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Let’s talk about TRUST—in finance and in business

[Presentation at a launch event of a new book on FinTech in Sweden, see below].

Trust is a funny thing. It’s a very human condition, which most people would consider absolutely essential in financial services and in business. Yet, we don’t reflect much on what trust really is. Most often it’s a gut feeling, not very well defined.

If you look it up in dictionaries you will find definitions such as ‘firm belief in the reliability, truth, or ability of someone or something.’

Note the word belief.

And here’s the first take-away—things that we’re using regularly without knowing well what it is and how it works, are likely to be unexpectedly changed or disrupted by digitalisation since we don’t analyze the mechanisms in play.

I started to look at the concept of trust for a contribution to a research project at the Stockholm School of Economics which has resulted in the upcoming 23-author book ‘FinTech: Accounts of Disruption from Sweden and Beyond’, and this is a short summary of the presentation I recently gave at a launch event in Stockholm.

First—what is trust:

Then, in interviews with ten individuals (see list at the bottom), I investigated how FinTech companies and people in the financial industry build trust and relate to trust:

And here are some main findings:

  1. Markers. Fintech startups build trust by using markers such as well-known people on the board or among the investors, tests by external experts, media reports, using established tools such as Bank-ID, getting an ISO certification, a banking license (makes you less global!) and through compliance. Other markers that build trust over time are reliability and good functionality. Note that almost nothing of this relates to whether the service is objectively trustworthy or not. But the markers give users a sense of predictability.
  2. Social. More than markers, the interviewees considered the users’ friends and social networks to be important today. People trust their friends, or essentially they know that if anyone among their friends’ friends’ friends would notice something unreliable, this information would spread very quickly. Not having heard anything negative, it’s probably trustworthy. You could also argue that this regards millennials more, being more used to interacting and giving away data on the Internet. Or as one of the interviewees put it: They are ‘trusting online, or mistrusting, as the case may be, or being wary but in a different way than people who are pre-internet are wary.’ This is in line with digitalisation: The Internet enables peer-to-peer communication across the world, as opposed to hierarchies we have built for thousands of years.
  3. Two kinds of trust. You can have trust regarding security, and regarding whether a financial institution will give you good advice and manage your funds in a good way. Some interviewees thought that traditional banks are trusted for security but that users’ trust in banks with regard to managing funds is decreasing. Some also thought that millennials have more trust in Internet giants such as Google, Facebook, Apple, and Spotify, than they have in banks, and that these will be more successful launching new financial services, such as direct payments through messaging services, launched by Facebook among others, and recently announced by Apple. This was considered to be an opportunity for FinTech companies.
  4. Trust is two-way. For FinTech companies, it’s essential not only to be trusted but also to have trust in their customers, to some extent by regulation e.g. regarding KYC rules (Know Your Customer). The Swedish bank-owned digital system for identification, Bank-ID, has been a door-opener for digital financial services, making it possible to identify people remotely. However, Bank-ID has also been criticized, partly for being privately owned by major banks with a potential self-interest of not being challenged, partly for lacking security (more about this in our report).
  5. Digital trust—Blockchain. As mentioned above, digital technology is efficient for prediction. One example is the startup Hiveonline, building a system for automatic credit rating, as opposed to human judgment. The system collects data on interactions between parties, and through an algorithm, it calculates a credit score which is not influenced by judgment and supposedly holds a higher quality with regard to prediction about how individuals will behave. In other words, trust. (The collected data is stored in a Blockchain—the distributed ledger system which is the basis of Bitcoin and which could be considered to provide distributed trust, since it eliminates the need for a trusted partner which controls and guarantees transactions. Note that Blockchain technology is not yet considered mature and some believe that it can not be used effectively for other applications than cryptocurrencies such as Bitcoin).
  6. Possible effects of automated credit ratings: In developed economies: a rebalance between large businesses and micro businesses. In developing economies: two billion unbanked, of which 1.5 billion people without even ID, birth certificates or other documents, could get a credible credit score and go to the bank to get a loan.
  7. Culture. Discussing global systems for digital trust, it’s important to remember cultural differences in people’s perception of trust. One such main difference is the scale between cognitive and affective trust, where cognitive trust is based on the confidence you feel in someone’s accomplishments, skills, and reliability, whereas affective trust arises from feelings of emotional closeness, empathy, or friendship. It turns out that in business contexts, cognitive trust is predominant in the US, in Australia, and in northern Europe, whereas affective trust is more important in Asia, in Africa, in the Middle East, in Mediterranean countries, and in South America. Possibly, affective trust is more important in countries where the legal system is less effective. US businesses, on the other hand, rely much on written agreements and consider mixing cognitive and affective trust unprofessional. Yet, proposing a written agreement in a country where affective trust is predominant could even be seen as offesive—you don’t trust me? All these cultural differences are important to recognize and relate to in a potential global system for digital trust, as in all other contexts of digitalization, where human aspects are half of the equation.
  8. The Trustnet—a possible evolution of the Internet. This would be a part of the Internet which you can only access if you identify yourself with a global, non-govermentally controlled ID system, e.g. based on Blockchain technology. In this way, everyone on the Trustnet would see whom everyone else is—even governments or companies wanting to do surveillance would need to identify themselves. In this way, surveillance becomes symmetric, as in a small village where everyone knows everything about everyone, as opposed to asymmetric as of today when we don’t know who is watching us. You would then see if people would ‘vote with their feet,’ and for different activities move between the Trustnet (where everyone is identified and visible), the Internet (where you can be anonymous and visible), and the ‘Darknet‘ (where you can be anonymous and invisible).

The book ‘FinTech: Accounts of Disruption from Sweden and Beyond’, expected to be released later this year, is part of the three-year research project The Internet and Its Direct and Indirect Effects on Innovation and the Swedish Economy—led by Professor Robin Teigland at the Stockholm School of Economics, with funding from IIS, The Internet Foundation In Sweden.

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List of persons interviewed:

Cecilia Skingsley, Deputy Governor of Sweden’s central bank, the Riksbank, Henrik Rosvall, CEO of the savings app Dreams, Johan Lundberg, Co-founder at the FinTech focused VC-firm NFT Ventures, Daniel Kjellén, CEO at the integrated bank information app Tink, Ulf Ahrner, CEO at the investment digital advising company Primepilot, Danny Aerts, CEO at IIS (Internetstiftelsen), Lan-Ling Fredell, Head of Operations at Stockholm FinTech Hub, Sofie Blakstad, CEO and Founder at the financial trust platform Hiveonline, Frank Schuil, CEO and Co-founder at the Bitcoin-focused startup Safello, and Jonathan Jogenfors, researcher at the University of Linköping.

Note: I also do seminars and workshops on digital transformation, and if you want a deeper look at digitalization, please don’t hesitate to contact me.

Seven Things You Should Know to Be a Digital Winner

It doesn’t matter whether you’re a doctor, a bus driver, a lawyer, an economist, an industry worker, a salesman, a trader, a teacher, an engineer or a customer service agent—your job won’t exist in a decade or two. Not in the form it exists today.

The reason is that machines are getting better and better at doing what humans do, in almost all fields. And they’re making progress quickly—faster than many would have believed. Google’s AI (artificial intelligence) based system AlphaGo recently beat the world’s best player in the world’s most complex board game—Go—ten years earlier than expected.

AlphaGo now stops playing games and will instead focus on solving world-class problems—finding new treatments for diseases, dramatically decrease energy consumption, and inventing new revolutionary materials. In other words, it’s a fairly smart machine, and it’s self-learning too!

Within all professions I mentioned initially, and in others too, there are already advanced AI based systems taking over more and more of people’s work tasks.

So now you’re asking, how will all this affect me and my job?

The bad news is that you won’t escape.

The good news, however, is that there are tons of opportunities if you develop an understanding of the ongoing change and if you build a strategy on that understanding.

To help you on the way, I will share some insights, built on my experience and focus on future, technology and digital change for individuals, organizations, and society.

  1. Start discussing digitalization and automation in your organization, in particular with the top management, which has to understand its importance and be ready to take action. If the top management doesn’t show this understanding, consider looking for a new job. Your company or organization will be in trouble.
  2. Get rid of boring work. Ask yourself which of your daily tasks you wouldn’t mind at all if a machine would do for you. Most repetitive work is boring, and the good thing is that machines are particularly skilled at repetitive tasks. Let them do it and free your time for work that you find more interesting.
  3. Be curious! Start investigating digital and AI-based tools in your field, and learn about them. Remember that such tools will help people to work faster and more efficiently through automation—be it lawyers, researchers, doctors, or analysts—and that those who are learning ahead of others will be winners.
  4. Collaborate with machines. No, machines won’t steal your job, at least not for a good while. In contrast, collaboration with machines is a winning formula. The best chess teams are humans together with computers, and that will be true for most other areas. So investigate how you can collaborate and build a team with AI-based systems, and even learn from them.
  5. Become better than machines. Four main areas will be the most difficult for machines to master: Creativity, ability to convince and motivate other people, empathy, and fine dexterity. Find out which of your work tasks are related to any of those areas and try to develop them further.
  6. Get more social. Remember that the Internet helps people connect, peer-to-peer, across the world, in contrast to all hierarchies we have built through thousands of years. This goes also for machines, but people are more social (so far). Use and develop this opportunity in your work, and reinforce your informal networks, not only in your own industry. Also—always try to share your insights and your journey with others. Together you are stronger!
  7. Pay attention to digital strategies. In the long run, digitalization will require a transformation of everything at work—from organization, development, and sales to the core business model. A digital strategy that is a separate part of your organization’s operations might be a good and careful start, but over time it’s not enough. Contribute to digitalization becoming a part of everything your organization does in a longer perspective—this will increase the chances that your own job can evolve.

In other words—your job will disappear, but digitalization, automation, and AI are bringing great opportunities to create a new one. And the earlier you start investigating these opportunities, the bigger the chances that you will be successful.

Note: I also do seminars and workshops on digital transformation, and if you want a deeper look at digitalization, please don’t hesitate to contact me.

Nine Things You Should Know to Be Smart About Driverless Cars

Just a few years ago, not many people realized what digitalization of transportation would be. Now, autonomous cars are the talk of the town, and carmakers, tech giants, and start-ups are racing to stay ahead in the mercilessly competitive transformation of the mobility industry.

It could turn out to be the most profound of all digitally driven transformations. Some call it a perfect storm, because of the fast convergence between autonomous driving, electric vehicles, and connected vehicles. The convergence is explosive and will result in so many secondary effects that it’s hard to even imagine them.

Such effects will hit you too, which might get you worried. The good news, however, is that you’ve got great business opportunities ahead if you develop an understanding of these effects and build a strategy on that understanding.

To help you on the way, I will share some insights, built on my experience and focus on future, technology and digital change for individuals, organizations, and society.

Here we go:

  1. Driverless cars will save lives. Over 3,000 people get killed every day on public roads in the world—more than two people every minute (not to mention those injured). Few diseases kill more people. Autonomous cars will be safer. They never get distracted, irritated, emotional, tired or drunk. The funny thing, however, is that even if all cars were autonomous, and maybe 1,000 people were killed every day, we would not be happy. Somehow we excuse people but not machines. Be ready for this debate. Eventually, though, humans will probably not be allowed to drive cars, except for at remote locations, and in an emergency, at low speed.
  2. Jobs will be displaced big time. Autonomous cars will lead to a substantial loss of jobs. Primarily drivers—both of cars, buses, and trucks. Goldman Sachs expects the decline to be 25,000 jobs a month in the US only when vehicle saturation peaks some years ahead. Since most vehicles will be electric (see below), a secondary effect will be the loss of jobs at gas stations, garages (electric vehicles require significantly less maintenance), spare parts providers, the oil industry and more. If you have such a job, let machines do the boring tasks and focus instead on things that machines are not good at. Essentially this regards four areas—creativity, ability to motivate and convince other people, empathy, and fine dexterity. Find out which of your daily tasks are related to one of those areas and develop them further. Bus drivers could e.g. shift towards bus hostesses.
  3. Fossil fuel cars will be displaced big time. According to Stanford University economist Tony Seba, no more petrol or diesel cars, buses, or trucks will be sold anywhere in the world within eight years. A twin ‘death spiral’ will hit those vehicles—since electric vehicles are ten times cheaper to maintain than cars that run on fossil fuels and have a near-zero marginal cost of fuel, people will switch, making it harder to find a petrol station, spares, or anybody to fix an internal combustion engine. Sell your petrol or diesel car before it’s too late. One fundamental issue, however, will be how to charge massive amounts of electric vehicles. Another issue is the environmental impact of battery production. Therefore expect the need for new energy sources to provide electricity on-board—consider for example LENR.
  4. Car-owning will change. As with most digital transformations, autonomous cars will push a shift from owning to accessing. Most people will access mobility as a service, potentially at a fixed cost a month. As for owners, there are four good owning cases: 1. People who want to own a self-driving car, for convenience and status. 2. Taxi or transportation firms such as Uber, Lyft, Otto and others. 3. Car-sharing firms such as Zipcar. 4. Cars will own themselves, doing business, occasionally driving to motor vehicle inspection, repair garage etc. And if they get rich they will buy another car and become two. Or more. Get ready to choose your owning or accessing strategy.
  5. Policymakers will have to regulate. Driverless cars will require fewer parking spaces in cities, but if unregulated, they will lead to more traffic since it will be easier and cheaper to use transportation. People could, for example, choose to let the car circulate when shopping in crowded cities, and soon streets will be congested. The risk for terrorists using autonomous vehicles for attacks is obvious too. This, and more requires wise regulation.
  6. Real estate values will be affected. Locations that are a little too distant for people to commute by car today will be more attractive since you will be able to work when commuting, instead of having to drive the car. Check for such real estate opportunities, before the value increases.
  7. Car ethics will be hot. Autonomous cars will have to make decisions, and such decisions need to be certified. However, don’t expect the decisions to be clearly programmed. Autonomous cars are self-learning and will take decisions in a way similar to humans, although many decisions will be taken together with other nearby cars. The upside is that cars can learn, become better, and immediately share their knowledge with millions of other vehicles. The challenge will be how to certify such self-learning vehicles—maybe with a driving license test? Be sure to understand this as a user.
  8. Privacy to the next level. If privacy on the Internet is already a complex matter, privacy for autonomous car users will be the advanced level. An autonomous car will have AI inside to provide help, service, answers, and entertainment, while also communicating with other vehicles. This will expose your activities more than normal Internet usage does. On top of that, autonomous vehicles will know where you need or like to go, with whom and when. Think well about who can access this data.
  9. Car security will by fundamental. With so much responsibility in the hands of the car itself, cyber security for cars will be of fundamental importance. No details need to be explained. Make sure the car provider is top notch on this point.

These nine insights might help you to prepare for choices you will need to make with regard to driverless vehicles.

But also remember that huge business opportunities will emerge for digital products or services—from finance, law, entertainment or any other field—that can be mixed into the autonomous and electric mobility industry from this perspective. Start investigating today!

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Note: I also do seminars and workshops on digital transformation, and if you want a deeper look at digitalization, please don’t hesitate to contact me.

Eight Things Retailers Should Know to Be Digital Winners

The digital transformation of retail has been going on for some years now, and as a retailer, it’s easy to become worried over how to remain competitive in such a fast changing environment.

The bad news is that this change still has a long way to go. The good news, however, is that you shouldn’t worry if you develop an understanding of the change and if you build a strategy on that understanding.

To help you on the way, I will share some advice, built on my experience and my focus on digital change for individuals, organizations, and society.

Here we go:

  1. Investigate your business model. Digital goods can be copied infinitely, and non-digital goods can be shared efficiently on digital platforms. And you reach the world with one click. Generally, this combination is what breaks traditional business models and also creates a push from owning to accessing, as for example in the music industry. Investigate to what extent your offerings are purely digital, or shareable on digital platforms, and play with ideas on business models taking advantage of the digital economy. Maybe you could design new digital services to go with your existing products or mix your digital offerings with digital content from other fields. Don’t stop. Ever.
  2. Be local (or niche). E-commerce is continuously growing, but essentially there are four ways to stay ahead online: Lowest price (hard to compete with Amazon and Aliexpress), Well-known Brand (hard to compete with Adidas and Nike etc), Niche Products (yes, you might sell sheep shears from Sardinia), Local Presence (yes, you might have a local store, which is more common than having niche products).
  3. Become Phygital. Local is good, but in a digital world, you also need online and mobile presence. And once you have both it’s important to integrate your Physical store with your Digital store, seamlessly—into Phygital: One single cash system, one single stock system, one single sales system, one single marketing system etc. Many providers offer these solutions (some call this Omnichannel, but that doesn’t underline integration, which is essential).
  4. Be social locally. The advantage of local presence is that it’s easier to meet people—managing returns and being able to offer additional items at the same time, building a brand experience in your store where people want to hang out, offering customers a pick-up location for goods ordered online, and more. This is why even Amazon is experimenting with local stores.
  5. Be social online. Naturally, you need to take advantage of all the opportunities offered on the Internet to be digitally social. Listen to advice from experts on social networks and always aim at creating an online presence that people might want to share with each other. Here’s where you can build digital momentum.
  6. Be super transparent. Customers visiting your physical or digital store should always know exactly what they can find in each of them, at any moment. Your physical store might be small, and could yet offer digital ways of discovering a large stock of products. Customers should be able to place orders in both stores and get deliveries at home or in the physical store, independently of where the order is placed.
  7. Develop logistics. Logistics is key for retail, and logistic services for phygital commerce is evolving. Investigate what new opportunities are offered, for example integrating delivery with nearby stores or having stock delivered to you in real time.
  8. Be predictive. With big data analysis, it’s possible for large online businesses to know what customers will order before they order it. Today, Predictive Analytics is also available for small businesses. The two top benefits are:
  • Customer Retention—for example predicting when existing customers will come back and buy more of something. Reminding them before they think of it will make them happy.
  • Demand Forecasting—tracking inventory, discovering trends and forecasting demand at different times can significantly help improve the top line.

In other words—digital is still a great opportunity in retail, and the earlier you investigate its opportunities further and keep track of new trends, the bigger the chance that you will be a digital winner.

Note: I also do seminars and workshops on digital transformation, and if you want a deeper look at digitalization, please don’t hesitate to contact me.

Seven Things Lawyers Should Know to Be Digital Winners

Many lawyers and law experts worry about how their professional opportunities are changing with digitalization, observing how some daily tasks are already being taken over by digital automation and artificial intelligence, AI.

And yes, the ongoing change in the legal sector is significant, and moreover, it only just started. The good news, however, is that you shouldn’t worry if you develop an understanding of this change and if you build a personal strategy based on that understanding.

To give you some help on that journey, I will share some important advice, grown from my daily focus on technology and digitalization and its impact on businesses and on society through many years.

Before getting to the advice (jump down if you’re in a hurry), let me just highlight three core pieces of the digitalization puzzle that many people struggle to put together.

First of all, remember that digitalization has become a hyped term, meaning all and everything. And instead of scratching the surface, looking at apps and social networks strategies, try to focus on what really makes digitalization a powerful driving force for change.

These three aspects of digitalization are fundamental:

  1. The cost of a digital copy is basically zero, and you reach the whole world with one click. This means that once you have digitalized content, tools, processes, products, services or methods, you can spread them over the world at a very low cost. This is what makes traditional business models break, pushing a shift from owning to accessing, among other things. Think of how the music industry went from owning discs to accessing music, but also of any kind of digital tool in the legal sector.
  2. People—it is people using, investigating, and taking advantage of the low cost of digital material and the possibilities of reaching the world, that really makes digitalization explode and disrupt many industries. And since the Internet is not hierarchical, people are networking, connecting with individuals all across the world, changing the way we organize, collaborate, build things, provide funding, distribute news, recruit collaborators and much more. And people are already building network inspired legal services, such as Swedish Lawline.
  3. Algorithms and AI. Algorithms are what let Amazon effectively tip you off with ‘Customers who bought this item also bought…’ while AI, which is now evolving rapidly, adds a why-dimension to that kind of advice, making it possible to answer more complex questions. Both can be learning, making them richer, more accurate or individually adapted over time.

In the legal space, the use of algorithms and AI is spreading quickly (remember that they are spreading and evolving because of point 1 and 2 above).

Key areas are:

  • Research tools—such as ROSS, built on IBM’s system Watson that won over humans in Jeopardy in 2011. ROSS answers advanced legal questions in plain language.
  • Contract Review—AI-based tools that assist attorneys in analyzing contracts and other legal documents, pulling out key points of interest. One example is Extract by the UK based company RAVN.
  • Electronic Discovery—tools for technology-assisted review, aka TAR, helping attorneys with the hugely time-consuming work of going through documents, searching for relevant facts, cases, relationships and more.
  • Prediction—AI-based tools that effectively predict the outcome of a case, court decisions and more, based on the currently available information. These tools help to assess whether it’s worth pursuing a case or not.

On top of these, there are other areas, such as tools for assisting courts with certain tasks. Meanwhile, important research is being done to verify that bias is not integrated into such tools—the systems are prone to bias since they learn from data that might be biased.

As you can see, digital technology is starting to transform the legal sector, and yet this is only the beginning. So, as a legal professional, how can you prepare for, and take advantage of this change? Here we go.

Seven digital tips to lawyers:

  1. Start discussing digitalization in you organization, in particular with the top management, which has to understand its importance and be ready to take action. If the top management doesn’t show this understanding, consider searching for a new job. Your company or organization will be in trouble.
  2. Start investigating digital and AI based legal tools on the market, and learn about them. Remember that such tools will help legal professionals to work faster and more efficiently through automation, and those who are learning ahead of others will be winners.
  3. Collaborate with machines. No, machines won’t steal your job, at least not for a good while. In contrast, collaboration with machines is a winning formula. The best chess teams are humans together with computers, and that will be true in most other areas. So investigate how you can collaborate and build a team with legal AI-based systems.
  4. Get rid of boring work. Ask yourself which of your daily tasks you wouldn’t mind at all if a machine would do for you. Most repetitive work is boring, and the good thing is that machines are particularly good at repetitive tasks. Let them do it and free your time for work you find more interesting.
  5. Remain better than machines. Four main areas will be the most difficult for machines to master: Creativity, ability to convince and motivate other people, empathy, and fine dexterity. Find out which of your work tasks are related to any of those areas and try to develop them further.
  6. Get more social. Remember that the Internet helps people connect, peer-to-peer, across the world. Use and develop this opportunity in your work, and reinforce your informal networks, not only in the legal sector.
  7. Beware of digital strategies. Don’t contribute to building digital strategies that risk remaining a separate component of an organization’s operations. Essentially, digital technology is just a new tool and as any other technology it changes the conditions for what you’re doing. What’s particular with digital technology is that it’s a hugely powerful driver for change and it requires an adaptation to the new conditions—of everything from organization and sales to the main business model. Any digital strategy including less is not enough.

In other words—digital is an opportunity in the legal space, and the earlier you investigate its opportunities, the bigger the chance that you will be a digital winner.

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Note: I also do seminars and workshops on digital transformation, and if you want a deeper look at digitalization, please don’t hesitate to contact me.

Also, feel free to register for the legal innovation event VQ Forum, on October 19, 2017, where I will give a keynote on ‘digitalization—a threat or an opportunity.’

Been a bit busy—will soon be back

For various reasons—mostly positive—I have been a bit busy the last year and not so active on this blog.

In particular, I have dedicated a lot of my time to following the ever increasing flow of interesting news on technology and its implications on society, organisations and individuals, continuously sharing much of this on my Twitter feed, on my Facebook page and on LinkedIn.

However, I plan to be back soon with some fresh posts here on the blog, so please stay tuned.

Thanks for visiting.

Announcing the New Energy World Symposium

News-blue-text-dateNote: The New Energy World Symposium was cancelled on April 15, 2016. A re-scheduled symposium might be possible. Read more here. 

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Today I’m announcing the New Energy World Symposium that will hold its first session on June 21, 2016, in Stockholm Sweden.

The conference will focus on the disruptive consequences of a new cheap, clean, carbon-free and abundant energy source—LENR or Cold Fusion—that may literally change the world, promising Planet Earth clean water, zero-emission vehicles with unlimited mileage, a solution to the climate crisis and much more.

I’m particularly proud to announce a few of the renowned speakers who together with me believe that it’s high time to draw global attention to this subject.

Read more in this blog post at the symposium’s main website new-symposium.org, where you will also find further information.

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