Reflections on the World Economic Forum on LATAM
Last week I attended the World Economic Forum on Latin America, in Sao Paolo. At the summit, more than 700 leaders from around the globe explored how the LatAm region should capitalize on technology and innovation to advance economic and social progress for all.
Many of the themes from the conference have deeply resonated with me, and the one I’d like to highlight is data. Data and information are different. Data is raw; information answers a question. Some questions don’t need answering, others are very far reaching in their implication.
We are not short on data, but we are short on information. The ability to turn data into information is growing exponentially. The technology now exists. Last year, computers beat humans at the Chinese game ‘Go’ (10^137 permutations) after a week, and within 40 days had generated insights into strategic opportunities for outplaying the opposition that would have taken humans 200 million years, well beyond the direct combination of moves themselves and deep into the domain of behavioral psychology. Effectively, this was achieved by pitting two Machine Learning protocols against each other and letting them have at it.
The potential to transform industries with information is compelling, and I discovered how much the bank community could learn from the other industries represented at the WEF event. The way agriculture has been able to turn sensor data into information to reduce the use of pesticides and improve yields is rapidly moving to the point where we can feed the world’s growing population. The CEO of a large mining company explained how his extraction productivity has improved exponentially just in the past five years (whole areas like shale sand extraction now being productive), with efficiency improvements well outstripping consumption such that productive global fuel reserves are going up at the fastest rate ever. If healthcare can turn people’s data into information to reach better diagnoses, we can cure people more effectively and quicker. One doctor talked about medical organizations like the WHO using blockchain-like technology to allow truly global sampling of blood test results in near real time to halt pandemics as they emerge.
That led me to think about the financial services industry, which was conspicuously absent from all the self-congratulation I witnessed. Which firms will be the best at turning data into insights? Who will be the winners and losers in this data-driven world? Just last week, Amazon said it was in discussions with JP Morgan to offer a current account to its customers, so the stakes are being raised all the time.
Do banks really see this as the burning platform it surely is?
My view is that for banks to become truly data-centric organizations, they need to embark on the kind of transformational journey that Temenos customers have already started. It begins with getting data out of silos, organizing data around customers rather than products, and putting in place an infrastructure that allows that data to be interrogated in real time. It continues with banks mashing together different data sets – locational, transactional, contextual – to be able to provide insights into their customers’ lives, that help those customers make smarter financial decisions.
Don’t forget that in the new world of open banking, not only is data much more portable, but also GDPR is giving customers much more control over who sees their data and for what purposes. So customers will flock to those organizations that both keep their data safe and give them a good return on it in terms of value-added services and advice.
As trusted custodians, customers trust banks with their data. But now banks must deliver on turning that data into information. It will not be long before some participants in banking make the same step change that others like miners and doctors are making, and that is going to shake up the industry in a very big way. We stand ready to support an industry that is going to go through a paradigm shift of the like they will only understand if they spend time looking at other industries just a couple of years ahead of them.
Prize for anyone who can name the footballer on the left in the photo below. The theme of the award to this incredible gentleman was ‘Belief in Yourself’. From growing up in abject poverty to the world’s most famous ever sportsman. Humbling.
World Economic forum on Latin America
We can all learn a lot when we step away from our day-to-day routines; certainly, I did the past three days.