BAI Podcast: The future of digital banking

technology-1.jpgBack in February, I was featured on BAI‘s podcast.  Lou Carlozo and I spoke about the impact that high-tech innovations from artificial intelligence to implantables are having on the banking industry.

If you missed it, you can check it out here.


Finaguide Podcast

On the same week that I was featured at’s podcast, my friends at Finaguide released an interview with me as well for their own podcast.Web_1.jpg

At this moment, it doesn’t show on their website, but it is available on iTunes, Stitcher, GooglePlay, and TuneIn.

On this podcast we talk about my career arc, banking technology, fintech, and the mysterious fintechmafia. Podcast

Last week featured me in their podcast. ts-podcast-alex-260x146.jpg As they note, they’ve been “interviewing top thought leaders, executives, entrepreneurs and technologists actively making the future of finance a reality.”

I am very thankful for the opportunity to talk about my career, the influence of technology in banking, payments, fintech, and innovation.  The one slight correction I have to their notes is that I’m not with Zions Bank, but with their parent company Zions Bancorporation.

If you missed it you can check it out here.

How do you define innovation?


One of the coolest things about Social Media, and Twitter specifically, is how some conversations can happen with people around the world that don’t know each other. This is a frequent happenstance in the Twitter fintech community.

A couple of weeks ago, I wrote a blog post that tried to define concrete steps in setting up an “Innovation Lab” in an existing organization that hadn’t had experience in this area. The post was well-received, and shared by many of my friends in fintech such as Spiros Margaris. Spiros’ share began a conversation featuring Ajit Tripathi and Nigel Walsh in London, Mitja Ucakar in Slovenia, and myself.

To see the conversation click here.

Your organization has decided to launch an “Innovation Lab” and they have assigned you to run it. Now what?

Fueled by the success of disrupting technology and innovative startups, organizations of all sizes and from vastly different industries are jumping on the innovation bandwagon. Most commonly, organizations that haven’t viewed innovation as a strategic imperative seem to be at a loss as to how to roll out “innovation.” Badly defined innovation programs are doomed to fail. For some organizations innovation is ideation or simply brainstorming. Even if new ideas are formulated, they have no idea how to move forward. Like everything that involves humans, innovation is a process that should be introduced and managed as a defined process.


Common issues with implementing new innovation function in already established organizations include failure to integrate innovation into the business’ existing strategy, and a culture mismatch between the function and the rest of the business. An innovation roll out should be within a framework that combines standard strategic planning with enough engagement of stakeholders including internal teams, and customer advisory groups.

There are many ways to frame an innovation program, but here is one example of a framework for a new innovation program:

Definition of goals
Working with the executive team, the innovation leader clearly articulates the objectives of the lab or program (strategy, revenue, adding capability, PR, etc.) and maps out how they will support the organization’s strategy. The innovation leader adjusts the objectives with executive partners regularly to ensure alignment with the rest of the organization. For each objective, there is a well defined set of metrics and goals to quantify the progress of the overall program.
Formalization of roles and responsibilities
The innovation leader puts together a governance team (e.g., steering committee, advisory committee) that provides guidance for the innovation program, ensuring collaboration of all stakeholders. Initially, the governance team meets as major milestones in the process are completed (e.g., prioritization of initiatives, proof-of-concept completion, change in objectives/priorities). As the innovation function process matures and a portfolio of initiatives are running in parallel, the governance team meets regularly.

Formation of a working group
Whether the program has its own dedicated staff, or borrows resources from existing teams, the organization assigns a working group that forms the core of the innovation program. The make up of the working group depends on the kind of company, but it should include key people throughout the organization to garner organizational respect.

Definition of problems, not symptoms, to address
Killer ideas won’t develop until problems to “tackle” are defined. The innovation leader, along with the working group, holds interviews with individuals, have discussions with groups, and perform (or obtain) research to identify problems and pain-points that might be candidates for resolution through innovation. The team performs causal analysis of potential problems to tackle to ensure that the root of problems rather than just symptoms are identified. As in any problem-solving process, the team analyzes problems identified, in conjunction with performing SWOT and market analysis, and complete a draft prioritization.

The innovation lab shares prioritization with the governance team to gain agreement on moving to the next step. After the initial phase of the innovation program, the team continues to have “discovery” interviews, group discussions, and perform research to keep the list of problems up-to-date and reprioritized.

A well defined problem statement leads to many possible solutions. Once candidate problems are identified, the team holds working sessions or group discussions with internal and external stakeholders to define possible solutions to the identified problems.

There are many methods one can use to arrive at possible solutions. For example, I have seen the KJ-Method work many times. However, an organization should examine which approach makes the most sense for their team. These sessions will result in draft solutions that may only include rough drafts that the innovation team will develop further in later steps.

Drafting of plans
The working team examines solutions produced during ideation and develop a plan with the help of the appropriate partners in areas such as product, development, and other applicable areas (which could change based on the recommendation). The plan includes proof-of-concept (POC) and resource requirements, a timeline, business metrics, initiative roles and responsibilities, change control plans, and a guiding organization.

Performing POC/Prototype
The innovation leader presents any plans for a new POC or prototype to the governance team. After gaining agreement, the innovation leader works with partners to assemble the team and oversee project management including technical design and development of prototype, testing, and gap analysis against estimates. At completion of the POC, the innovation leader shares results with the governance team and other stakeholders, if appropriate. The review includes a performance of the POC against metrics, and an updated business case. The governance team evaluates the outcome of the POC and decide whether to end, continue, or amend it.

Planing for a full development of solution
Upon reaching a decision to move forward to a full roll-out of the solution, the innovation leader works together with the appropriate executives and the project team to develop a plan to scale-up the prototype. The appropriate product development teams take a lead in the completion of the development.

A framework like the one described should be iterative and evolve with time, but the basic steps should remain.

Inspiration alone does not make up the process of innovation, and businesses should execute innovations as they would any other process within the organization. The popular myth is that innovation is about the “Eureka!” moment. Innovation doesn’t just happen. Thomas Edison tested 6,000 different kind of filaments on his way to invent the commercially viable home light bulb. His many innovations were the result of painstaking processes, and not just inspiration. Organizations should take that into consideration when setting up innovation labs, and not just name someone their innovation czar and hope that inspiration strikes.  We are well served to remember that great innovations are the result of painstaking processes that started with inspiration.

Stop trying to centralize my blockchain

Stop trying to centralize my blockchain

The topic of blockchain drew the most discussion in Fintech for 2015, not THE bitcoin blockchain but just the general concept of a shared distributed public ledger.  Financial institutions (FIs) have varied views about what blockchain technology can mean to them.  For some FIs, blockchain has warranted serious exploration and investment.  According to the Aite Group, financial institutions spent an estimated $75 million on the technology in 2015chain-gang

For many FIs, however, blockchain’s definition and function remains elusive.  Recently, I had a discussion with a bank executive who wanted to know how they could use blockchain technology to develop a centralized, private, and encrypted ledger.  He understood the blockchain as a new technology that his bank could mold and, in essence, use to enhance the current banking models.  Blockchain defies centralization, but may be private and encrypted in some fashion.

It’s design as a distributed ledger, as opposed to a centralized ledger, makes blockchain especially intriguing.  (Distributed means that every participant in the blockchain has the same exact version of the ledger all the time.)  Mike Gault, Founder and CEO of Guardtime writing in re/code puts it this way:

Imagine that you’re walking down a crowded city street, and a piano falls from the sky. As dozens of people turn to watch, the piano crashes down right in the middle of the street.

Then, without a second to lose, every person who witnessed the event is strapped to a lie detector and recounts exactly what they saw. They all tell precisely the same story, down to the letter.

Is there any doubt that the piano fell from the sky?

Because everyone participating in a blockchain has the same version of the ledger, participants do not need to refer to a single, central copy, which the current models require.  Improved efficiencies result from having a distributed ledger.  For example, in capital markets settlement of a stock transaction takes three days.  With a blockchain design, such process could take place much faster.  The distributed nature of a blockchain would eliminate the need to have all the “witnesses” corroborate their accounts of the piano accident.  Such design would eliminate disputes, making processes more efficient.

While a blockchain can be private (not open to the world to see), it has to remain public to all the participants in a blockchain.  A blockchain’s distributed nature can only remain if it stays transparent.  If FIs remove the transparency of a blockchain by making it visible only to particular participants, such as to the FI, they just replicate the existing models.  This approach misses the point of a blockchain.

Blockchain purists argue that the essence of a blockchain’s distribution lies in its total transparency,  and that its recorded events must remain entirely visible to everyone, whether they participate in part of that specific blockchain or not.  While they have a point, limited access can enforce a level of privacy.  For example, the bitcoin blockchain is theoretically public, yet if someone doesn’t participate in bitcoin, they don’t have access to the ledger.

The contents of a blockchain can be encrypted but if the deciphering keys remain under central control, once again they are replicating existing models.  For a blockchain to remain functional as a distributed ledger, all the participants in a blockchain need to be able to decipher its contents.  Naturally, FIs have a desire for encryption in order to ensure that only participants in a blockchain have access, but that must not interfere with what makes a distributed ledger attractive. 

In the case of the piano accident, a blockchain allows for all witnesses to have a complete and identical account of the incident, while limiting it only to participants, thereby assuring privacy.  Applying privacy controls or encryption to the accounts of the accident limits the ability to ensure identical stories, and would make the blockchain design ineffective.

As FIs consider the use of blockchain technology, they should be careful not to bring the current models into the discussion.  FIs should start with a goal in mind and determine how a blockchain might help them achieve that goal.

FIs looking for improvements in processing times need to define new processes that remove the inefficiencies of current models.  For example, Nasdaq Linq (a blockchain for capital markets) promises significant improvements due to shorter timelines.  The latest results show that trade clearing and settlement time is being reduced from three days to less than 10 minutes.  Such time reduction also reduces risk exposure (the possibility that funds won’t be available to cover the purchase by the time of settlement) by 99%.

FIs also need to identify the participants in these new models and include them in the design process.There are at least two major industry groups that exemplify this approach.  The partnership between R3, a blockchain startup, and 30 or so major banks including Citi, Bank of America, and HSBC, seek to build a real time fund transfer network.  A consortium headed by Digital Assets Holding’s Hyperledger, IBM, Cisco, Intel, the London Stock Exchange, and several banks is working on various use cases for blockchain.

As FIs look at these new models which include some level of openness in comparison to current models, they need to come to terms with balancing transparency and security.  Also, they must consider what value FIs can bring to a blockchain model as well as any revenues they may need to replace.  As the industry moves forward in adopting blockchain technology, FIs will need to answer these questions.

The question of future regulations still remain, and warrants a separate discussion.

A version of this post was published by Irish Tech News under the title “Hey you!  Leave my blockchain alone.  Why blockchain doesn’t need centralising” on January 29th, 2016.