Month: January 2018

A lot of people are talking about ecosystems and platformeconomy. They assume platform heroes like Amazon and Google will disrupt their industry soon. Especially banks, but even more the Insurers are fearing loosing their customer to the ‘High Engagement Heroes’. Sensitive respect and awareness is justified and risks are real. But this new digital war is not lost yet. While GAFA might be the current world champion for customer engagement they aren’t yet the ‘Champion of Trust’ I believe. Yes, Amazon is on its way to becoming the one.  Amazon’s priority is to satisfying its customers, understood, trust is the base of any sustainable business. But when you compare  the ‘money-‘ and insurance-business with retail business  today, ‘trust’ still has a different meaning.  So how can one survive this new ecosystem war? Fight the trust battle! Participate and build your own ecosystem and do what you can do best to play a sustainable, prefered and accepted role. Be the most trusted partner for your customer and support him with (Digital) Trust Services. Base your new ecosystem on trust and fill in the gaps your government couldn’t fill in the years (see picture above – the unlucky und unsuccessful attempt  to the create a government based Digital Identity in Germany). Now it’s your chance to becoming the long awaited ecosystem of trust. How can Digital Trust look like? One very interesting use case is to supporting 3rd party services with onbording-, KYC-, registration-, authentication- and authorization-services. A bank has the necessary customer data  and usually a long relationship either. Digitalize these services via OpenAPIs and become an important part of, probably the most important one of a finance platformeconomy, Compared with Google’s or Facebook’s social login, but with the regulatory quality, acceptance and reputation even the most demanding onboarding processes can be satisfied with.  In Germany companies like YES or Verimi have already started implementing corresponding services and some banks and insurers have already acknowledged their contribution. But from a platform and CxO perspective this approach is still a very new and less popular one, as this statistic documents. (Interesting Blog post about Digital Identities – German) Another Digital Trust use case is indeed the good old payment and checkout process. Already a very mature digital process and provided by APIs and many parties (e.g Paypal or Paydirekt),  but if provided together with the Digital Identity process banks and insurers could create a vertical touchpoint frame surrounding platform activities and services. Compared with a room or building where you ‘own’ the save entry and exit. The customer always will pass both. Fill the room with services and products the customer needs, not necessarily the ones you created, but which helps the customer most. This is another important aspect of creating an Ecoystem of Trust. A good and recent example is the integration of Friendsurance into the Deutsche Bank Retail portal. Deutsche Bank owns the entry, the exit and provides an insurance comparison platform, not the one insurance product. Deuba provides what the customer is looking for, not what serves the bank most – selling the one insurance. Revitalizing the very old Ecosystems of Trust – the banks and the insurers.        

Cars are going to produce a lot of data in the near future and there are bunch of different businesses and industries that are interested in them. Cars will collect location, fuel level, velocity and a lot of other technical data during a ride and store them. And when it comes to “Intelligent Self Driving Vehicles” there will be much more data to collect. Today Oliver showed me an interesting article in faz.net, the online news platform of “Frankfurter Allgemeine Zeitung”, one of the big German newspapers. It reported that Allianz (Germany’s biggest insurance company) is requesting a trustee of data collected by cars. As the article mentions, this is because there is no agreement between different parties such as car manufacturers, vehicle inspectors, insurers and service stations about who will manage data continuously created by cars and how all the other parties will get access to them. Allianz doesn’t want car manufacturers to collect and store data on their infrastructure and make them available to others afterwards. A trustee must collect and manage these data, Allianz requests. One of the main reasons Allianz brings according to this publication is that data collected by cars will become more important in case of accidents in which self driving cars are involved. Well … wait a minute … a trustee? Seriously? Haven’t we recently been discussing technologies, which make trustees obsolete? Is that a case for distributed ledger technologies (DLT)? And yes, we think that DLT is exactly the technological answer to solve this issue of trust between all parties. Using DLT there will be one network consisting of several peers each of which ran by one of those parties interested in the data. Of course cars themselves must be part of the network as well. They can be considered as clients accessing the network. While a car is going for a ride, it will collect data and send them to the network by invoking a so-called “transaction”. Transactions are provided by smart contracts being part of the network and holding the business logic of it. This business logic is used to either write data into the ledger or read them from it. The Ledger can be considered as a database where all collected information will be stored. Once a car calls a smart contract’s method to write data, they will be validated, signed and distributed to the network. A consensus algorithm will make sure that all peers will have the same valid and consistent data. As data are signed, hashed and blocked there will be no reason for an insurer to insist on having a “trustee of data”. A DLT used for this case not only makes sure that all participants can trust each other without having a trustee in between, it may also help to create new use cases which not being thought about in the first place. While we have been thinking about UHUCHAIN Car for instance we found out that people who want to buy a used car might use our ledger, which holds car data over its lifecycle, as well. They can look up data such as claims, service details and mileage to be sure there is no fraud when they want to buy that car. This use case was not originally on the table when we started designing UHUCHAIN Car. But … What about data privacy and data ownership? An amazing fact within that publication on faz.net is that an insurer is arguing with car manufacturers about who is going to store, manage and distribute data collected by cars without bearing in mind that those data actually belong to cars’ owners and they are the ones who can decide to whom data should be forwarded and what may happen to them. To make owners give away their data industry must come up with new rewarding models, which attract customers and encourage them to do so. Maybe some day we will see very cheap cars tagged with a symbolic price being sold off literally. But you will be able buy one if you sign an agreement to give away all the data those cars can collect during your ownership only. Things like this might happen in the future to make the decision easier to give away data.

Usually I’m the ‘glas-half-full-guy’. I love tech. I am the one who gets excited very easily. But yesterday after scanning a bill with my mobile banking app I asked myself how did the Fintech and Insurtech Euro really improve my ‘day-to-day-retail-life’? Seems  ‘bill scanning’ is the only thing really having simplified my banking life in spite of Millions having being invested in tech. Who am I? I believe I’m average. I am a customer of the largest retail bank and the largest broker bank in Germany. I’m a customer of one of the largest insurance groups in Europe. Besides I own accounts at the one or the other challenger bank.  And what I do most of the time with my banking client (account information and transactions) can be done since years.  Even before the launch of the iPhone and Android.  I know as I was part of the team who developed one of the first mobile  banking clients in Germany in 2005. And when you look at current apps and consider the time and corresponding tech improvements you ask yourself: ‘What did we do with all the time?’. Some apps, my broker app for example, even got worser and worser over the years. To sum it up:

• What happened all the years with all the money?
• Why is my broker app still ugly to use?
• Why is the functionality of my retail app still so limited and did not fundamentally change the last 20 years?
• Why is my banking still so isolated and closed?
• Why don’t I have online access to my insurance contracts? 
• Why…

I know about exceptions, other banks, many good ideas and pilots. The new onboarding process of the challenger banks as an example.   The online processing of my doctors’ bills.  But, as  said, I’m average and this is an average experience of an average banking and insurance customer with average banks. What would I like my bank, my insurance company to be then? To develop to? A difficult question and honestly I really can’t provide a complete or comprehensive answer, but I could give it a try. I would love my bank to becoming  the   Amazon of Trust:

1. With my bank identity I would like to register and login wherever a  verified and trusted identity is necessary. I don’t any longer want to stick with Facebook or Google to login to 3rd party services. And I don’t always want to register again
2. I what to pay and transfer with my bank account as seamless as possible. I don’t want to register for Paypal, register for a credit card, transfer money. I just want to enter my bank id
3. I want to apply 2FA systems for transactions easy to use and transparent (face, fingerprint etc.)
4. I want many new services connected to my bank account and portal. E.g. I want my bank to analyse my payments and to tell me how and where to insure. I want my bank to be my trusted ‘check24 price comparison’ without the need to register or to use another 3rd party service
5. I want my bank to provide me advice on every transaction. Maybe to register an item in my personal item store, to tell me my car is due for service or to apply for an extended  guarantee  because they know standard guarantee is ending soon
6. I want my bank to offer me a tax accounting and consulting service. They have all my data and my bills. They could directly interact with the tax accounting office without having me to printing out tons of papers
7. I want to do everything digital. I want to change any property of my account. I want to process every possible transaction in an electronic way
8. But I also want branches. Much fewer, but more beautiful, more stylish in central locations with best services and consulting like Apple is showing us the way. For the seldom cases I need one I’m willing to drive
9. As long as we need cash I want to withdraw money at every supermarket with my mobile app and deposit either
10. I want my other bank data integrated via Open APIs
11. I want my insurance data and processes integrated via Open APIs
12. I want a document and key store
13. I want my bonus programs to be integrated into my account and my payments. I don’t want to be urged to pay with Payback Pay only because I want to collect bonus points
14. I want…

I could list many more services I’m interested in but the basic principle stays the same: My banks knows me very well and manages my money and transactions. I trust my bank. I know they really know everything about me. My salary, my debt, where I am, where I was, where I am employed, when I married and who, my kids, my parents by name and address…My engagement with the bank is very high either. In no other app I login more (apart from some social media apps). Frankly: All this is not new. Since years, maybe since decades innovators within the finance space are talking about ideas like these.  Nothing really happened instead. Since more than 5 years we are crying Fintech will change everything and nothing happened again. Maybe it’s finally now the time to move. Technology has evolved, technology is cheaper, banks have learned and the pressure for change is much higher. And Digital Natives are slowly entering the boards. So please: Do much more within this given context and data to help ME!

• Become a better, become my trust ecosystem – you already own the entry and the exit, all my keys, but the room between is rather empty
• Don’t necessarily invent, copy, collect good ideas instead and much faster
• Develop yourself to an independent software company, everything is software in these days, you need to deliver software
• Fight centralisation, globalisation and outsourcing if it hinders to following your strategy, don’t follow blindly your CFO, CEO or your headquarter anywhere in the world – follow me, your customer
• Cooperate faster and more often
• …just please do something!

I would forgive the one or the other mistake if I just would see the ambition to better serving me.       

When I started my career as a developer I was often told machines will take over and we very soon don’t need many programmers. This was 30 years ago. And after the Y2K and DotCom bubble I thought we will never see a comparable huge demand for programmers again. But since more than three years now I am noticing a war for IT talents I’ve never observed before neither expected. In parallel the new tech talents have massively changed their attitude to work and life. New approaches to hire the best are required, especially when you are not playing within the Google, Facebook or Apple league. One approach, my approach would be to combining what people love with their profession.  Interwove office with their leisure life.  Create a symbiosis of both. Teach the people to love what they do, not only because what they do,  but because how and where they do it.  My three rules would be:

1. Love what you do!
2. Love how you do it!
3. Love where you do it!

These simple rules applied to tech talent motivated my idea of the  InnovationCaste. Founding a company in an old castle with beautiful surroundings and landscapes. For the ones who love history and are excited by the way people lived in the past.  Providing space not artificially created, but being cool by nature. I believe an inspiring room to be creative because one feels as being at home and feels natural as well. Surrounded by the green and wild. Enough natural world to do your sports close to the front door of your office, not having the need to visiting a modern,  dry emotionless and anonymous gym. Walking, running or biking hundreds of kilometres  deep in the forest. Doing a sprint planing while biking or creating the next user story while having a breakfast on a lonely clearing. Coding the next Node.js module lying on the grass being watched by horses. Providing you with conditions you don’t want to rush home because you need to do your sports or want to go out for a bike trip breathing some fresh air. I believe the young people and especially the tech talents are starting to redefine what they want to offer for a living. Our InnovationCastle, as a model, a prototype could be one answer.  

I’m now working for the Insurance and Banking industry since more than 30 years. For an IT guy the last ten years have been very boring ones  often as most IT Euros  spent were regulation motivated. The newest ones for example are MFID II and PSD2,  both starting this year. But in spite of so many attempts, Euros, Dollars, laws, rules…to make the banking world more secure, more transparent, more resilient and more fair we are currently entering the most unregulated and anarchic finance times ever,  at least as far as I can remember. With Blockchain, Bitcoin, all the cryptocurrencies, ICOs and other ‘New Fintech kids on the block’ we are deploying – in my eyes – a totally unregulated and anarchic new payment and investment eco system. One might point to the many chances and to the innovation power behind (what I confirm), but nobody really sees or at least deals with the risks yet. Take this lastest story behind kraken.com. One the of the largest cryptocurrency trading and payment platforms. Kraken wanted to go offline for a two hours maintenance release, is now back, but has been offline for nearly three days.  But the system still seems to stay on a shaky foundation and any withdrawals are forbidden.  I really don’t know if theseare legal and compliant actions, in any country kraken.com operates, but even if it is, this smells like the Big Depression where banks closed their counters to protect themselves. And it’s no longer just a gambling of minorities, if one considers the transaction volumes and what is done with all the coins traded here. And what we all want to do with in the future. We, in Europe, must get back into the driver seat. Innovation is important, but more important is controlled and regulated innovation.   Best would be if regulation and innovation would from the very early stage on innovate together, like security and tech already do today. We all know what unregulated finance innovations can do with all us. Does anybody remember the name Lehman Brothers btw.?

Currently I’m reading a lot about platforms, Platform Economy and about the ‘Platformization‘ of the world. And although I really love the core idea and am a fan of implementing accordingly there are some irritating myths running around:

1. A Platform Strategy is a Business Strategy and Business Architecture and not a Technical Architecture or Strategy. A new technical architecture might be a supporting part, but only a part of. One selling you the implementation of a new core system as the core of a platform strategy is fooling you
2. Although there are vertical and horizontal platform models when we talk about platform economy we refer to horizontal models – we don’t see the ‘taylorization’ of vertical production lines as modern platform approaches
3. There is no one role in a platform strategy. There is no one winner and are many losers. There are many roles and you need to define yours first. From service provider to platform operator, to name just a few.
4. The platform economic approach is neither new and nor a revolution.  It’s a very old evolutionary approach. The multi-industry company is so to say the ‘mother of the all platform economies’.  Companies like Siemens and Samsung have been the prototypes for such companies, but in the 90ties Europe and especially Germany declared this model to be an outdated one.  In Europe we focused on vertical models with high dependencies and got rid of most of the horizontal models. This is one reason, why we in Germany and probably also in Europe now lack behind
5. Although the GAFAs are already far ahead we, in Europe and Germany, still have a lot of chances to catching up. Successful platforms combine  services under one entry (‘Login’) and one exit (‘Checkout’). It’s now important to win the ‘Digital Identity- and Payment/Checkout War’ to reshuffle the cards (Think of Verimi, Yes, Paypal, Paydirekt and many others)
6. If somebody talks about about Platform Economy ask him for successful examples in Germany.  If he doesn’t name Rewe or Check24 he has never really thought about seriously. Check24 combines already a lot vertical financial services and Rewe supermarkets become the physical touchpoint for a strong digital ecosystem in my eyes

In a nutshell:  The digitalization re-empowers a very old business architecture: The vertical combination, aggregation and digital consumption of loosely coupled multi-industry services: The Platform Economy. The Platform Economy regained strength by the introduction of new technologies, but it’s not a technical strategy. The GAFAs are already ahead, but winners are not yet decided. It mainly depends on who will succeeding in the Digital Identity, Trust and Checkout challenge.

Typically people are talking about predictions and what will happen the next twelve months these days. I can’t and don’t want to predict the future, but if I would own an Insurer or a Bank I would define my future strategy as the following: In my world there won’t be ‘Only-banks’ or ‘Only-Insurers’ anymore. There won’t be products or channels or sales departments. In my world of modern finance there  would be a profiled customer centric ecosystem  and platform of (partially invisible) services built around and needed by a peer group. This vertical aligned platform would offer banking and insurance  services, but also many other services digital enabled and profiled for my customer group. I would like to be the ecosystem of trust for my tailored customer group. These  kind of vertical ecosystems exist since decades –  mutual societies and comparable organisations – but with the digital revolution currently happening everywhere there’s a new chance to reinvent and even to massively extend this model far beyond what was possible before. And this is a chance for the old incumbents, the old banks and insurers to beat the GAFAs and all other coming platform revolutionaries and newbies on their home-turf. They know their customers, they have build trust and relationship over the century. Now it’s time to modernize their houses and to copy the digital and platform services approaches. And to profile these much better than the global horizontal providers can. You don’t need to own the product, you need to ‘own’ the customer and to provide trusted services via modern, simple and fast technologies. In the future you will very likely make  more revenue with platform services  and network effects than with a traditional approach as these numbers indicate. The Digital Mutual Peer Platform Society is one modern technology platform response to the mega global platform threat coming from all the Amazons and Alibabas these days. To provide you a simple example: As member of my platform you could login to any 3rd party service you need and to pay with your platform membership, because you are part of our community…and a trusted and accepted member.

“Banking is necessary, banks are not” (Bill Gates 1994)

Sometimes it takes 20 years and more for good ideas.