Smart watches are making their breakthrough and getting people to monitor their health data. Insurance companies and health care providers are developing new products that utilize customer’s data in the service and pricing. Now Amazon, Alphabet and Apple are interested in the health care business. Telcos must also think through their positions.

I wrote earlier that health data is to smart watches what camera and social sharing is to mobile phones (read more here). It is one important service category, and and a reason people are now buying those products, and companies can start to collect data and use applications to analyze it. For telcos this means increased business in terms of smart watch sales and greater data usage by customers, but telcos might also have more value-added opportunities.

A well-known Silicon Valley investor John Doerr had commented at the Forbes Healthcare conference that Amazon is one of the best positioned firms help customer utilize their data and he expects Amazon to offer services in health care. Amazon published a health care initiative with Berkshire Hathaway and J.P. Morgan Chase earlier this year. In late November Amazon announced its new service Amazon Comprehend Medical that uses machine learning and natural language processing to extract relevant medical information from doctors' notes, clinical trial reports and patient health records.

Apple has its touch point in collecting and analyzing health data in its phones and watches. Google and its parent Alphabet also have already activities in health care areas, although it has also encountered challenges. For example, in the UK, Google DeepMind works with the national health care service, NHS and its use of data has raised many concerns and also a political debate.

Insurance companies are actively utilizing more data. Health data is one important part of this. Many insurance companies already offer price discounts, if a customer e.g. is ready to use a smart watch that then delivers data to the insurance company. The use of data and smart pricing models is one of the most active areas in insurtech.

Health care and health insurance business are globally a huge business. It is not a surprise the tech giants are interested in this business area. Advertising and content business on the internet start to be quite mature businesses and their earning models have their challenges. Fintech, insurtech and health care offer a lot of growth opportunities.

Content business can be a good comparison for digital health care services. There are companies that focus to actually make and produce content. Then we have giants like Netflix, Amazon and Apple, but still in many countries telcos have been able to find a role in this market too. They are near each customer.

Trust and reliability are very important components in health services. Google’s issues with data in the UK are a good example, how companies must be very careful as to what kind of services they offer, how they use data and with whom they work. Based on this year issues, it would be hard to see Facebook having a role in health data. Other tech giants have somewhat similar issues. In many countries regulatory requirements also specif, how the data can be used and where it can be stored (e.g. it cannot be exported to other countries).

Data is a fundamental part of health care. We are still in very early days regarding how it is utilized. Even the devices and censors are not always very accurate to measure, better software is needed to correct and analyze data, and much more services are needed really to utilize the data in actual services. Privacy and user’s control also need new solutions.

Telcos as a local trusted partner have an opportunity to get into this business. It just needs a very careful analysis as to what would be the role, services and partners to offer the service. This will be one of the fastest growing digital business areas.

The article first appeared on Telecom Asia. 

RoboCorp Technologies Inc. is a startup that offers a cloud-based platform for license-free open source robotic process automation (RPA). The company operates in San Francisco and Helsinki. Siili Solutions Plc announced today investment in the company. Grow VC Group is a shareholder in RoboCorp.

The aim of RoboCorp is to disrupt the RPA industry by changing its licensing and delivery models through open source technologies. The company focuses on enabling efficient development and secure deployment of RPA solutions globally through its cloud platform. RPA is a fast growing market, estimated to reach $2.3B in 2019, but the whole market is still today dominated by license based solutions.

RPA is very a crucial technology in digital platforms, data and fintech businesses. It enables to automate processes and also get legacy and new systems to work together without expensive integration work or changes to the legacy systems. “RPA is a key technology to accelerate the use of modern fintech solutions in finance institutions. RoboCorp's cost-effective versatile solutions make it possible to fully realize the potential of RPA in many new applications where it has been earlier too complex or expensive,” comments Jouko Ahvenainen, Grow VC Group Chairman.

RoboCorp already works with selected partners and clients to deliver pilot solutions. The company takes more pilot customers during the next weeks and generally available products come during the first half of 2019. If you are interested to participate in pilots or get more information, please register RoboCorp's' mailing list.

RoboCorp Technologies Inc. press release on January 17, 2019.

Siili Solutions Plc press release on January 17, 2019.

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Blockchain and AI will be important technologies in 2019, and they develop beyond the initial hype stage to real business cases. They also offer significant new opportunities for telcos that have huge ‘distributed’ networks and are near the customers.

Development is fast and carriers need technology partners to catch these opportunities.

Blockchain and AI can be the most significant new technologies in the mobile and internet during the next five years. They can change many internet services, and even the fundamental structures and business models of the current internet services; from very centralized services to much more distributed models.

Let’s focus just on a few opportunities of those technologies for telcos:

1. Distributed AI solutions, e.g., consumer has AI solutions at home and work to assist in work, make shopping and control things.
2. Consumers get better control on their own data. 
3. Blockchain solutions especially for smart contracts and mutual agreements and settlements.

Professor Mahadev Satyanarayanan from Carnegie Mellon University made a strong case at MWC2018 for edge computing and how its time is now. Wikipedia defines edge computing as “a method of optimizing cloud computing systems by performing data processing at the edge of the network, near the source of the data. Reasons to use this local AI is especially bandwidth, latency, privacy, and availability.”

Carriers have an excellent opportunity to have a major role in these local AI and edge technologies and businesses. All devices are linked to carrier’s network and the carriers are in a position to offer services to each consumer near them. But carriers should find a business model to do this, rather than try to do everything themselves.

This has been a year of data breach and privacy scandals. Consumers have also started to see the data in a new way, although attitude changes always take some time. Companies have also had such serious issues that they are starting to realize that data is not only asset, it is also a liability. The time when all companies just tried to collect all data and trade it is over.

Utilizing blockchain

The industry is now seeing a lot of development of totally new data solutions, where consumers and businesses can really own and manage their own data. Many of these utilize blockchain. Carriers can carve out a good position also in this data model disruption when they can offer these new solutions and even storage models for each consumer.

In a way carriers missed the chance to adopt business models that really utilize data, as Google, Amazon and Facebook have done, but now this can be to their benefit. They have more credibility to offer new solutions. But again, the carriers should not do this alone, but with the right technology partners.

Smart contracts can be a more important outcome from blockchain than cryptocurrencies. It is an area where telcos can really offer new solutions to consumers and businesses, but also utilize them for their own business. This can really enable digitization of many services, and mean huge savings in IT and back office costs. It can start from telco’s own customer care and billing systems and end with new ways to also offer financial services to customers.

A challenge for telcos has been often that they try to make too much inhouse. In the services mentioned above, telcos should really take a role to orchestrate the ecosystem with open APIs and truly multiparty open framework. It is also fundamental that telcos have a business model that not only defines how they make money from the ecosystem, but the model also motivates all other parties to invest in and develop the ecosystem. Telcos have destroyed too many previous business opportunities by trying to get too large share to themselves and control everything too much. It is now time to orchestrate things in a new way with these new opportunities.

This article first appeared in Telecom Asia Vision 2019 Supplement.

Money, power and politics have always been linked to each other. The control of banks and finance services is an important way to use power and control macro developments. For example, anti-money laundering measures are an important way to fight terrorism. With FinTech and blockchain ushering in a new phase of finance services, that also means a battle over who will control them.

The US government and financial institutions have had an important role in international finance. Many British and Swiss bank have learned this the hard way, paying billions of dollars in penalties or settlements when the US caught them in money laundering activities or other investment regulation issues. The blocking of Russians banks and money sources of influential Russians has been an important part of sanctions against Russia since the Crimea occupation and East Ukraine war. Russia has also realized this and is trying to develop alternative systems for finance.

The big game will be between China and the USA. On a broader level, this is also a battle between centralized government-controlled systems and more distributed blockchain-based systems. The rise of Chinese FinTech finance services and distributed services are challenging the positions of the US institutions.

UnionPay card services are expanding around the world, initially to serve Chinese tourists. WeChat is also used worldwide,  and its money transfer services are also becoming more global. Alibaba’s Ant Financial Services is a huge business – the highest valued FinTech company in the world, in fact.

New money transfer services and payment services – centralized or distributed – are a threat to SWIFT and credit card networks, which have also been very important to control international finance and money flows. If someone can block card payments and money transfers in a country, they can have a major impact on life and politics in that country.

We now witness trade wars and increasing tensions in international affairs. At the same time, we’re seeing disruption in finance services. Sooner or later governments will also be interested in FinTech services. They have mainly been interested in controlling services in terms of finance regulations, but the political role of these services is also becoming more evident.

We can already expect that Southeast Asia and other emerging markets in Africa will be important areas in the battle of future finance dominance. In those areas, FinTech services can rapidly achieve a key role in financial inclusion of people who have lived without access to traditional finance services like banking or credit cards. These are also areas where China is investing heavily and exerting as much influence as it can.

FinTech companies have become strategically important quite rapidly. They offer access to money and its control that is similar to banks and credit card companies, but with the ability to become global much faster than incumbents. They also collect a lot of data that governments and institutions would love to have access to.

The impact of distributed models is still difficult to evaluate. If governments lose control of money and finance institutions, what is left? The monopoly to collect taxes and use violence are the ultimate tools of governments, but to keep those, they need to monitor money transaction flows and collect tax money.

At the same time, many blockchain visionaries have been too ideological. For all the talk of radical transformations to distributed systems, the old institutions won’t give up their position without a fight, and totally distributed trustless systems and communities are not easy to implement. In the longer run, however, their influence could be really fundamental, once we get past the fancy ICO phase and move on to more serious solutions.

We’ll see a lot of development in FinTech services during the next few years that will challenge the position of banks and other traditional institutions. But it won’t be a battle of market shares and revenue so much as a battle of international politics and strategic positions. We’ll probably see this soon also in FinTech investments. We have already seen how important the control of data and social media can be. The control of finance services and money is even more important. As the digital age ‘Deep Throat’ might say, “Follow the FinTech.”

Follow the money comment: https://en.wikipedia.org/wiki/Follow_the_money

The article first appeared on Disruptive.Asia.

The holiday season is coming after an interesting year in finance and data businesses. This year has been a turning point in many areas: from the fading ICO business to emerging real blockchain solutions, from brutal data monetization to new distributed data models, and fintech window dressing of banks to real fintech services. Grow VC Group has had a good year, several companies have done good progress and we have seen our sustainable long term business approach bring results, at the same time of course, there are also activities we have ramped down to prioritize resources to best areas.

Especially, we like to thank all our customers, partners and supporters. We hope you have now time to take a break, spend time with love ones and also get fresh ideas for the new year.

Season Greetings from Grow VC Group and its companies!

The cloud business is very much dominated by Amazon, Microsoft and Google, although there are many more regional, niche or smaller cloud providers. The push towards edge and serverless computing mean many technical changes for cloud services. It can also change the market, and offer opportunities to other players like telcos.

Current cloud architecture is very centralized, although there are regional clouds. Edge computing is bringing processing nearer the users. Serverless (read my earlier article about serverless) make the actual servers invisible to the users and programmers. Together they bring new abstraction layers, and challenges involving how to implement services and software in the cloud.

The main cloud providers have already launched their serverless services AWS Lambda, Google Cloud Functions and Microsoft Azure Functions, but the market is still in the very early phase. Application developers are just learning how to really utilize the serverless model, and the ecosystem still needs additional components, starting from monitoring functions. But we can see that, for example, in fintech services with open APIs and distributed models, the model can be fundamentally disruptive. It is said the model gives developers the freedom to focus purely on usability and the customer experience, without having to worry about capacity and technology infrastructure details.

The edge (read more here) can especially offer benefits with availability, latency, security and bandwidth. With volumes of data increasing all the time and the proliferation of smart devices and AI, it is hard to process everything in central places. But it is not easy to design an optimal Edge architecture. It is not easy to say what is the optimal place to keep and process data, and even for the same data, it can depend on the situation.

Another issue with Edge is that networks (backbone or mobile) are not designed to fully support these kinds of models. An optimal Edge and serverless utilization should also be considered in the network design, regarding bandwidth, storage, and processing capacity on the different layers and nodes. Now cloud and network providers are separate companies, only this fact makes it complex to optimize.

So, we can say that telcos could be in a good position to offer serverless edge supporting cloud services. The challenge is that telcos don’t really have experience and competence in offering these services. Network vendors also offer some solutions to build cloud services. But they don’t have very strong software competence in this area either. AWS, Microsoft and Google have very strong software competence, and the culture required to get new services fast to users. It is hard to compete with this. At the same time, it is said that edge can change the game so significantly that companies like Amazon and Google that are based on very centralized architecture may face difficulty adapting to the change.

First it sounds like telco and mobile networks are an optimal place to implement edge and serverless services. But it is good to realize, that those services can be done without anything new from carriers and the carriers are only dummy data pipes. This means, for example, models that make users' devices part of the processing and data storage, and cloud providers expanding their offering capacity globally.

Blockchain is the wild card in this development. It can change fundamentally how and where data is stored, but also where the processing is done, and even the fundamentals of internet services to more distributed technology and business model. Blockchain as such doesn’t offer database solutions, but enables new ways to store data and handle access to data. Blockchain processing (often called mining in a certain context) also creates its own needs and requirements for processing and networks.

Changes in cloud services offer opportunities for new providers to offer cloud ecosystem services, and to develop new types services in the cloud. The development pace is now very fast and anyone who wants to be successful in this game must really have top level competence and get new services to users constantly. Some companies still struggle to utilize any cloud, whereas advanced companies are already moving to the next phase of cloud technology. This just demonstrates that all companies must work hard all the time to follow the development of the sector, as it becomes harder and harder to compete with obsolete technology.

The article was first published on Telecom Asia.

Read more about Grow VC Group Serverless Developer Trainee program.

Fintech, blockchain and regulatory changes are driving the finance sector towards a fundamental change. It is not so difficult to predict what will happen so much as when it will happen. History doesn’t repeat itself, but we can get ideas from other industries. So, let’s try to predict what will happen in the finance sector in the foreseeable future.

Before we look ahead, let’s first look back at how changes and disruptions have unfolded in some other industries:

1. TCP/IP came in the 1960s, but it was only in 1990s when it really started to change the world. One factor was, of course, usability – things like World Wide Web and browsers to navigate it. But the change also needed new business models. We can say that technology enables disruption, but new business models implement it. We needed Amazon, Google and many others to disrupt industries.
2. We have seen major changes in many industries during the last 25 years. Let’s look at telecom, media and retail businesses. Many companies, e.g. mid-size companies, have had trouble due to business disruption, but at least the major actors have survived, companies like TimeWarner, Orange, Vodafone, News Corp, WPP, Tesco and many others. However, these incumbent companies haven’t really gained much of a share in new business and revenues – that has gone to companies like Google, Amazon, Apple, Netflix, and Facebook. So, the old hands have saved their basic business, but the real winners have been newcomers in those industries.
3. It has been said many times: “The 1849 gold rush made only few gold miners rich, but it was shovel sellers and service providers that made a fortune.” We have seen this more recently in the mobile app business, for example. A few mobile app companies have struck it rich, but companies like Apple and Google make money from the ecosystem.

When we look at the finance sector, banks obviously play a central role. When we talk about banks, we don’t talk about companies that offer one or a few products – in reality, banks are massive black boxes that offer hundreds or thousands of products, and mix them in a way that often obscures their visibility from outside.

So, when we think about the future of the banks, the thing to consider is not whether banks will survive, but rather which banking services and roles will be relevant in the future and who will offer them. For example, banks have very obsolete IT, ineffective processes and inflexible business models, and these can become obsolete rapidly. But money, assets and positions in finance instruments don’t lose their value overnight.

Based on the preceding observations, we can now make the following predictions:

1. Traditional finance institutions will have a hard time to adapt to the new reality, and there will be new stars in the market – so, leading and agile banks will survive, but there will new companies that will take most of the new business.
2. Distributed models (e.g. blockchain-based solutions) and tokenization will be applied to all asset classes and instruments, including truly digital instruments, smart contracts and smart contract based settlements.
3. Tokenization will come into the mainstream with big traditional asset classes and new digital assets (e.g. digital right management and personal data), not with things like startup equity ICOs.
4. Finance will become a plug-and-play component for many other services. Often, finance is just ‘a tool’ to do something else: buy a house, purchase something online, save for the future, etc. So, it makes sense that finance will be integrated into those services.
5. We’ll see a revolution in finance IT solutions, as new technology and platforms cut IT costs to 1/100th from traditional banking IT. We already now see fast payment and money transfer solutions, full cloud-based finance back offices, e-KYC, and blockchain settlement solutions that are based on modern technology, pay per use business models and global availability.

As mentioned earlier, the hard part to predict is the timing. Change has come slower to the finance sector compared to many other industries, even though all the above-mentioned components are available.

What’s missing is new business models. Some people have compared ICOs to the Year 2000 dotcom bubble, and indeed there are similarities. It is worth remembering that many companies rose from the ashes of the dotcom bubble that now dominate the world. When the ICO bubble bursts, we will really start to see new FinTech and finance companies, and we probably see companies that will have a major role in the finance business for the next few decades.

The article first appeared on Disruptive.Asia.

We had this slogan ‘live your data’ for our data analytics company in 2007. The company was growing, attracted investors and many new people, and especially the new management and marketing people thought the slogan is too abstract and unclear. I think I had quite a lot of responsibility with that slogan. Probably it was too early, but we now are coming to an era that we can say people truly live their data.

Maybe it is still abstract, but let me try to explain the background. We already made very advanced analytics, combining traditional segmentation, machine learning behavior and social network analytics. We also had the very first concepts for ‘distributed’ data and analytics models, for example, how a mobile phone could learn from the user’s behavior and propose and choose things based on their profile, and a user could even have an anonymous avatar to do things online. Some of those things were too early for that market and technology.

The point of the slogan was that data is becoming a fundamental part of each person’s life. Your data influences your life, your data helps you to live your life and your data can even do things on your behalf. Data is really taking a fundamental role in your life. But, you need tools to control, utilize and manage it, or other people will manage and use it to drive your life.

Now we see this clearer than in 2007. Your finance data very much controls your financial opportunities. Your social media profiles and data create your public image. Your purchase history data determines what kinds of offers and pricing you get. Your health care, and now even real time wellbeing and exercising data, defines your insurance policy and pricing. You live your data.

We have also seen the negative side of this. If someone steals your data, he or she can literally live your life after the identity theft. If someone is able to modify your data, it can change your life drastically, e.g., result in a bad credit score or cause troubles at immigration, or you can even become a terrorist based on your data. You live your data.

We see countries and governments that start to collect all kinds of data not only for credit scoring people, but scoring their reliability and ‘citizenship’. If your data tells that you are not a good citizen, your life can suddenly become much more difficult. You live your data.

Now we are really at a point that we must get control on our own data. There have been enough scandals about data misuse, theft and trading. We are also in a point where legislators, regulators and technology are driving new models to own, manage and use data.

We already see new solutions where people can start to manage their own health care (e.g. MedRec and Patientory) and finance (e.g. Prifina) data. They are still early phase companies and models, but the change has started. Telcos are near consumers and their data, they should also think about how to help their customers embrace a new way to manage data. There are also many more plans about distributed data models, e.g. a social network that doesn’t own data, but just enables people to show their posts (data) to their friends, or a personal AI that helps to find relevant things.

In 2007 we finally started to use ‘data is the black gold of 21st century’ slogan and dumped the ‘live your data’ slogan. The black gold slogan became very popular and many parties have used different versions of that since then. Now this old slogan came to mind at a time when I feel we really are moving from the data as oil era, to the data drives your life era.

Personal coaches and psychologist give advice, how to get your personal life under control. Now we need coaches and tools to take our data into our own control. Live your data, or someone else lives it. And, by the way, your data lives much longer than you.

​The article first appeared on Telecom Asia.

Traditional finance institutions often question and criticize the new finance models enabled by FinTech, using the excuse that banks are heavily regulated and must manage risks and protect their reputations. Yet the banking sector has more than its fair share of scandals – Danske Bank and Wells Fargo being two very recent examples – where regulations are bent or broken, putting their reputation and bottom line at risk (not to mention the careers of the people involved).

Perhaps now is a good time for them to wake up to reality?

Around 15 months ago I talked with a person at Danske Bank who works with digitization. I tried to get him to talk with some of our companies to implement truly digital processes. His comment was that he doesn’t talk with companies that use clouds because they are too risky. Another Danske person from wealth management gave me a lecture about how it’s easy for startups to use new technology – e.g. for KYC and AML and digital processes – but banks must really focus on regulation, reputation and risk management. Now we are reading that dozens of billions dollars (estimates of total exposure range from $30 billion to $240 billion) has been laundered through Danske.

Meanwhile, we’ve seen the news that Wells Fargo employees created millions of fake customer accounts to fulfill their targets. It was not very clear who initiated this practice, but it was basically motivated by pressure to hit targets and earn bonuses. Wells Fargo has also had other issues with things like modified mortgages, delayed payment fees (although the delays were their fault) and overcharging of credit card payments. Several management and lower-ranking staff were forced to leave the bank, and the firm has announced 26,000 job cuts.

When I recently spoke to a finance sector consultant in London about FinTech and wealth management, he commented to me: “It is clear the Swiss wealth management business struggles when it has been based on money laundering and tax avoidance, and now many governments have put pressure on it.” People also question more and more what these well-paid guys who offer coffee and lunches are really doing to offer value for their high management fees. Data analytics and AI can replace a significant part of portfolio management with lower fees, although it’s questionable if even AI can get those expensive lunches and dinners under control.

I was recently speaking at a FinTech panel in Silicon Valley and one fellow panelist – a venture capitalist – made a comment that “KYC is a funny thing – if you take a billion dollars in a suitcase to a bank in Switzerland or London, and you have traces of cocaine and blood in your suitcases, they find a way to pass the KYC, but if you are a foreign worker with a few hundred dollar salary, you are in trouble with KYC.”

Big risk hubs

Regulation seems to be a recurring argument traditional finance institutions use to protect their own positions. At least, people in the organizations seem to believe that. But in reality it is not so clear – many regulators have also seen that traditional finance institutions are big risk hubs and that’s why we have things like PSD2 and FinTech sandboxes. The cases above are only some examples – there are many others, so it’s fair to question how much talking about regulation and reputation is hypocrisy.

It is easy to list all kinds of risks and uncertainty with new technologies, crypto and blockchain models, and how machines could handle KYC, AML and portfolio management. They also like to argue that customers are keen to have a human touch in the services. But do you really feel you have a human touch when you call a bank call center, end up in a call queue for half an hour, and when you’re finally connected to the human, you realize he/she is reading standard answers from a screen?

It is said that if someone invented bank notes today, they would be illegal because they would be too risky to use. People are always skeptical with new things. At the same time, concern, skepticism and risks never stop development, especially when new solutions are just so much more effective and offer new opportunities. It is the same with finance services. When distributed models, FinTech and AI come to finance, old institutions either adapt or lose a significant part of their business.

We can already see, for example, cloud back offices and IT that cut the IT costs to 1/100th of traditional banking IT. When these come to the mainstream, this will be quite disruptive, and we will see thousands of new finance services that are not only more cost-effective, but also can offer better tools to manage money, find optimal loans and provide a better customer experience. Expensive IT is no longer a barrier to entry.

Probably AI is also more resistant to all the hypocritical talk about regulation while the other eye is closed to suspicious transactions and customers. Data analytics, AI and RegTech will be the new tools of regulators. No system is perfect, but when machines manage the process and there are audit logs and document history of yellow and red flags, it is harder to bypass processes.

We are headed for a new finance services reality, and traditional finance institutions can no longer hide behind the window dressing of regulation, reputation and risk management. They need to face reality and decide their next move. They can either fight and defend the old castle till the very last man, or start a journey to a new land.

The article first appeared on Disruptive.Asia.