We live in amazing times. The capacity to generate and to store data has reached dizzying proportions. What lies within that data represents the chance for this and the next generation to solve its most challenging problems — from healthcare and diseases to customer understanding and financial freedom. Just looking at the magnitude of the data being generated gives us a glimpse at the magnitude of the opportunity — it is simply stunning.
The world’s Internet population grew by more than 750 percent in the past 15 years to over 3 billion and will pass the 50 percent penetration mark in the near future. Every minute, this group of 3 billion shares more than 2.5 million pieces of content on Facebook, tweets more than 300,000 times and exchanges more than 204 million text messages. Even more dramatic, the acceleration in data growth will increase dramatically in the coming years as the Internet of Things takes off, connecting 20 to 30 billion “things” by 2020. These devices will transmit data on everything from your car to your kitchen devices, temperature controls to the health of your yard.
The Internet of Things (IoT) is here to stay. According to International Data Corporation’s Worldwide Semiannual Internet of Things Spending Guide, there will be an estimated 4.9 billion connected devices by the end of the year — an increase of 30 percent over last year. And while in 2013 the IoT market in manufacturing operations was already worth $42.4 billion, that market will grow to $98.9 billion by 2018.
These opportunities are being generated thanks to major advances in data storage technology and architecture coupled with near-zero associated costs. The consequences? Enterprises are capturing everything possible, in many ways hoping that one day this data capture will generate value.
Meanwhile, in this new digital world, expectations are increasing. Consumers continue to demand more personalized products and services, at the time and places they want them. And thanks to a large amount of data being made available by the billions of connected devices out there, it’s easier than ever before for businesses to meet these expectations. The value of this data is unparalleled.
In a survey by the World Economic Forum, organizations that put IoT programs in place saw their average revenue increase by 16 percent in 2014. Even more interesting, 9 percent of those companies had an average revenue increase of more than 30 percent. When asked to explain how they felt IoT was helping them grow, almost all respondents credited their ability to better understand their customers.
The age of IoT is here. The opportunities are real and they are big. Our responsibility as business leaders and individuals is to establish how we can turn this raw commodity into something of real value.
Despite the technical advances in collection and storage, knowledge generation lags. This is a function of how credit unions approach their data, how they conduct analyses, how they automate learning through machine intelligence.
At the heart of the problem? Math. For any data set, the total number of possible hypotheses or queries is exponential compared to the size of the data. And to further complicate matters, the size of the data itself is growing exponentially, poised to hit another inflection point as the internet of things kicks in.
What this means is that we are facing double exponential growth in the number of questions that we can ask of our data. If we choose the same approaches that have served us over time — iteratively asking questions of the data until we get the right answer — we will have lost out on the opportunity at hand.
To truly unlock the value that lies within our data, we need to set aside the actual questions we have and turn our attention to the data itself. This, too, is a mathematical problem. Data, it turns out, has shape. That shape has meaning and ultimately tells us everything we need to know about the data, from its obvious features to its deepest secrets.
The knowledge that lies hidden within electronic medical records, billing records, and clinical records is enough to transform how we deliver healthcare and how we treat diseases. The knowledge embedded within the massive data stores of governments, universities and other institutions will illuminate the conversation on climate change and point the way to answers on what we need to do to protect the planet for future generations. The knowledge contained in the web, transaction, CRM, social and other data will inform a clearer, more meaningful picture of the customer and will, in turn, define the optimal way to interact.
This is the opportunity for our generation to turn data into knowledge. To get there will require a different approach, but one with the ability to impact the entirety of humankind.
APIs, Open Banking and the future impact of financial data
Financial institutions are curiously watching the progress of banking APIs. In the future, market demand will require credit unions and all other financial services to make it easy for another firm to gain access to their members’ data, and to engage with their platforms to transact. Europe’s open banking initiative serves as a model for this approach. One of the key principles of open banking is the ability of third parties to develop new products and services through the use of APIs. These APIs can help credit unions to pursue new distribution channels, while also finding new ways to improve the customer digital banking experience. While banking APIs are generally good news, one thing is clear: Business as usual is no longer an option.
The market will become more transparent
In other verticals, aggregators have become a powerful force in increasing competition and reducing costs — just look at the effect on insurance markets, airlines, and electronics. Banking APIs will further strengthen this trend. With the new APIs, members will be able to see exactly how they’re being treated by their existing banking providers. New businesses and competitors will be able to extract a prospective customer’s transaction history and model how they would be served if they switched financial institutions.
One emerging trend is that you don’t need to be a bank to offer banking services. Social networks, hardware manufacturers, and even search engines are entering the financial services space. Interestingly, these e-communities don’t aim to become regulated financial services providers, but merely to provide these services to increase their own customer engagement while extracting margin.
For example, Apple could expand its Apple Pay offering to provide real-time balances, but also enable bank-to-bank transfers directly from their app with no need for the customer to log in to their bank. It could eventually offer a whole-of-market comparison service, letting Apple Pay customers see where they would be best served. It could then extend services to enable customers to close their accounts at one bank and move them to another.
New ecosystems will provide new value
The availability of new banking APIs will create new industries. As every bank will have their own API, talking to all of them will be complicated. Some banks may decide to link up to the different banks’ APIs on their own, but most others will use intermediaries. APIs will generate a sudden abundance of data. This will not only need to be extracted; it will also need to be stored, analyzed and kept safe. As a result, we will see a proliferation of new business types:
- API aggregators (AISPs and PISPs, in PSD2 talk) will act as hubs to provide one-stop shops to entities wishing to link with all the banks’ APIs.
- Data management providers will enable the creation of efficient and scalable data silos.
- Big data analysis providers will tap into the already scarce data analytics talent pools to help companies make sense of the data.
Today’s brands must build a comprehensive data foundation for their digital businesses that spans all vendors, teams and customer touchpoints with a common purpose to better understand customer needs and take relevant, timely action across channels.
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