenge data-driven omnichannel strategies will help tackle is the “death of the high street” for example.
In May, a Centre for Retail Research report stated that especially in the UK, the High-Street would see declines and layoffs by 2018. It was noted that spending at bricks and mortar stores is declining, from 50%in 2000 to a predicted 40.2% by 2014, according to the Centre’s report. By contrast, online retailers are projected to make up 21.5% of retail sales by 2018. In 2006, that figure was 6.6%.
In such a situation, one needs to understand, if consumers are leaving physical stores, where they spend their time. And if, as it has become obvious, they are online or mobile most often, then one needs to drive online consumers in-store moving forward. Forrester Research sized online-influenced commerce as already over $1 trillion back in 2010. Card-linked companies such as Cardlytics who work with banks and Birdback who works with Affiliates and large financial institutions are bridging the online to offline gap to make sure retailers can drive consumers back in-store, measure the ROI of their Online-offline campaigns and enable both financial institutions and affiliates to monetise ROPO (Research Online Purchase Offline).
The future is connected. More and more data sets are speaking to each other. The Web is the world’s new dialect.
Pre-payment : The 80 in the 80/20
Later in the week, one of the most compelling panels took place - “O2O : Driving retail commerce with connected value propositions” - with 4 memorable speakers.
One point stood out: The shopping experience needs to improve. Small important things give offline an advantage compared to online. Human contact, for instance … Greeting a customer when he comes into the shop is essential. More so, going to a shop implies a certain level of commitment to the purchase. It doesn’t come as a surprise then that conversion offline is 20 to 25% compared to 0.5 to 1% online. Evidently, it’s 95% in groceries and 99% in restaurants you don’t go in if. You don’t really go into restaurants to “have a look”. You’re probably hungry. All this to say and as the Shopkick CEO pointed out: “Get them in!”
Put boldly: A customer walking by a store is a missed opportunity. It means the retailers hasn’t done his homework. Cyriac Roeding said (apologies for any inaccuracies):
"Before customers come in, make sure you are a reflex, that the trigger is interiorised, that they come in systematically when they walk by the store. And make sure you drive them back, You need the pre, during and post."
It’s a battle for relevance and value. And relevance is a arbitrage between pull and push. If ads are pushed at me, it won’t click. I want to pull the offers and choose the moment. And for that click to be systematic, stores need to become the promise of an experience. Hence Shopkick’s vision of a the future of shopping:
- Imagine that if you like something online, you’ll see a like button in-store next to the items you liked.
- Shopkick’s newest iteration allows customers to get “kicks”, its loyalty currency, when they scan a product in-store. If it’s their hands already, what are the chances they’ll put that product back on the shelf versus taking it to check-out
In many ways then, the future of online is offline; it’s a new ground for innovation in commerce. And smartphones are the only interactive medium in a non-interactive world. Or so was it until card-linked technology appeared.
An application is like a bookmark. It matters when frequency is high. Think about this however: There is an application we’re already using all the time and it’s called the payment card ! So forget about mobile wallets for a second. The card is already the wallet and the phone is a screen to show everything a payment or a purchase can trigger for customers.
Post-payment : “Check-out” is greater than “Check-in”
Wait … what ? For years we’ve seen the rise of Foursquare-like services and Shopkick-like applications aiming at getting customers through the door. And your humble servant just said it’s it’s the 80 in the 80/20. No doubt. Check-out however and what happens pos-payment is 100 in the 80/20.
If you’re not tracking customers’ wifi signal in-store, transaction data is the only way to individually recognise a customer in-store. Without this capability, there is no way to figure out the ROI of an online campaign. Transaction data is the only data that enables retailers to close the online to offline loop. Without it, it’s as if a retailer in the 90’s was advertising in his neighbourhood and forgetting to track changes in revenue.
More so, check out does not only indicate a payment: It is a signal that a person is getting out of a place to head somewhere else. If a person just paid 80 pounds worth of groceries at 8pm, they’re probably heading home to store their food. Isn’t that the ideal time to tell them they could grab a hot meal on the way out instead of cooking tonight ? That is where the value lies : Check out is valuable information about the end of a given activity. Or even the beginning of a new one. If you just paid 5 pounds at a coffee shop, you’re probably going to sit down to have chat i it’s the afternoon or work if it’s the morning. In both cases, suggesting some content or downloadable magazine would be ideal.
Check-out is the loose end of commerce that nobody has quite figured how to leverage. The triggers that can be leveraged then are things such as targeted offers but also cues to create new habits. People often buy food before they head home, why not suggest a gym subscription or an event nearby ? Card-linking changes the game.
Pay for payments ? In 2014 ?
An interesting question popped out during Money2020 : “How do you make retailers pay more for payments ?”. As for application developers, it is also the case for Payment Service Providers as well : A battle for relevance and value. If payments become an attractor, a potential profit centre that increases consumers’ LTV (Long Term Value), payment processing may be able to stop its pricing war and never-ending race to the bottom.
Payment as an un-vanishing act
When was the last time you thought about your purchasing experience ? If you’d allow me to make a guess, the feeling of buying something probably came up the last time you had to wait more than usual for your card payment to go through. You looked at that strange machine’s appalling design, sighed then looked at your neighbouring shopper, experiencing your pain and shared a smile in compassion.
The other time was when you were paying with cash and the cashier had to count the change. Check again. Then hand you the bills before slipping the coins in your palm…
Payments are a means to an end and should stay so. The only criteria to evaluate a payment experience is noticeability. And number should be 0. In a world where payment experience is perfected, no one should realize they are paying. IBM had something going with RFID back in the time:
"It’s not about payment" as Sarah Friar, CFO of Square, accurately stated during her talk at Money 2020. Coming from a company that is very much about payment, that goes on to show the necessary discrete essence of payments.
However, in a world where payments currently have to be noticed i.e. where it’s a necessary pain for both the merchant and the consumer (until we can walk out of stores with products in our bags), the next best thing to do is to make it the culmination of a great journey and the trigger for something amazing… I know, it sounds surrealistic.
Payment as a tweak-able triptych
The new head of Google payments, Ariel Bardin, also took the stage at Money2020 to present his vision. And interestingly Google’s vision for payments revolved around payment. 80% of the Google Wallet presentation was not about payment but rather about what happens before, during and after a payment. Consumer experience 101 with a dash of behavioural economics mixed with a zest of influence engineering. All leading to:
- Pre: 90% of users use mobile phones before going to a store to compare prices
- During: 84% use phones during their time in the store
- Post: 45% want loyalty, 4% have it
More important is how Google stacks up in this triptych:
- Google Pre: 100B searches per month, 1B shopping products on Google shopping, last year saw a 5x times increase to some specific categories (fashion…)
- Google During: 1B users on google maps and google offers
- Google Post: 200k cards added in 3 weeks inside google wallet
To that Google adds its home grown sauce of analytics and lean methodology:
- Google Adwords you understand impressions, clicks, cost per click, conversion, cost per conversion. You can calculate ROI using that. To calculate ROI in the real world, there’s no way to calculate ROI
- Conversion: Merchants can figure out conversion across devices (something google can already do)
- SOW + RFV: Using aggregate anonymous information Google could deliver to merchants, Share Of Wallet data ad metrics regarding Recency, Frequency and Value
Simply put, Google got it and had the muscle power to pull it off. What it still lacked was the means to bridge its online capabilities with the offline world. That elusive heavy duty, appallingly designed, buggy device you had to wait on to be able to pay. A memorable phrase from another speaker seems fitting: “Mobile wallets will die If empty.”
If you follow our twitter feed by now you have probably learnt about our upcoming hackathon, (Vol.2) which is happening on November 9-10 at London’s Rainmaking Loft. Following out first hackathon, we took our leanings and made a commitment to top ourselves and we can conformably say we think this one will be bigger and better!
As the name gives it away we are focusing on high street retail and for good reason. 90% of commerce is still taking place offline, despite the huge growth in mobile and e-commerce. We are aiming to encourage more innovation in this space and have been spending time some with some of the most innovative high street brands out there to bring you a great program.
With help form our sponsor American Express, our event will feature brands like Marks & Spencer, The Kingfisher group (B&Q) and coffee shop chain, Harris + Hoole. We are almost at capacity but still have a few tickets left. Grab yours now from here: https://birdback.com/hack/
See you all very soon!
In a recent article on TechCrunch, one of our favourite applications, Shopkick, which is also using card-linked technology, is featured along with its latest innovation: In-store purchase on mobile.
The novelty here however is that products are not sourced from Amazon or e-retailer but from the retailers customers are visiting at that very moment. This might sound puzzling: Why would I buy an item off my phone if I can buy it from the store I’m in.
Of course, there are some practical reasons such as current unavailability. But more so, the quintessential problem is much more conceptual: Reality is sub-optimal.
Why ? Maybe Chris Anderson hinted at this in some of the first chapters of “The Long Tail”. He single-handedly fleshes out exactly how fundamental search engines were in revolutionising commerce. Think about it! When was the last time you tried to find your favourite mustard in a grocery store or your ‘minor’ author’s 1976 book in an aisle? How long did it take? Keep that figure in mind.
Now compare to your online experience and to the frightening efficiency of Google. Shouldn’t reality be the same. Shouldn’t commerce come to you rather than you going towards it?
Clicks to Kicks to Bricks
Shopkick already has a unique positioning relative to retailers as the incremental sales it drove in-store have wowed the industry. And in the article, CEO Cyriac Roeding makes it clear that this new in-store purchase on mobile won’t cannibalise real commerce. According to him, bricks are here to stay. And we agree.
However, bricks and mortar retailers have lived in the fear of price comparison apps and “Store to Web” apps that suggest you buy a given item you found in-store for less after scanning its bar code. This is what Shopsavvy suggests for example in its latest partnership with Capital One. This initiative is also linked to Capital One customer credit cards and goes on to show that Card-linking is essentially a technology and, depending on who funds it, can benefit a party or another.
Essentially, this is a trend that breaks the online to offline as well as the offline to offline customer journey and guides him back online invariably, in looks for a better price. However, that is where Shopkick’s newest feature manifests its importance.
Kicks are a significant value for customers. Shopkick members receive ‘Kicks’, a special currency, in exchange for simply walking into a partnering store. These kicks could then be used towards discounts on future purchases. And the crucial question here becomes: Are kicks valuable enough for customers to prefer buying through the app one of the store’s items rather then searching for a cheaper equivalent online?
What is a store ?
Though it remains to be proven that Shopkick has the ability to re-route purchases away from Amazon thanks to its latest instalment, what is certain is that, at least conceptually, it is giving retailers control over a loose channel and reducing in-store churn.
And that by itself is a strange thing to note as it makes one wonder what stores are for if one needs to reduce the churn they might produce. Why not get rid of that space and build a park instead? Corbusier whose “Ville radieuse” is pictured below would’ve been keen to enact such project.
Wether the world of tomorrow is bound to be re-invented piece by piece and whether that means shedding every brick in a grand re-design where consumer items would lie in warehouses waiting to be delivered to online shoppers, remains to be seen.
Some might miss the alleys of a store, others the white supermarket neons. Riots might break because there aren’t any more bakers or convenience stores around. No one to smile to in the morning. Le Corbusier had the guts to suggest such a city to a people that reveres its cafés, bakeries and local butcheries. If the entire world gives tis green light to a bricks and mortar free world, nostalgics can always count on the French to hit the Streets :)
The etymology of words is often very revealing. Here’s where Wikipedia traces ‘cash’ back to:
"The word is variously attributed. Some claim that the word "cash" comes from the modern French word caisse, which means (money) box, from the Provençal word caissa, from the Italian cassa, from the Latin capsa all meaning box. In the 18th century, the word passed to refer to the money instead of the actual box containing it."
Intrinsically, ‘cash’ points to an old conception of security. A box. Though millennial, this same conception is till around. The counter isn’t going anywhere, any time soon.
The recent news regarding Bitcoin however gives an interesting perspective on how foreign from any form of security ‘cash’ can be. The slide below is quite revealing, courtesy of Juan’s Blog, the Bitcoin specialist:
All sorts of arguments can be opposed here, from a moral point of view. These 6 bullet points are, for instance reminiscent of what it is to be ‘free’. Moving away from ‘cash’ feels like moving towards a Big Brother configuration of society. Bitcoin might be an attempt to port cash online but the latter is too big a control opportunity for regulators and authorities to let pass and be owned by ‘alternative’ issuers.
In a world where cash is mafias’ currency of choice, it might be worth considering an alternative system that lacks the properties of the latter. Receiver, emitter, user, location, time-stamp and value are the fighting grounds for Bitcoin if one was to translate the slide’s bullets. But to gain credibility, these need to be recorded by Bitcoin-related systems.
Eventually, one is reminded oh how hostile John Manyard Keynes was to physical currency (especially gold, that ‘barbaric relic’). After the grand depression, people hid dollars underneath their mattresses … And dealt a good blow to the economy for the full next decade.
Privacy is primordial. Security is paramount. Freedom is essential. The line shouldn’t be blurred, but a reference and a record, a form of feedback material is essential to every complex system to thrive. Cash won’t do.
It had been an exciting morning. The day was looking good with meetings delayed to the coming days and he was almost trembling in excitement at the tasks ahead. A day filled with no-holds-barred exploration. A ‘nerd safari’ as he liked to call it. Or whisper it rather. To himself. Only.
August’s fiery sun added to his stroll’s energy. Like a battery getting charged. Ready to power some strange Rude Goldberg machine. The main ingredient of such a perfect day however was not the weather or the void calendar. It was the small analogue, old school,vintage-looking, almost-rotten, Moleskin notebook stranded between his arm and armpit.
Paper. Paper was the secret ingredient. That was the ultimate catalyst. The driver of his greatest pieces. His companion and accomplice into the wilderness of imagination. A secret universe where the carbon molecules of a tree made paste turned solid meet and mate with the electric vibes of his neurons.
An invisible dance which, though public, was performed with such discretion, none of the coffee drinkers and fellow writers could see. Sometimes he would laugh secretly at the thought he was the only spectator of the ‘Most magical show Money could offer’, though money … he had none. Or very little. Very. It was a great day though and currency would not occupy his thoughts today, he decided.
He always walked into the store with a smile. But today his smile was even wider. He remembered he’d reached 10 stamps on his card. And as all patrons knew, 10 stamps meant £10 ! Today his loyalty would pay off. Though a mocker of such dumb incentives, reminiscent in his mind of the rabbit traps he used to lay down in his village up north, all criticism faded today. Today, capitalism and the likes would not be an issue. As long as it was working to his advantage he guessed. Tomorrow is another day.
A latte, a salad, some chips and the deal was done, the platter full. Nearing from the smiley cashier, he felt like a canny predator, a poacher ready to raise his rifle. And reaching to his pocket for the card, it felt hotter than usual, as if the bullets were getting excited… But the bullets. The stamps. The card.
He dives his hand into his other pocket. Phone. His jacket pocket. Debit card. His other jacket pocket. Keys. Table. Next to the oddments. A paper sticking out and the souvenir of a mind too wandering to link the dots and pick it up. Green and beige. No. Not today. Damn paper…..
We love Asana. Here you go. We said it. Now it’s clear :) We even posted an answer in Quora that links to 1) this blog 2) a small hack we did to be able to move projects around workspaces in Asana. In other terms : Asana, we love you :)
But like all things you love blindly, there’s always a small voice inside you saying “if only”. If only Asana could act as an ultra-CRM, see my sent emails and remind me, in a task, of re-sending them again if nobody answers… “If only”
Enter Boomerang !
Boomerang is a great reminder for Gmail we ran into some weeks ago. We meddled a bit with Yesware (kudos to you guys, great tracking feature) but ended up choosing Boomerang because it was the perfect and simplest reminder tool.
After a couple of days working through it, we figure something out:
- Boomerang send back an email with a boomerang tag every time it reminds me of something
- On the other hand, Asana has a “e-mail task” feature through its firstname.lastname@example.org address
The dots connected and taraaa (or was it taratataaaa ?):
- Remember to boomerang each e-mail you want to be reminded of
- Create a Gmail filter asking Gmail to send to email@example.com every e-mail with a ‘Boomerang’ tag and sent from your e-mail address (Boomerang sends emails back to your inbox using your own address)
- Enjoy looking at reminder tasks popping up at the right time inside Asana
The beauty here is that, through e-mail, what used to be a management tool is integrated and communicating with your process flow… Machines can talk to each other and it’s for the best !
So, to sum it up : Birdback ♥ Asana + Boomerang. Thank you guys, you make it so much easier
“Like air and drinking water, being digital will be noticed only by its absence not is presence” said Nicolas Negroponte about the blurring of the boundaries between our digital and physical world.
Negroponte is a Greek American architect and founder of Emritus MIT Media Lab and the One Laptop per Child Association, he is known as one of the most prominent future thinkers of our days.
The Digital Revolution will soon be over and digital would just be, he predicted in 1995. Digital convergence is in the making. We are now embracing it into our physical world. The online and offline worlds are converging and will be increasingly integrated.
In a recent blog-post of ours we explained how data and the Internet of things will be talking to us and knowing us, operating like an Augmented Intelligence, because different information and elements, will be able to communicate, thorugh the web.
Already today, we as consumers are expecting the digital world to be aligned and integrated with our physical world. As Negroponte predicted it is not a question about whether the digital would should or should not be present in our physical experience. It is instead a fact that we notice the absence of the digital, when for example shopping in the physical world.
You have your boarding pass, payment cards and discount vouchers on your phone in the passbook or wallet and have them linked directly to your payment card making it easy to pay for anything anywhere and get redeemed with no fuzz.
Shops are implementing mobile devices as payment counters, making it easier for customers to pay and merchants to accept payments. Customers are running price checks in-store and in real time and deciding on where and when to make their purchase while shopping.
But this is by no means news. What is new is the possibilities for development this brings with it – we are looking at endless possibilities if we merge our online and the offline world.
Negroponte argues how we are controlled by blindness similar to the one, blinding previous generations. Namely the blindness of the present, which fixes us to the things, we can imagine and see coming.
However technology today moves not only in the pace described by Moore’s law, but at an exponential pace we are not able to imagine.
Not so long ago, I read this story describing the current pace of technological development in places like Silicon Valley:
“Imagine you are in a normal sized football stadium, sitting on the top row with the best view. A guy comes in, with a magic pipette, and pours a drop of water on the grass, he waits a minute and does the same only this time the double amount of water comes out (hence the magic), now he continues to do this. Every minute. And every time the double of the previous amount comes out of the pipette. Exponentially increasing the amount every minute.
How long will it take before the stadium is full of water?
- The answer is 49 minutes.
About 45 minutes in, the only thing you will see is the water covering the grass, meaning that within the last 4 minutes the stadium will be filled with water.
Now, you have been watching this development take place right in front of you, but could never imagine how it would develop in the end.”
Lets take a swim:
This means that within the last 4 minutes, what you can do is simply to get ready to take a swim. There is no way of escaping the water once it is just covering the grass. The water will cover the entire stadium before you can grasp it happening and find your way out. So there is only one thing to do - take a swim. This way is much more fun anyways.
After reading the story I told it to my room-mate, who looked utterly worried. His thought being “but how can we stop this, or control it”. He was clearly frightened by the pace of development and I could see his point. But the fact is that there is no reason to try to control it, much rather we should embrace the developments.
Development of convergence between the online and offline world will most likely take the same turn as the water in the stadium. The drops have already started to fall, but what we can see now, is merely a small spot of wet grass on the playing field.
We can foresee that the grass will slowly become wet.
Already now the convergence between mobile devices, telecommunications and media allow you to pay for groceries with a single click on our phone, or even collect loyalty points in real time while shopping and allow you to compare and check prices.
But it won’t stop here; you will know in advance what you should buy, because you checked with your home fridge what is in there, whether the milk got too old, and what recipes you can use, if you want to make something with those eggs we would otherwise throw out the day after tomorrow.
The fridge’s built in sensor signals to you that there is a good pie recipe, which is also fitting your diet programme. You have a date over tonight, which is in your calendar, and the fridge’s computer doubles the portion but also comes up with a new menu more appropriate for impressing a date.
The merchant you are shopping at will be able to see data from the purchases you make, and your transactions become available for him to analyse. How these in collaboration with all the other information coming from the Internet of things can give the merchants real-time information about the customer stepping into their store.
We will be able to create links between our online consumer behaviour and our offline purchases, showing merchants the actual effect of any online marketing effort without having to bother the customer. This lets the merchant know us. He can now give us personalised and relevant information.
These are just the developments we are anticipating today.
Negroponte finalized his Wired back-page era, stating that not only the digital and physical world will converge, but we will see a convergence of fields as nanotechnologies, biotech and managing nature converge with the augmented reality as well. The future hardware will not be stationary computers but rather become smaller and smaller and in the end be integrated into the gadgets we have around us in our everyday life, which are something else than computers.
There will always be developments we will not be able to foresee especially when it comes to the possibilities created by convergence of our online and offline world.
At Birdback in London, we are ready for the water to grow and have already put on the water wings and cannot wait to take a swim.
Let us converge the digital with the physical and let the possibilities come.
We’re betting on digital convergence, come have a coffee before the flood :)
Some weeks ago, the Birdback team was privileged to attend the Anthemis Edge conference during Payexpo 2013. Anthemis Edge is the consulting arm of the Anthemis group, which focuses on financial innovation and business transformation in the payment industry. And in the impressive line-up of speakers, one keynote captured the imagination of our colleagues much more than others.
JP Rangaswami, Chief scientist at Salesforce and venture partner at the anthemis group, took the stage to tackle “Distributed finance: scaling trust through technology”.
Just as much as the content, the eloquence, and humour! it is the paradigmatic framework and systemic thinking that wowed the audience.
Social, open, cloud, mobile
JP first explained the major technological trends shaking our world today. Social, open, cloud and mobile might seem obvious only JP wielded the 4 to explain how we’re shifting time and place in our current era, effectively TIVO-ising our lives.
When applied to the financial world, this augurs the disappearance of ATMs. In the 21st century, while we have in our pockets tools just as capable as ATMs, we still need to walk to an actual machine, put a plastic card in and wait to get paper out to then walk again and give that paper to a merchant who puts it in another machine!!! Wait. What ?
On openness, JP also explains how APIs make for a more sustainable ecosystem as they allow for more adaptivity than vertical integration. This brought Birdback and its several partners to mind as well as legacy players allergic to sharing technological advances and conducting research efforts in silos. I think that quote regarding the fact “Nature doesn’t do SLAs” also falls in this category :)
Risk, trust, liquidity, access
To the 4 major technological trends, JP then opposes what might seem like “old-school” challenges but that are, on the contrary, fundamental to any efficient ecosystem.
JP’s conception of risk is disruptive. Risk is not uncertainty, it is data based. Risk evolution evolution especially can only be computed from data. Risk is not an abstract notion but rather an ad-hoc realization or manifestation, stemming from more information.
Lately two trends have shaken the insurance industry for example: The emergence of non-life products and self-insurance, the latter having beend provoked by the drop in the cost of finding friends who have the same needs as ours. Any one who searched for a new apartment knows how much more efficient Facebook is compared to any Zoopla out there. Though Zoopla is very nice-looking :)
JP even mentioned a rebuilding of legacy thanks to social networks. The importance of leaving an honourable trace to whomever comes after becoming more pressing with time.
When looked at with a financiers’ goggles, one understands banking institutions used to, and still to a very large extent, base decisions only on history i.e. the past. Now, and for the first time in history, we are sharing what we’re doing and share plans i.e. the future, through social media. This has tremendous value.
A tweet such as “If you don’t fix my broadband, I’m changing it today” should make a network provider think, just as one that says “I want to buy the I-phone 9” (or 5 was it ?). Here lies the importance of intentions and the power of intent.
Trends <> Challenges
At the intersection of trends and challenges lies opportunity. "The smartest person in the room is the room”. So, better listen.
According to JP, this is financial institutions’ chance to up their game. The trends we see today are a queue for each and every legacy player t increase touch-points with customers. And the platforms and ecosystems to do so are finally there.
Thinking of Birdback, I believe JP’s point regarding the fact “sharing” should be “by design” also applies. Card-linking is a new trend in Europe. Wait though, soon you’ll be tweeting “I linked an app to my card!” ;)