For a former Amazon leader, data transparency in banking has clear advantages
The connections between Egyptian high priests, medieval bloodletters and 21st Century data scientists might seem extremely remote at best. But leave it to the former chief scientist at Amazon, Andreas Weigend, to make the connection.
So hold on and follow Weigend’s compelling trip through financial time:
“Who were the people who had wealth 3,000 years ago? It was the high priests because they made predictions about the flooding of the Nile, many years out. And in the Middle Ages the predictions came through bloodletting and religion. But again, it was over a long time scale and difficult to verify. And today that’s where we put our money: long time scale, uncertain outcome,” such as the stock market.
By contrast, leveraging consumer data can help people save money and build wealth in real time, and it can help financial institutions bolster customer loyalty. But when people unconsciously put all the control of data in someone else’s hands, it takes their power away, he contends.
“Most people don’t think about themselves as a digital organization,” says Weigend, a featured speaker at BAI Beacon 2018. Nor do they think of banks as potential partners in what he calls a “symmetrical relationship.”
“If you ask about trends, what is the core functionality a bank needs to provide?” It is, Weigend says, allowing users to access their data and share it—while the banks do all they can to help customers use it in the right way, and make the best of all the bank has to offer as well.
Dialing in from Hong Kong, Weigend shared his views on data as they relate to consumers and large institutions. Take note: Weigand doesn’t hold the same activist bent that made headlines in the wake of Facebook’s recent troubles.
BAI: Let’s start with Facebook’s Cambridge Analytica debacle. Some have called for Facebook to pay users for their data. But you see things differently.
Andreas Weigend: I find it annoying [that people] are now saying Facebook should pay you for your valuable data. Why should they? Instead, I’d like to pay Facebook in exchange for using their platform—and stay in control of my data. I wrote a piece in the Los Angeles Times last year that stressed if you were to divide all of Facebook’s profits by the two billion people who use it, it would come to $5. That’s just enough to buy a latte at Starbucks.
BAI: Also last year, you released a powerful book called “Data for the People,” which discusses what you call the era of “post privacy,” but for an individual’s good. Help us understand how this might relate to a common banking situation.
Weigend: I am a big fan of empowering the user. Let’s say I have one bank and change to another bank based on more favorable rates, for example. They could ask me to fax in bank statements, but I could alter them or even fake them with Photoshop. So the right to port your data is a function of blockchain and encryption. Blockchain provides the organization with an immutable history: You cannot change or alter it. If you want to share your data with someone, you can give them the key. But otherwise it’s your data and you decide.
BAI: It sounds like this calls for transparency on both the bank and client side. Are there any instances of fintechs getting it right—of making the most of data in a way that maximizes customer benefit?
Weigend: A wonderful example is run by Mike Sha, the co-founder and CEO of SigFig. You give SigFig your brokerage account and a read-only password. They can now analyze your portfolio across different brokerages. What’s really, really exciting is that people knowing and willingly volunteer their passwords and user names. And I love that idea: To get insights into their own behavior, people give Sig Fig access to their own data. That allows them to compare performance: “Andreas, are you aware that you paid twice as much for your trades as the average at your bank?”
By sharing data the individual gets empowered and transparency is created—whether the main institution wants it or not. The customer wants that transparency and the technology forces the transparency. I think that’s awesome. Creating transparency is really the way to move.
BAI: But what if consumers are uncomfortable volunteering their data?
Weigend: Let’s say I got in a cab and the driver asked me, “Where do you want to go?” And I replied, “That’s my personal information. I don’t want to give that out.” You can what guess what happened: The ride didn’t get very far. [Laughs.]
BAI: You believe that in the long run, banks will have to embrace transparency. Some are clearly headed in that direction. But where that isn’t the case, what do you see going on?
Weigend: Overall, we have to change our mindset to helping people. Data literacy is an important goal—and banks can play a role in educating people.
Dr. Andreas Weigend is an expert on big data, consumer behavior and social-mobile technologies, the combination of which he calls the Social Data Revolution. His recent clients include Alibaba, BMW, Deutsche Telekom, GE, Hyatt, Lufthansa, MasterCard, Tencent and the World Economic Forum. Andreas teaches at UC Berkeley and at Fudan in Shanghai. He lives in San Francisco and on weigend.com/where.
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Lou Carlozo is the managing editor at BAI.