This will be a longish post, so hang in there.  This is not just my favourite topic, its core to everything associated with the web lifestyle.  Simply put, where is all this going, and should we care.  This report is 115 pages long, so I have focused on two points for the future:

• intelligent agents
• privacy

PEW always provide great insights, and their “Future of the Internet” series is valuable.  Its worthwhile noting this report is based on interviews with Internet insiders, but for me that makes it the more useful.  Its worth noting the results are assembled points that the group largely agreed on. 

So here are the main findings summarise by PEW, with a link to the site, and report following, as well as my own views on the pertinent points for banking.

A survey of Internet leaders, activists, and analysts shows that a majority agree with predictions that by 2020:

1. A low-cost global network will be thriving and creating new opportunities in a ‘flattening’ world.
2. Humans will remain in charge of technology, even as more activity is automated and ‘smart agents’ proliferate. However, a significant 42% of survey respondents were pessimistic about humans ability to control the technology in the future. This significant majority agreed that dangers and dependencies will grow beyond our ability to stay in charge of technology. This was one of the major surprises in the survey.
3. Virtual reality will be compelling enough to enhance worker productivity and also spawn new addiction problems.
4. Tech ‘refuseniks’ will emerge as a cultural group characterized by their choice to live off the network. Some will do this as a benign way to limit information overload, while others will commit acts of violence and terror against technology-inspired change.
5. People will wittingly and unwittingly disclose more about themselves, gaining some benefits in the process even as they lose some privacy.
6. English will be a universal language of global communications, but other languages will not be displaced. Indeed, many felt other languages such as Mandarin, would grow in prominence.

Source: Pew Internet: Future of the Internet

Two key points for banking that I will focus on here are:

Intelligent agents: 

This was all the talk in late 90’s but has disappeared off the radar screen.  The concept applied to bots spidering around the net, seeking the best deal for you;  the best rate, the right mortgage, the most appropriate investment(s). 

This may be closer now than we think.  Tools I can see heading in that direction are:

• xml tools that can contain data, as well as presentation information
• RSS feeds that provide personalised information on your schedule based on your pre-determined needs
• news readers, such as Feeddemon, Greatnews
• feed aggregators, such as Bloglines, and Newsgator
• Technorati providing tags to common topics, and assessment of the value of blogs, based on how much other blogs link and comment
• tagging services such as de.licio.us, & ma.gnolia
• Open source taking over traditional software rules.  Open Source says the value lies in the tools that are built, not in the building blocks.  The classic example is html.  No-one owns html, yet its pervasive in our lives.  This has profound impacts on technology business models for the future.  For Banks, we won’t buy proprietary software, because the developer community is proprietary, and therefore not sustainable.
• microformats:  small pieces of code that provide incredibly functional capabilities, that will fit within existing web sites
• Ajax: the brilliantly simple (yet hard to code) amalgamation of DHTML, Javascript, and XML (Asynchronous JavaScript and XML) that provides capabilities far greater than the individual components.

They all share the attributes of adding intelligence to the web.  This takes us beyond the flat non-intelligent world of browsers displaying pages, into an application based web. Forrester know it as the x-web.  Its defined (roughly) as the confluence of web pages, and PC based applications.  Capabilities available to you as close as your nearest PC/ telephone screen(soon to be)/ kiosk.

These capabilities are here today.  All that is lacking is the imagination, and talent to develop them into the intelligent agents of the future.  There are small starts, such as:

• writely, that replicates much MS Word functionality in a browser
• Google Spreadsheets – as above except for Excel
• gmail, and Yahoo Mail (the beta), Windows Live Mail
• Linkedin, allowing people to connect at a professional level
• Flickr shows enormous amounts of photo’s and eliminates any concept of ‘downloading’
• youtube does the impossible, and shows videos realtime with no delay
• Riya stores photos, and does searching of people /things / places in the photo’s.  Yes, you can search peoples faces
• P2P lending: Prosper & Zopa, bringing together lenders and borrowers online

These online applications are just developers getting used to the technology, and replicating things that we already understand, mainly MS Office, but as you move down the list, the creativity and true innovation is beginning to appear.  One outcome will be intelligent agents supporting financial services.

Consider a Bank as a provider of agents.  We already know that the value of many products, such as mortgages have diminished to that of loss leader.  Banks must seek value in new services.  Almost all Banks are focussed on relationship management.  Somehow the belief is that by becoming the customers best friend, the customer will always return.  That worked in the 70’s, when relationships were defined face to face.  Today GenY’rs define purchasing patterns and perhaps even relationships through Internet.

Privacy 

Changing gears, a central big idea in the report is privacy, with 50/ 50 split on whether the outcome is good or bad.

The experts and analysts also split evenly on a central question of whether the world will be a better place in 2020 due to the greater transparency of people and institutions afforded by the internet: 46% agreed that the benefits of greater transparency of organizations and individuals would outweigh the privacy costs and 49% disagreed.

I find this fascinating.  Perhaps I am the perennial technology optimist, and assume solutions will always follow problems.  Of course the pessimists will always read that as the problems always one step ahead of the capabilities.

The problem is nicely summarised in this quote:

There is a widespread expectation that people will wittingly or unwittingly disclose more about themselves, gaining some benefits in the process even as they lose some privacy.

I think this is going to be flawed thinking, but I remain an optimist, because smart people are always working on the solution.  It can become mind-bendingly complex, but in simple terms, I think the idea is to separate authentication (who you are), from your detailed identity.  There are parts that are ok to share, such as demographic data, and even credit data, provided its kept separate from who you are, and most important, you are assured it will kept separate.  That’s a tall order that no-one will buy into today, but its coming.

Here is an example.  Openid.net is an open source identity schema.  Everyone becomes a URL.

OpenID starts with the concept that anyone can identify themselves on the Internet the same way websites do-with a URI (also called a URL or web address)

I only quote this as a (good) example of how smart tehcnologists will solve our problems. 

Relevance to Bankwatch:

Banks must get behind these movements, and integrate tagging, open source, blogging, ajax etc.  Banks can lead the development of tools that protect people, and add superior value through intelligent agents.  These attributes will be loyalty builders of the future.

tags: PEW, internet+future+2020, intelligent+agents, privacy