FINANCIAL SERVICES ARE a market basket of different things. We think about the brokers, bankers and insurers as the three communities of interest. We have the impact of the Internet and information technology as being transformational in those communities.
The Wall Street that I remember with guys in colored smocks at the Stock Exchange waiving their papers has changed. All of that is now done at a computer farm within fractions of a second. That has had ramifications on the way Wall Street conducts business. Policymakers are still trying to figure out how to regulate and moderate this properly so you don’t have people sneaking into the back door and taking advantage of the system— and I am not just talking about the traders, but also the customers.
There is also the dimension of how to get more active and more diverse in terms of customer services. E-banking must be combined with response systems that have artificial intelligence so they are not just going through the basic “press 1 if you want to talk to a representative” process. We need much smarter and responsive systems. People are realizing that they cannot solve the problem by throwing more staff at it and doing it in a cost-effective way.
The value of data analytics is that if you are capturing all of the behaviors and all of the extremes that happen in that profile—and then you can match them to a pattern—that is certainly giving you a Newton’s Law of Motion without having to know what the law is. Now you can begin to reliably use that model as a way of predicting behaviors. That will help shape patterns that are contributing to the market for brokers and provide ways of understanding how to better service customer needs based on their past interactions. It’s also a way of getting beyond the statistical approach to actuarial predictions. The infusion of data analytics and big data into financial services is a big game changer.
The New Jersey Innovation Institute (NJII) Financial Services iLab is putting together a blockchain demonstration— Bitcoin is the cash transaction capability and blockchain is the delivery mechanism that provides for the secure and validated information transfer from buyer to seller. It’s essentially “bankless” banking. There is a lot of interest in understanding how it works, how it can be protected and how we can make a business out of something that, in some cases, can put businesses out of business. We are working on a real-world demonstration site where we have an operational ability with people coming in and finding out different ways they can use the block technology for providing secure transactions.