Citi Calls Coders to Develop Apps for 'Internet of Things'

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Citigroup is seeking help from outsiders to develop apps that will work with the so-called "Internet of things" and wearable technologies.

Internet of things — which refers to home appliances or other gadgets that connect to the Internet and communicate with other devices — is a nascent tech category that is expected to transform companies. It promises "to help unleash a new era of banking through hardware," Citi said.

Citi's fintech challenge is part of a trend in which a handful of banks have been soliciting external developers to tell them what to do next in digital. Banks are just as interested in getting digital banking ideas from someone in a college dorm as they are from an engineer working for a billion-dollar corporation. The idea is to speed up development for an industry getting disrupted, and help banks shed their stodgy images.

"Innovation can no longer be just internal," said Stessa Cohen, research director at Gartner.

Citi will make available a set of APIs (application programming interfaces) to individuals around the world selected to participate, and invite them to create apps for mobile devices, the Internet of things and wearable apps. An internal team from Citi will select applicants who can code while a panel of judges will determine who participates on one of three demo days.

The innovation initiatives underscore what banking execs have publicly stated: They are struggling to keep up with customers' digital demands at a time when the industry is getting disrupted on payments and other fronts while consumers are using branches less.

And the call to coders coincides with Apple's announcement of its new mobile payment platform, Apple Pay. Citi is one of the tech company's initial partners. Apple also unveiled Apple Watch earlier in September. The smart watch will not be for sale until 2015 but is expected to help make wearable technology more common.

The tech brand's product news could spark wearable app ideas with Citi's participating developers in addition to serving as a catalyst for broad consumer adoption of smart watches.

"We are lucky with the timing," said Heather Cox, Citi's chief client-experience, digital and marketing officer for global consumer banking.

Citi is preparing for when people expect an experience that is deeper than downloading an app and viewing data presented on a flat screen, Cox said. Such services "won't quench [consumers'] desires in the future," Cox said. "Banking needs to be more exciting."

In fact, Cox would like to see a day where banking engages someone so that when he wakes up, he checks in with his bank app the way he might already with a Fitbit.

"Money matters in people's lives," she said. "Wearables will create a new kind of demand that can be fueled by biometrics — think even safer payment mechanisms with multi-layer bio-authentication as the security layer."

Crowdsourcing tech ideas is but one of the more recent methods banks are using to help inform their innovation pipelines.

American Express will test out ideas drafted by academics that would work with Serve, its prepaid account-opening platform.

First National Bank of Omaha hosted its second hackathon in a bid to uncover talent to hire.

Eastern Bank in Boston, which launched an innovation lab earlier this year, invites fintech enthusiasts to pitch the bank on ways to improve banking.

And Westpac in Australia, which ran a crowdsourcing challenge in 2013, is rolling out one of the winning ideas that came from (literally) a rocket scientist and involves augmented reality.

Mary Monahan, executive vice president and research director of mobile at Javelin Research & Strategy, expects banks to use hackathons for a long time to come to try to keep pace with shifting consumer behavior.

"They have to reinvent themselves," Monahan said. "If banks can't fulfill consumers' digital needs, they will go elsewhere. …Geography won't matter as much."

A hackathon, meanwhile, could help a bank discover coders while they are free thinkers, untainted by corporate employment.

"Sometimes it's easier to innovate when you don't know the rules," said Monahan. "Once you know all the problems, it's harder to go outside the box."

Citi's new challenge, for example, is an extension of a contest it had been running internally and follows a successful event it ran in Latin America last year. The contest had more than 150 participants from 19 countries. The latest event, dubbed Citi Mobile Challenge, is meant to also serve as "a fun way to stir the pot and generate good ideas," Cox said.

To rethink digital banking apps, selected developers will be able to access a limited set of Citi's APIs — more details will become available on Oct. 10 — to create apps and have a shot at cash prizes, a potential contract with the bank, face time with banking execs, and mentorship possibilities following the challenge.

Participants will retain intellectual property rights for their software codes; however, Citi will have the option to license the software.

Citi partnered with numerous companies on the upcoming challenge, including Intuit, Plug & Play, Wearable World, FinTech Innovation Lab, Endeavor, Yellow Pepper, Women 2.0, Gimbal, Empire Startups, UK Trade & Investment and Fintech Hackathon.

The bank, which is preparing to launch one of the winning technologies from its Latin America contest, hopes the investment becomes a regular part of the bank's mix of efforts to find innovative idea. It also has an innovation lab and a ventures unit.

"There is no silver bullet in this world of innovation," Cox said. "We don't know where the digital world is heading."

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