Facial recognition system, Smartglasses, Facebook, Glasses, Augmented reality Bank of the Future | SFF 2020
Iwata senior, director of nec and brett king founder and executive chairman of moven hi welcome to green shoot session on bank of the future. My name is daiichiwata director of digital finance team at nec. I am so excited to host this session today, because sharing insights about this topic has never been vital than never before harnessing power. Digital to banking has been important to bring more accessible and fairer services. However, because of the influence brought by kovite 19, its impact and the need to change is becoming more and more critical. So in this critical moment, how should we approach designing banking services? So we asked brett king the author of bank 4.0. These questions, in the context of evolution of a banking, what he describes from bank 1.0 to bank 4.0, what are perspectives of future banking? We should consider what is the principle we should take into account when designing services to get these answers i’d hand over to brett. So we look at this on a trajectory basis b from the bank 1.0 error through to the bank 4.0 error. We really see this uh. You know this trajectory based around two key elements. One is that we’re moving from the digital distribution, sorry, physical distribution, world to digital distribution, that’s happening across every industry, it’s certainly happening in retail it’s happening in banking. It’S happened in transportation, it’s it’s it’s happened in uh, consumption of media and content such as netflix and and so forth.
This is a factor of the internet’s impact, but in financial services the real difference is about regulated friction, and that is where we’ve re used. Customer experience, investment or transformation to massively reduce the amount of friction it has taken for people to get access to financial services. One of the reasons we exclude people from the financial services system in the current climate is just simply the amount of identity, paperwork and things like that we throw at them so with digitization we’ve, seen a rapid reduction of friction. So we go from the bank 1.0 world, traditional banking bank 2.0, which is self service, bank, 3.0, mobile and finally, bank 4.0, which is where banking is embedded in the world around us. So, as we see new technologies like smart, glasses and voice based uh ai assistants, that we have built into these smart speakers in our home and our cars and things like that, we’re going to see even a faster change to consumer behavior around banking, especially as it Becomes embedded, this represents a significant threat to the traditional banking environment. Let me explain why, when we look at the most disruptive innovations throughout time throughout history such as the automobile and so forth, we see a pattern there in respect to those innovations or inventions that were most uh transformative from a community perspective. And you know if we look at the space program as one example of disruptive innovation. You know we’ve just celebrated the 50th anniversary of the apollo program, but in the apollo days it cost about fifty thousand dollars to get one kilogram of mass into orbit over the fifty years or so since we iterated on that model, making small improvements all the time To get the cost down to about half of what it was during the apollo days, but in more recent times a long has come a challenger from outside of the traditional sector spacex that reinvented rockets by starting from scratch in engineering terms.
We call this first principles design when you look at a problem and you break it down back into the sort of constitute physics of what you’re trying to achieve, and you start from scratch with new design principles rather than taking the old model and improving on it. Using available technology, you go back to the drawing board. This is what spacex did and today they’re within sight of not just getting mass to orbit for under a thousand dollars, but potentially with their starship program under 100 dollars per kilogram that’s a 99.8 percent reduction in the cost to orbit since the apollo days. So no one really can compete with spacex today because of their reusability and their unconventional approach to rocket science. This is the benefit you get with. First principles, design the same happened with automobiles, disrupting the horse and cart, and it also happened with the creation of the iphone, so the iphone as technology didn’t borrow from the previous best selling phones. You know prior to 2007. now you know this was not an iteration on the nokia banana phone or the motorola star tech, flip phone or the blackberry. With the rim keyboard, it wasn’t an iteration on those technologies. It was a net new design approach. How do we fit a a personal computer in your pocket that can also be used as a phone with a multi touch, screen and so forth, and today every smartphone in the world essentially looks like that iphone templated design because apple through first principles, engineering was able To change the game: now, when we looked at the technology that was emerging on smartphones, the nfc chips for making payments, we naturally assumed we could turn these smartphones into payment devices and more capable um.
You know devices to interact in in respect to banking, but instead of using first principles, design or taking you know allowing a rethink on payments. We essentially created a card proxy that you would stick inside your phone. This is not first principles, engineering, clearly it’s an iteration on the existing card model, but in china things were different in china. They started with qr codes. This created incredible network effect growing these payments schemes like tencent wechat pay and ant groups alipay. But now we have facial recognition, technology in those markets as well, creating an alternative approach to authentication and identity, and these the results have paid off in 2019, ali pay and 10 cent. Wechat pay did 42 trillion dollars of mobile payments. Some commentators put the figure as high as 55 trillion dollars in mobile payments in 2019, including both merchant payments and p2p transactions. This was more than double the entire plastic card market on the planet, which was about 22 and a half trillion dollars for companies like mastercard, visa amex, diners, discover and others. So this is a radical shift already today, the number one mobile number one payments methodology for consumers is mobile based on this data, but the next change is going to get a little more interesting as we incorporate the ability to do these transactions in real time. The one of the ways we will augment financial services is making them smarter, introducing artificial intelligence and these capabilities so you’ll be able to ask your smartphone hey.
Can i afford to go out for dinner tonight what’s my budget? How much? How much do i need to save each week to be able to afford that holiday uh for the family to on you know on a disney cruise once they start up again, maybe or a trip to paris. For my honeymoon, assuming travel comes back you, you know, your smart bank account will know the answers to these things. More than that, you know. If you take a problem today, i walk into a grocery store. I fill up my grocery cart with my groceries at the supermarket. I walk to the checkout, maybe you’ve had this happen to you. You present your card to the cashier, the cashier swipes it or you put it in the chip and pen machine, and you see the message declined and you realize, oh, maybe my salary hasn’t hit the account. This is maybe the problem, or maybe an unexpected bill, has come up that you didn’t didn’t, recall and in in this environment. What banks would say is ah well, you obviously need a credit card. If you had a credit card, wouldn’t be a problem, you could just use that alternative card, but technologists using first principles. Design would come up with a very different solution in today’s world, and this is the sort of thing we’re going to see over the next four or five years as this technology and these different partnerships come together. You walk into the grocery store.
We know how much you spend on groceries. We know this is your favorite grocery store, and we know today your bank balance isn’t at the level where you normally spend for your groceries, so we can offer you credit access as you walk in the grocery store. We know this because we’re using geo location technology as well tied to your banking, app or your phone, so as you walk in the grocery store, you get a message saying it looks like you need 200 uh euro to complete your grocery shopping today. Um. Would you would you like to proceed the fee, for that is 3 euro 50? Something like that, and so you can then make that decision as you’re walking in the grocery store having the problem solved when and where you need it or maybe a a different example. You walk into an electronic store and you have the option of look getting some. You know maybe some new technology, but your smart glasses, remind you. You have the rent to pay coming up this week and so we’re now using the smart infrastructure to change your behavior one new technology emerging is smart glasses. This is going to be the next personal computing platform. We see facebook working on this today with their project. Aria development under their oculus acquisition that they did not just vr glasses but we’re, talking about augmented reality, smart classes apple is working on this technology as well, along with others like google and so forth.
So we’ll use 3d technology like the lidar capability in the new iphone 12 to map the world around us. We use pattern recognition to recognize various things. If you’ve lost your keys, you’ll be able to see exactly where they are. Your ai smart classes, we’re going to tell you where you left them because of interacting with the world, so this sort of technology is going to be commonplace within three to five years and this really changes the integrated or embedded nature of financial services when you’re transacting. When you’re walking around you know and interacting with the world around you, this information will be presented in your head up display. So let’s summarize this over the next few minutes in terms of the biggest changes that’s going to happen over the next few years. In respect to banking and financial services, if you look at the evolution of banking and financial services, this is what it looks like we’ve gone from this informal banking system to community based banking, where the bank branch was at the center of the bank relationship. You had some of those banks with branches became big enough. They became global universal banks. Then we had the era of multi channel and leading to omni channel banking specializing around digital integrated into the overall banking experience. And finally, we get to the bank 4.0 era where banking is embedded and ubiquitous ready when and where you need it. This requires three key players to be working together in this future ecosystem.
You have the banks that have transformed, digitally and survived they partner with the tech giants that own this technology layer and we have fintechs coming in either as challenger banks, alternatives or as technology partners to banks offering banking as a service capability, ai specialization and so forth. And this is the ecosystem that melds together for the future of banking. You know we will need digital identity schemers. A physical signature is no longer safe, it’s no longer secure. Neither is your mother’s maiden name or your date of birth or your physical address. We can get that information off social media today, so we need a digital identity based on things like facial recognition, biometric recognition, voice, fingerprint iris recognition and so forth, combined with a data trail that allows us to see heuristically. You know your individual behaviors as a customer by 2025, more people will have a mobile wallet or a cloud based wallet for their day to day discretionary spend just like we’ve seen in china with alipay and tencent wechat pay. This will be their primary spending account and so that’ll be a mobile wallet embedded in the cloud that they use with their devices, not a physical plastic debit card that we have today and for those that are unbanked currently coming into the financial services system through the Mobile wallet, this means that more people by 2025 will be using a mobile wallet as their discretionary spending account than a bank account.
They got from a bank branch. We’Ll also get more advice. Every day from our technology that’s linked to our bank, smart bank account then we’ll get from a human at a bank every year, and so this is a significant shift because we used to think think that humans differentiated versus the technology because of advice, we’re going to Flip that on its head, because of ai, so when we see where this all lands by 2025, maybe 2030, the largest bank in the world is probably going to be a company. That looks a lot like ant group today, because from a technology perspective, they have the ability to acquire customers at rapid scale at a very cheap acquisition, cost and they’re focused on embedding financial services in the lives of their customers in real time, not waiting for a Customer to come to the bank sign a piece of paper to get access to a financial services product. The future of banking bank for porno is real time. It’S ubiquitous it’s, embedded and it’s smart, a bank account that helps you every day when and where you need it that’s. Bank 4.0. Thank you. Thank you. Brett for presentation, nec at digital technology company is thrilled to play along in this evolving ecosystem. We are working customers to develop fast, principal design, offerings for digital identity and decile banking, as in the present presentation by brett, banks need to be ready to offer services when and wherever customers want, rather than waiting for customers to come to do that, banks need to Be able to identify customers through any digital channels, nec is enhancing our world class biometrics technologies such as facial recognition to offer secure and safe identification and authentication services after secure identification and authentication.
Banking services need to be embedded in user centric customer journeys and need to be personalized using data analytics tools to meet that goal. We are working with our group company banksoft, microsoft is a banking software. Company based in nordics nordic countries are always ranked top in many digital economy and society indexes. Banking services are already embedded in many aspects of lives. We are even updating bank software software to fast engineer the design architecture on cloud banks can use our functions on cloud to embed its services to customer centric customer journeys and can use powerful data analytics tools that will keep being updated on cloud to cater services to Individuals using biometrics technologies and software on cloud, we are working hard to provide great offerings for our customers, but this is just the beginning. Nec and our group companies are working hard to offer greater services in this digital finance ecosystem. Thank you for joining our green shoot session and see you at our microsite and workshops.