The Alan Turing Institute: Human-centric?

A slightly dispiriting day at The Alan Turing Institute 'Financial Summit', yesterday, I'm afraid to say. 

The ATI itself represents a grand vision and stunning organisational achievement - to act as a forum for focusing Britain's data scientists on the great problems of the world. Naturally, this leaves it open to attempts at 'capture' by all the usual vested interests, and its broad remit means that it must reflect the usual struggle between individuals and organisations and between 'facilitators', who exist to solve their customers problems, and 'institutions', who exist to solve their own problems at their customers' expense. 

And of course, it's the institutions that have most of the money - not to mention the data problems - so I can see, too, why the ATI advertises its purpose to institutions as "the convener of a multidisciplinary approach to the development of 'big data' and algorithms". It's true also, that there are global and social issues that transcend the individual and are valid targets for data scientists in combination with other specialists. 

But it was concerning that an apparently neutral event should seem predicated on a supplier-led vision of what is right for humans, rather than actually engineering from the human outward - to enable a world in which you to control what you buy and from whom by reference to the data you generate rather than by approximating you to a model or profile. Similarly, it was troubling to see a heavy emphasis in the research suggestions on how to enable big businesses to better employ the data science community in improving their ability to crunch data on customers for commercial exploitation.  

To be fair, there were warning signs posted for the assembled throng of banks, insurers and investment managers - in the FCA's presentation on its dedication to competition through its Innovation Hub; a presentation on the nature and value of privacy itself; and salutary lessons from a pioneer of loyalty programmes on the 'bear traps' of customer rejection on privacy grounds and consumers' desire for increasing control over the commercial use of our data. The director's slides also featured the work of Danezis and others on privacy-friendly smart metering and a reference to the need to be human-centric.  

But inverting the institutional narrative to a truly human-centric one would transform the supplier's data challenge into one of organising its product data to be found by consumers' machines that are searching open databases for solutions based on actual behaviour - open data spiders, as it were  - rather than sifting through ever larger datasets in search of the 'more predictive' customer profile to determine how it wastes spends its marketing budget.

Personally, I don't find much inspiration in the goal of enabling banks, insurers and other financial institutions to unite the data in their legacy systems to improve the 'predictive' nature of the various models they deploy, whether for wholesale or retail exploitation, and I'm sure delegates faced with such missions are mulling career changes. Indeed, one delegate lightened the mood with a reference to 'Conway's Law' (that interoperability failures in software within a business simply reflects the disjointed structure of the organisation itself). But it was clear that financial institutions would rather leave this as an IT problem than re-align their various silos and business processes to reflect their customers' end-to-end activities. There is also a continuing failure to recognise that most financial services are but a small step in the supply chain, after all. I mean, consider the financial services implications of using distributed ledgers to power the entertainment industry, for example... 

When queried after the event as to whose role it was to provide the 'voice of the customer', the response was that the ATI does not see itself as representing consumers' or citizens' interests in particular. That much is clear. But if it is to be just a neutral 'convenor' then nor should the ATI allow itself to be positioned as representing the suppliers in their use and development of 'big data' tools - certainly not with £42m of taxpayer funding. 

At any rate, in my view, the interests of human beings cannot simply be left to a few of the disciplines that the ATI aims to convene along side the data scientists - such as regulators, lawyers, compliance folk or identity providers. The ATI itself must be human-centric if we are to keep humans at the heart of technology.

Building Societies Abandon The Lending Code

A new version of the Lending Code has been released, simply omitting the name of the Building Societies Association which has ceased sponsoring the farcical idea that UK retail lenders should be allowed to regulate themselves.

Banks and credit card issuers still think it's a good idea though...

Heap's Giant Leap!

Another great discussion about distributed ledgers, this time focused on the music sector, hosted by the Copyright Hub at the Digital Catapult. A quick summary of the discussion along Chatham House lines to protect the innocent.

By now it's clear that people in different sectors are encountering very similar issues that might be solved by distributed ledgers, but each sector tends to have a different set of priorities that might mean one is faster to take advantage of the technology. The fact that the first solutions have been alternative currencies tells you that proponents of distributed ledgers are not shy of a challenge. Now music is to get the same treatment with key events this Friday and Saturday night featuring the release of Imogen Heap's song "Tiny Human" into a distributed ledger for 'hackers' to attempt to spoil the party, followed by a live Saturday night post mortem on what could be improved. No doubt future events will try to perfect the process.

Why music? 

The problems in the music industry (and most other segments of the entertainment market) are pretty well-rehearsed, with just about every stakeholder group (except the consumers, these days) split over whether digital technology is helping all the participants strike the right bargain or robbing them blind. The revenue flows (or lack of them) have been the subject of constant disruption from internet technology, with the advent of P2P file-sharing via Kazaa in 2001 and rewards-based crowdfunding through Artistshare in 2003.

But bigger obstacles to reaching a better settlement for all concerned lie in the notorious lack of data about who really created and/or worked on various tracks and albums; or even about what's really in many 'back catalogues'. Then there's the secrecy surrounding licensing/royalty deals and the snail's pace of royalty collection/distribution - not to mention who sampled what; whether a performance and related video was a private family affair or an attempt to build a public-facing YouTube channel; hacking digital rights management software; and file-sharing. 

A lot of these issues go away if you just focus on creating and dealing with new music in a more efficient way. And few of these issues are exclusive to music itself. They relate to any item whose status changes a lot and where a multitude of different parties are affected but find it hard to get all their systems and processes to talk to one another. 

So this seems another case for getting everyone's machines to share a single view of a marketplace that avoids 'capture' by any single intermediary. In fact, the 'ledger' they all share becomes that intermediary. In that case, all the participants' machines running the same ledger protocol would be able to see and agree who created which music in its myriad iterations and remixes; who has the various types of rights to exploit or consume the various versions; who owes what to whom; and even make payments in the ledger currency.

Will it work? There's only one way to find out - hence Imogen's giant leap on Friday night.

I reckon it'll be all the rage this Christmas ;-)

This Is Not The Time To Let Bank Management Off The Hook

The CEO of UBS yesterday joined other wolves in sheeps clothing big bank leaders in calling for freedom to make 'honest mistakes' (last year it was the crew at HSBC!). 

This is just a confidence trick. After all, the word "mistake" covers many different types of sin and bank culture doesn't seem to distinguish between honest and dishonest ones, as Andrew Hill of the FT has pointed out. He also cites a memo from JP Morgan's CEO as warning against descending into "a culture of back-stabbing and blame" - but from what I understand that's exactly the culture that already prevails, at least amongst rival managing directors. Emails disclosed in numerous scandals reveal that these are dog-eat-dog environments, full of perverse incentives, where everything from taking the credit for other people's efforts to fiddling records to incurring the odd regulatory fine are just speed bumps along the road to fees, profits and this year's bonus.

Ignorance of exactly what is going on at operational level is another aspect of this confidence trick. Recently, the CEO of government-owned RBS told John Snow of Channel 4 News that he "didn't know" whether there were other major scandals waiting to break. I guess it's a tricky question to answer, but it does highlight the conclusion from the Parliamentary Commission on Banking Standards that these banking groups appear to be beyond management control, enabling those at the top tend to avoid culpability. Remember, too, that many of the recent scandals, like currency market rigging, arose well after the start of the financial crisis. So nothing has really changed since the aptly nick-named 'noughties' (lest we forget Bobby "Dazzler" Diamond's immortal words in 2011!).

And to suggest that regulation might mean big banking groups will tend to take less risk in doing things that customers care about, like lending to small businesses or paying higher returns on savings, is poppycock. They aren't bothering to do this anyway. They just want the freedom to make more money for management, and possibly shareholders. They are simply not customer-led businesses.

For all these reasons, the bank CEOs should continue to be roundly ignored.

Guest Post at Open Identity Exchange - A Pragmatic Approach To Distributed Ledgers

The post appears here.

Thanks to OIX for the opportunity to support the initiative.