If credit unions hope to innovate effectively, they’ll need to turn to big data while rethinking all processes and member touch points.
That was the message from Mark van Rijmenam, founder of Holland-based Datafloq, speaking during the California and Nevada Credit Union Leagues’ annual conference last week in Hollywood.
The good news, he added, is that CUs aren’t alone in this. Van Rijmenam, an expert and author on the topics of big data, blockchain and artificial intelligence, told attendees all companies will need to think differently if they’re going to turn themselves into data organizations. “To put the data to work, embed smartness in the organization,” he said.
He outlined three megatrends that are changing business: analytics, blockchain and artificial intelligence.
“Analytics helps companies understand context,” he said. “Yesterday, intuition and experience were used to make decisions. Going forward, data will be used. Today there are 5 billion to 7 billion connected devices, and we interact with them every 26 minutes. By 2035 humans will be interacting with connected devices every 18 seconds. To understand the tremendous amount of data coming in, you need analytics.”
CUs can prepare for this data analytics future by removing silos within their organizations and share data throughout the enterprise. “When you start to use analytics, you empower both your employees and the members you serve,” van Rijmenam said. “When employees have the right information, they can better serve the members. This is moving from content to context.”
Blockchain enables a concept the world has never had before: a peer-to-peer collaboration among industry partners and customers, he continued, asserting blockchain creates a more efficient supply chain, and better products and services.
“Blockchain is a shared single source of truth that is immutable and traceable. It is the technology behind Bitcoin, but digital currency is one of many uses for blockchain.”
One use is smart contracts: a computerized protocol that executes the terms of a contract automatically. In simple terms it can be described as “if this then that” statements, although the full scope is a lot more complicated. In any event, van Rijmenam said smart contracts can make supply chains a lot more efficient and effective.
“The convergence of big data and blockchain is disrupting business,” he said. “Blockchain offers huge benefits for the financial sector, including increased transparency, more financial solutions, instant settlements, reduced errors, improved capital optimization, reduced counterparty risks, improved contractual performance. It can improve how the organization is run.”
Blockchain also can be used for social good by uncovering fraud and corruption, he added.
Artificial intelligence means human collaboration with machines. “This enables the organization of tomorrow,” van Rijmenam said.
As deep learning becomes smarter, it brings us closer to AGI – artificial general intelligence, or a machine that can do the same intellectual tasks as a human. For the financial sector, he said chatbots make the interaction between humans and machines possible.
“Chatbots are assisting human staff at banks by handling low-hanging fruit – changing someone’s address, opening a new credit card – allowing humans to handle customer service and more challenging requests.”
“However brilliant this all is, we have to be careful,” he continued. “AI will change the world, we have to make sure it is for the good. We need responsible AI – AI that can explain itself. We also need safety engineering – a kill switch that ensures humans are always in control. We need machine ethics, the most complicated area of all. What happens when a machine becomes more ethical than humans?”
CUs need to create more H2H (human-to-human), H2M (human-to-machine) and M2M (machine-to-machine) interactions, with data as the enabler, van Rijmenam suggested.
“Work on building the organization of tomorrow,” he told the audience of credit union professionals. “There are four steps. One, start to datafy your organization. Two, distribute the data through blockchain and get rid of silos. Once that is in place, step three is you can analyze data. The final step is to automate your processes. Use AI and smart contracts to make the organization more efficient.”
