Think about the latest trends in innovation and what does your mind imagine?
Maybe you think about the connected home, such as a door that either greets you by name based on your height and cadence of your step or recognizes and stops a two-year-old from wandering out of the house unattended. Maybe you imagine appliances that can order and purchase goods, such as the dishwasher that orders more detergent when the bottle is low. Perhaps you imagine something we often hear about in the news: a car that can map a route and deliver its passengers without a driver. Maybe none of these come to mind because they sound far-fetched.
In financial services, we think about innovation as it intersects with money and management of it. Already, we are providing payment-card applications to our fleet customers that help them find the closest filling station with the best price at the pump. We are helping private jet pilots arrange and pay for their aeronautical service and more via a simple-to-use mobile app — and eliminating paper invoices and receipts in the process.
What comes next is only happening sooner and sooner. The pace of innovation has gone from years to months to sometimes weeks as new ideas surface and users have the drive to make it possible. An interesting area that is beginning to show promise can be found in the Internet of Things — things connected by networks to computers and/or each other via the internet. These sensors are creating a revolution as they connect the globe in a digital nervous system that has the potential to create an ecosystem with trillion-dollar impacts. Some predict there will be 10 devices for every human on earth by 2020, and it's unlikely to stop there. Imagine the art of the possible when ordinary devices can help us live our lives better, easier and more securely.
Consumer innovation is all around us — and always has been — as humans imagine ways to make our collective experience better, smarter, more efficient and more convenient. Spend an hour at the next Consumer Electronics Show and you'll see what I mean. But what about business? How do we take the energy and spirit of consumer innovation and parlay that into advances in the corporate and retail sector?
The next big wave for the Internet of Things has business at its core. A report from McKinsey & Co. predicted nine major categories of future innovation — smart homes (automation and security), retail environments (automated commerce), offices (security and energy), smart cities (public health and transportation), factories (operations and optimization), outside (logistics and navigation), worksites (optimization and safety), human (health and fitness) and autonomous vehicles (maintenance and logistics).
So what has the most promise for businesses today? The innovation team at U.S. Bank spends a great deal of time and energy on that very topic, and we have narrowed the field to four main areas: beacons, conversational interface, visual interface and distributed ledger.
Beacons are battery-powered chips that broadcast their location wirelessly up to 70 meters (that's about 230 feet for us Americans). Smartphone apps listen for beacons (if you want them to) and can use presence near a beacon to provide information so that retail locations — from museums to bank branches — become interactive and personalized.
Beacons can transform the retail customer experience. How? Imagine a beauty salon that can automatically check in a client as he or she approaches the door, and allow customers to pay as they leave. Imagine offering real-time personalized promotions or discounts to customers you've specifically selected, rewarding them for visiting the store or certain departments. Beacons and location-based services are also transforming the event experience, including in Major League Baseball and NFL stadiums. Concessions are being ordered and delivered to guests in their seats. Bathroom lines are a breeze as beacons signal where to find the shortest lines. Beacons and location-based services are here, and they're delivering a user experience beyond compare.
Speech recognition, voice biometrics and artificial intelligence mix to create a more natural human and computer interface. Think about it — passwords and typing are tiresome, not to mention dangerous if someone is using the same password for multiple websites.
New connected devices, meanwhile, don't come with a keyboard. Take Amazon's smart speaker system Echo, for instance. According to Experian, of the estimated three million Amazon Echos in use today, Alexa — the device's voice-command assistant — is doing everything from setting timers to playing music to creating grocery lists to paying bills. Imagine if voice commands were to take hold in the office setting. Buildings then could suddenly become intuitive and respond to direct requests.
Virtual and Augmented Reality
Beyond information, virtual reality allows you to consume the experience, while augmented reality allows you to transform an experience.
Applications of the technology are moving well beyond gaming and entertainment, and may ultimately replace device screens with screens wherever you want them to be. Imagine the future possibility for commercial real estate design, sales and marketing. Clients will be able to walk around their space before the ground is broken. Product demonstrations take on a whole new level of engagement. The potential to transform architecture and design, travel, co-working, education and training, commerce and medicine, and therapy seems limitless. Virtual and augmented reality will change the way we experience space and location, and may be a disruptive force in the long run.
Bitcoin, for all its intrigue and controversy, delivered to us a new opportunity that will vastly change how several complicated business transactions are executed and settled today. The technology on which bitcoin is exchanged, the blockchain, is a type of distributed ledger. Distributed ledgers provide universally accessible, cryptographically secure records of transactions and events. They enable permanent and unchangeable records of events and a running audit of lineage and changes of ownership. Because the ledger is distributed across all participants, everyone that has access to it has the same version of the truth.
Here's an example of how a distributed ledger might transform commercial real estate: Today, escrow services and banks mediate financial transactions, providing a "golden record" of the position of each party. In other words, everyone agrees that the version of the truth provided by the intermediator is correct and that it will dictate which transactions are allowed. With a distributed ledger, each party to a transaction holds the same information set. However, changes to the information — transactions — are agreed to by all parties via an automated consensus process. In the end, a process that may have taken a month could, conceivably, be completed in days.
Distributed ledgers have the potential to transform property management. Digital addresses could correspond with physical addresses containing property data such as occupancy, building performance and physical characteristics that are accessible by investors to more effectively manage portfolio risk. Digital title management could materially reduce friction in real estate transactions. Additionally, distributed ledgers enable real-time, asset-level reporting, meeting the growing demand for data by investors and, via consensus mechanisms, could enforce and validate the authenticity of reported figures, without a direct intermediary.
There's enormous potential on the long-term horizon. While we don't expect many operationalized platforms at scale within the next five years, there will likely be many pilots and proof-of-concept activities in the next 24 months.
Dominic Venturo is chief innovation officer at U.S. Bank. He can be reached on Twitter @innov8tr. This information is not intended to be a forecast of future events, a guarantee of future results, a recommendation or solicitation for f any particular product or service, or advice. It is issued without regard to any particular objective or the financial situation of any particular individual.
Corrected September 27, 2016 at 3:04PM: A version of this op-ed first appeared on Linkedin.