The calm before the trust storm
It has been quite a year both for FinTech and for Identity - with both not only receiving a huge amount of attention but also coming together in a very exciting way. Even over recent months this has been highlighted by Identity in one form or another being top of the agenda in almost every conference, meeting or chat about FinTech.
It’s a good time of the year to reflect why this has been the case. At a recent personal identity conference that I was speaking at it was described as the perfect storm. While this was a more general statement than just referring to financial services I think it's even more appropriate here than anywhere else. So the question then must be why is this the case? Why does Identity and trust feature so highly on the agenda these days?
Global unrest
On reflection it's easy to see how much unrest there is throughout the world these days. It has been a very difficult year for many with a great deal of unrest. From the tragedy in Paris, the Syrian Civil War and subsequent refugee crisis causing a huge influx of migrants to new countries to the ongoing ISIS battle - we continue to battle against fear and confidence. I'm not suggesting that this has a direct impact but does make us think about how and who we can trust - who they are and do we really know them. More and more as we talk to people and the industry that the appreciation for the need for trust is so much more evident and obvious. At the end of the day almost everyone now has been or knows someone that has been affected by some form of miss trust, fraud, identity theft or risk. This is highlighted in the increased risk when engaging in a digital context…
Increased data risk
Over the last few years it has been building but it was 2015 that definitely highlighted a shift in cyber risk. At the FinTech Week in London a few months ago this was highlighted in a few talks we did. Looking over the last few years it is easy to see, with eBay, Sony and others the risk of operating online starting to build. These were doubled with the cost of Target's credit card data then doubled again with Anthem Blue Cross healthcare data causing 80m consumer records to be lost. Doubled again with Ashely Madison and a record breaking $600m law suit only to see us with Talk Talk here in the UK have a similar situation that hasn't even been quantified yet. As these situations continue to grow so does the conversation about how to manage this risk. I'm not sure there is a clear solution yet other than continuing to do what we do today isn't working. At a panel recently we talked about this and when the idea of leveraging a consumer owned and managed identity was presented heads nodded alongside the recognition that we have to empower individuals to help manage the risk - we can't do it for them - its just too complicated now. I believe as we continue to do more online, as we continue to disrupt more traditional industries that this risk is only going to continue to increase to a point where it could be unmanageable or even uninsurable. Much of this disruption is coming from the FinTech space….
Disruption in financial services
Whether you view it as a bubble or not the other big trend this year has been the insurgence of resource, innovation and funding in the FinTech space. A very broad term, often miss used, covering a huge range of trends from crypto currencies to blockchain, remittances to payments, disruptive digital only banks or other specific consumer finance services - it is a very exciting space to be in. The continued pressure on financial services to become more efficient, reinvent itself and be competitive continues to grow. Blockchain as a technology is definitely riding high on this trend and has a fantastic opportunity to support many of these trends - something we ourselves like so many others are looking at and will leverage in the new year. But for us it's more than just using a new technology - its seeing new propositions emerge. Many of our customers and partners are doing just that whether like eMoney Union providing a P2P marketplace for mortgages, Fair Finance helping the underserved, Startling bank completely disrupting the traditional banking model, or Prosper as a leading marketplace lender starting to dominate the market. Much of this disruption is being powered by new models and one of these for us is the ability for individuals to leverage the identity and the data they have, typically with their existing bank, to access new services and do new things quickly and easily.
This is where the trends come together, where the perfect storm starts and where we are seeing so much activity. Okay so we are a bit bias, understandably so - this is the world we live in, but it is happening and it's happening quickly. Empowering consumers with their own data, letting them prove their real identity and do things leveraging sources of trust like their bank, is opening up new markets and allowing them to do new things. It's creating a layer of trust in the internet that hasn't existed until now and one that will continue to support and disrupt as we move forward into 2016. The need for this trust as we have just covered or highlighted in recent years through government programmes such as Verify.gov in the UK or NSTIC in the US is now maturing. Supported through the Payment Services Directive (PSD2) and the Open Bank Working Group (OBWG) this empowering of consumers to open up new markets, increase competition and do new thing is now a reality. It was recently described by the City Minister to me as building a perimeter within the UK retail banks that if I already have a bank account I should be able to easily switch, open up new accounts, access services and do new things quickly and easily. While we completely agree we view this as a global challenge - we live in a global world.
So where does that leave us in 2015? I truly believe, with everything that we have seen in this crazy year, that it is the calm before the storm. In 2016 this will only accelerate the need for trust online. A view shared by our partners like ID Analytics and Deloitte to name a few - all with exciting announcements in the new year as we launch new initiatives, features and insights to help further the cause. To help create a faster, easier and stronger user experience that is consumer centric and creates a layer of trust in the internet that we all need.
