As Health meets Wealth, can Wisdom be far behind?

Today as fitbit prepares to float on the New York Stock exchange, after which it could reportedly be worth an estimated $4.1bn, I thought I’d reflect on the further convergence happening between the health and wealth markets and the need for greater wisdom that these trends entail.

I first started monitoring the convergence of Health and Wealth back in 2010, when we added Mobile Health to our Digital Money knowledge fabric, as the two industries showed important signs of pulling together. This year an estimated 500 million people could be using smartphone apps that are health related.




Of course health-related functionality need not be delivered on a smartphone alone. As fitbit goes public, the wearables market has grown by 200% from last year and is currently an area that connects people of all ages and income groups. The recent darling of this industry is of course the Apple Watch, which brings together health and wealth applications with a potential and scale that I don’t recall seeing ever before. Convergence is the name of the game, as it has been for the last decade and more, as multiple functionalities converge around connected and increasingly mobile devices and the Internet of Things becomes a reality.


As regards Wealth, another thing that connects all of us is the need to save and spend, an area we at Shift Thought have scoped out at great depth under the term “Digital Money”, a tapestry that connects up digital banking, digital wallets, digital networks, digital payments, digital services and digital technologies. As 15 billion connected devices grow to 50 billion over the next 5 years this brings a host of new opportunities, but also risks. The cyber security potential data loss could jump from $113 billion to $3 trillion by 2019, according to a report just out.


However making sense of transactions from different areas relating to Health and Wealth works only when it is possible to link it all in Big Data and create profiles, to piece together data points so as to put knowledge to use in marketing and offer creation. In 2011, the Google Wallet launched with a radically new business model that leveraged customer data to create appropriate offers that could be delivered to our mobile devices in real time, rather than relying on charges to customers or even fees to merchants. As the Great Recession continues to bite, trading of data for goods and services has seemed to be an increasingly acceptable thing to do for consumers, especially Millenials.


I start to wonder about all the implications this could have. Can we be complacent about giving out our mobile numbers and email addresses as we’ve done in the past? A mobile number is a well-respected “handle” for communication today, and both the joys and consequences of this are generally speaking properly appreciated by people of all ages. However there could be unintended consequences that could rise from the use of our mobile number as a handle to financial services, although I hasten to add that this in no way detracts from the important role I appreciate it must continue to play in this.


Our mobile number continues to become increasingly important in our lives today, and also starts to become a surrogate for use with regards to financial services. It seems to me that this piece of information about us could become as precious, if not more, than our bank account number. Should we then get more concerned about who knows this commonly shared detail about each of us? And of course, our email addresses are also highly important “hooks” to us that raise similar questions.


Both these forms of identification have captured the imagination when it comes to reducing friction in payments. A payments expert I was recently speaking to mentioned that after the introduction of IBAN, it’s even harder to remember our bank account, so people greatly welcome sending money to a mobile number. This ultimately boils down to sending money to a name in the phone book, that we believe is associated with the person or company associated with the money transfer or digital payment.


This for me raises the question of assumptions we make regarding data that needs to be kept secure and currently regarded as candidates for the “secure element”, whether on SIM or embedded Secure Element (eSE) or on the cloud with HCE (Host Card Emulation). When we divide up “secure and inaccessible” areas on our smartphone from “accessible” areas, and design our mobile apps and functionality, we need to build in and test for additional security in all stages of the life cycle of connected bits of data. For instance, could someone substitute the mobile number of the person I know as “Mum” for that belonging to a criminal at some stage between my device and the cloud, in one of the myriads of incarnations of our now highly backed-up, transferred and accessible phone book?


The convergence that technology is making possible has wide implications and potential for Retail and Marketing, to grow more mature in their use of data about us. However this may need to be matched by greater sophistication and wisdom in the design and testing in the growing FinTech area, as well as a more integrated approach from regulators and a heightened consumer awareness that guides what we share about ourselves, at each stage and in different areas of our lives.


Charmaine Oak, Author of The Digital Money Game, co-author Virtual Currencies – From Secrecy to Safety

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Citi’s view on being a global digital bank


Today I am delighted to share highlights of my interview with Aditya Menon, Managing Director, Digital Strategy at Citi. Citi is one of the largest banks in the world and has long been at the forefront of innovation.

Aditya Menon explains why the bank, already known as the world’s leading digital bank is focusing now on simply being the best bank, backed by the power of technology. We learn of the journey over 2014 and how this is likely to further play out over 2015.




Aditya, I am excited at this opportunity to benefit from your deep knowledge on trends in global digital banking and especially delve deeper into developments in the US and India markets. Could we please start with a bit of background about your remit and the deep experience you have in payments?


As Managing Director, Global Digital Strategy at Citi I work on Citi’s global digital strategy for stakeholders in our consumer bank including card and Citi retail services in the US.

We do 3 things for our internal stakeholders. Firstly we assist them to formulate their digital strategy, particularly on payments, commerce, capability and technology. Secondly, an area in which I am most involved in is informing on the digital capability we need to grow and compete with banks and non-banks. Thirdly, we define and drive alignment around key strategic initiatives including key digital metrics and KPIs – both internally and against competitors.


Citi plays so many different roles around the world in Corporate Finance, Retail Banking, Investment Banking and more. How does your digital strategy support all these areas?


There are three key strategic imperatives for us to deliver on:

  • Firstly we must be Customer Centric and from a digital perspective this requires that we track metrics such as net promoter score, to recognise and reward the segments we want to serve with valuable personalized services.
  • Secondly this must be Globally Common. Globally, we serve approximately 200 million client accounts and operate in more than 100 countries. The challenge we address is to deliver globally common services across all these markets. For instance, taking the example of high net worth individuals, they do have certain globally common needs that we identify and help address.
  • Thirdly, it is about being Digitally Connected and creating digital partnerships. We see financial flows are digitising and we need to be in the middle of those flows, to drive greater access to our core products through digital channels and strategic partnerships.

For each of the three areas we have launched initiatives that help us to further enable our core business, go beyond the core and finally, drive innovation by creating disruption.


What led you to select this digital strategy for Citi?


At Citi we studied how digital disruptions eroded value across multiple industries including news, travel, video, music and advertising. Across these industries we found that over 10 years there could be a substantial market share shift. If we take year zero as being peak of physical manifestation of an industry, we saw a typical trend play out for each. An initial gradual decline was followed by an inflection point between year 2 to 4 and then a rapid transition from physical to digital.

In most of these industries the disruptor was not one of the incumbents. In most cases the total revenue of the entire industry declined over time due to disruption and commoditisation and revenues never really returned to the earlier peaks. This is interesting as it means that fewer players at end of year ten have to share a smaller pie and a number of incumbents make a loss.

Extrapolation to US retail banking made it clear to us what strategy we had to adopt.

We then extrapolated to see what this could mean for the US retail banking industry. We expect to see a substantial share shift over 10 years. Looking at payment and retail banking industries separately we expect retail banking to see even more disruption than payments in terms of value.

Our conclusion is that over 10 years the laggards could lose a major share of their revenues and profits, while leaders will gain moderately. So clearly it pays to be a leader, and as a laggard one could get into a vicious cycle which takes you down a point of no return.

We concluded that Citi must therefore rapidly enact a strategy that would help to best position our bank with respect to the digital disruption trends across the world.


What are some of the important ways this strategy was enabled by Citi in 2014?


Our strategy of globally common enablers has led to the launch of our award-winning retail banking mobile app that we deploy globally. In the area of corporate banking our Citi Velocity digital platform is the world leading FX trading app in terms of volume and value. We also have CitiDirect BE Mobile, which allows our corporate treasurers to use our payments infrastructure to complete payments anywhere.

With respect to driving disruptive innovation, we have brought out the Citi Wallet in partnership with MasterCard. We were also one of the first banks to launch with Apple Pay. The strategy played out in many ways across the world. For instance we launched a contextual offer and wallet platform in Hong Kong that went beyond the ordinary, to create contextual experience using location based services.


I am curious, considering Citi’s size and global footprint, how do you still manage to achieve high levels of innovation?


We place a lot of importance on innovation through a number of initiatives, of which one example is our Citi mobile challenge initiative.

Our US challenge in December was a great success and we just kicked off the same challenge in EMEA.

We have already got innovation labs set up around the world and the work there feeds into our business of crafting new services for the future. For instance our innovative work with our API opens up transformative potential through third party development.


Over 2014 what were some factors blocking the progress of money going digital?


This has continued to be a time when financial institutions must transform themselves in line with the demands of the economy and to support evolving consumer needs. This involves considerable rebalancing within the business.

Regulatory pressures and the need to balance AML requirements and security against innovation and superior consumer experience continues to make this process challenging.


From Shift Thought’s recent work in India we identify it as one of the most complex, yet promising markets for digital money. Please could you share your thoughts on this?


In the Indian market the regulator helped to create clear and transparent regulations for mobile banking, prepaid and agent banking. To my mind we have the clearest set of regulations that exist for digital payments and money anywhere in the world.

Although early services did not take off as the initial players in this space found it hard to sustain repeat usage as customers had no way to cash out But more recently, after giving banks and nonbanks a chance, what has lifted off well is the NPCI IMPS project. There has been steady growth in mobile-to-mobile payments.


What has worked well for India and what are some things the market may not have anticipated?


Perhaps one thing unique to implementation in the Indian market that was a unique requirement, but turned out to be a bit of a sticking point for adoption, is the centricity and early introduction of MMID. To my mind this could be the biggest barrier to adoption, a point I’ve raised in public forums recently.

Regarding unintended consequences, one interesting trend we’re observing is the use of the services for cash to bank account transfer. Consumers are starting to give cash to the banking agents who help to deposit this into their accounts. This use case is seeing a huge volume and value traction over NPCI rails.


What is the key development you expect in India over 2015?


Earlier in 2014, regulators asked for a new kind of institution to be created, that of a payment bank.

Alternate networks did not really work so this new type is expected to greatly help in getting subsidy programs and other important initiatives off the ground. This requires the creation of a massive number of bank accounts through a business model that works with lean 1% commissions to offer services to people who may be on or below the poverty line.

Half a dozen payment banks could be created in the near future and a number of telcos have applied for this. Under this new scheme payment banks will be permitted to operate savings and current accounts but will not be allowed to lend, thereby opening up the possibility of partnerships with scheduled commercial banks.


Aditya thanks so much for taking the time to so generously share with us your thoughts and findings. I have personally benefited so much from these discussions with you over the years and I take this opportunity to wish you every success in your plans in 2015 and beyond.


imageAditya Menon is Managing Director, Global Digital Strategy at Citi.

A pioneer in the field of payments and a true entrepreneur, Aditya has helped to shape mobile payments through his work at Obopay and Yes Bank Ltd. Aditya is hailed as a visionary leader who can inspire teams to deliver their best.