How to thrive in a hyper-connected world

This year’s annual gathering of the global financial services community organised by SWIFT takes place in London. Visitors will have arrived to see a vibrant and chaotic city hub, and to be faced by some fairly pragmatic connectivity challenges – particularly if they have chosen hotels in central London without realising that the SIBOS conference venue was way out east.

Many delegates will have had needed a crash course in connectivity involving public transportation, taxis, ride-hailing platforms. Possibly even electric cycles after Uber surge pricing kicked in.

Beyond the physical challenges, most new visitors will also have sensed an unusual backdrop in London of a different kind of connectivity challenge. They will have seen the permanent narrative on TV news covering the latest developments on the UK’s relationship with Europe. They will have listened to bewildered inhabitants of the UK trying to understand their role in the uncertain post-Brexit trading arrangements. They may have seen the demonstrations in central London outside a suspended parliament (and a palace of Westminster coincidentally obscured by the scaffolding used for much needed physical restoration work).

The 4^th Industrial Revolution

It’s a long time since the first industrial revolution was exported from the UK. In the late 1700s, the smart new processes for textile production led to the creation of new trading connections around the world. Today, as many economists and policy makers ponder the challenges of a so-called 4^th Industrial Revolution, London today seems an apt place for the SWIFT ecosystem’s participants to gather to solve the uncertainties of modern day connectivity needs.

The challenges of connectivity today go beyond the physical needs of being plugged-in and on-line. Clearly the 4^th Industrial Revolution assumes ubiquitous computing and an emerging “Internet of Things.” There will be a consequential need both for citizens to get access and for systems to be able to access other systems. But the challenges of connectivity go beyond the basics of having the right sort of switch-gear technology. This is not just about gateways and friendly Application Programming Interfaces (APIs). This revolution also addresses a state of mind; helping participants to find new ways of participating and collaborating within the emerging networks and ecosystems which will support the 4^th Industrial Revolution.

The current narrative for the 4^th Industrial Revolution can be attributed to the activities of the World Economic Forum, the think tank famous for its annual conferences attended by world leaders in Davos. The premise is that progress and productivity will come from the safe interconnectivity between people and machines, and machines to machines. The connectivity will need to harness new technologies for rules handling, controls, limits, preferences and citizen-centric advocacy. The technologies will take advantage of artificial intelligence and massive data processing capacities, but they will need to keep data safe and secure, and they will also need to protect citizens’ rights regarding identity and privacy.

IoT will lead to PoT

“4IR” introduces the “cyber-physical” age not just between human and machine, but also between machine and machine. Systems will need to verify their identity with other systems before clarifying what credentials and rights are applicable for the automated actions about to be executed.

This interconnected world of systems leads to the Internet of Things, IoT. But inevitably IoT will lead to PoT – the Payment of Things; the payments industry may need to deal with massive new volumes of transactions. They may not need individual processing, clearing and settlement, but new approaches for rules, authentication and authorisation may need to be devised.

Underlying these system impacts caused by 4IR is a wider uncertainty about how people will work and play. This is an era when citizens’ incomes are becoming irregular, mobility for jobs is normal, and the notions of identity/authentication with different jurisdictions need to become more nuanced. There is a new “Universal Connectivity Imperative” to allow systems to be set up then re-configured quickly depending on the needs of market participants. This is an era where ever more electronic transactions need to be accommodated – not all of these are necessarily “full payments,” but it’s pretty clear that the components of payments (including authentication, permission, consent as well as money movement) will need to be accessible.

Unpredictable future working patterns will be characterized by the gig economy and workers being more likely to move between holding several jobs and having periods of low income. These disruptions will have an impact on traditional payment preferences – imagine scenarios where stable standing orders and direct debits have been the norm, but consumers now need more flexibility to turn payments on/off, to change values, and perhaps more frequently need to use alternative funding sources to cope with career down-times.

Manage data at scale, safely and securely

A common theme emerges from this chaotic new landscape of 4IR – the need to manage data at scale, safely and securely, and in a way that drives best outcomes for citizens, businesses, government and broader society. We face a dichotomy about how best to take advantage of data – on the one hand, having access to massive data sets will create the insights needed to create highly relevant and personalised new services. But on the other hand, the emerging awareness of personal data rights and privacy may stymie the creation of meaningful intelligence.

A balance will need to be found. Organisations will need to be able to reconcile their roles as providers of fantastic new services based on clever data insights and as custodians of customers’ valuable assets – including their personal data. Citizens will need to choose their champions. Will they trust the so-called Big Data companies to look after their interests? Or is there an emerging new role for banks to act as ideal advocates for citizens’ role in the new Industrial Revolution?

By Lu Zurawski, Practice Lead Retail Banking, ACI Worldwide