“Ripping” IDs Should Go the Way of CDs, Klarna's AI Assistant and the Future of Loyalty
“Ripping” IDs Should Go the Way of CDs, Klarna's AI Assistant and the Future of Loyalty
Plus: Creating a Better Travel Experience for Us All, and Privacy Is Big Business (but we are missing a huge part of the ‘market’)
Hi everyone 👋
Thanks for coming back to Customer Futures. Each week I unpack the disruptive shifts around Empowerment Tech. Digital wallets, Personal AI and digital customer relationships.
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In this week’s edition:
“Ripping” IDs Should Go the Way of CDs… it’s time to go truly digital
Privacy Is Big Business (but we are missing a huge part of the ‘market’)
Bilt Rewards and the Future of Loyalty
Klarna AI assistant handles two-thirds of customer chats… so why not my finance too?
How Can Digital Identity Create a Better Travel Experience for Us All?
… plus other links about the future of digital customers you don’t want to miss
Let’s Go.
“Ripping” IDs Should Go the Way of CDs… it’s time to go truly digital
In the UK I bank with Monzo. With 9M customers and a valuation of £4BN, they are now the 7th largest bank in the country.
And they have zero branches, and no online web banking.
Instead, it’s an app. That’s it.
It’s fair to say they are a Digital Bank.
But last week they asked me for a manual ID check. They needed a selfie of me holding an ID document, which I had to email them. Whaaat?
Now, Monzo is clearly one of the leading UK digital banks. But when it comes to ID, are they really digital? Or have they just digitised a paper ID?
I will die on this hill: There’s a subtle but critical difference between ‘digitizing’ something, and being ‘truly digital’.
Let me explain.
Digitising means taking manual things as they are today and converting them into digital equivalents. When you don’t have the opportunity to rebuild a digital platform from scratch, you ‘digitize’ what you have today.
It’s what all the old banks have done to offer ‘online banking’. They’ve taken their existing bank products and turned them into PDF statements. And relatively useless pie charts of your spend.
Very clearly it’s ‘digitised’ banking. A digital conversion.
So what does being ‘truly digital’ mean? It’s those brands that have built their digital products and services from the ground up.
Digital first. Mobile first (and in some cases like Monzo, mobile-only). APIs front to back. Modular, flexible data-rich products.
Offering if-this-then-that rules to the customer. For example, when I spend using my Monzo card, it automatically rounds up the amount and puts the difference in a savings pot. Magic.
Now, Monzo is clearly a natively digital business. A Digital Bank. Yet it asked for a photo of my plastic ID. It was asking for a digitized copy.
Why?
Because in most countries - including the UK - we don’t have any decent truly digital identity solutions or options. As Dave Birch reminds us, we don’t have any public digital infrastructure for digital ID at all.
Instead, we are asked for digitised versions of our paper and plastic IDs.
Just think about what becomes possible when things are truly digital. Smart, automated workflows. Right-sized data flows where we don’t need to share all data, just what’s needed. Intelligent recommendations.
So what would a truly digital identity mean?
It’s to give a digital identity credential to the individual. A private and secure data file with a digital watermark. Issued to people in a secure and trusted manner, so that the customer themselves can hold their identity information in a digital wallet.
People can share this data file - or more likely selected parts of the data file - and be able to prove instantly
Where it came from
Who it was given to
If it’s been tampered with
If it’s been revoked
Now that’s digital.
David Kelts has been working on this stuff for years, and is a digital ID expert. He makes the same point about digital vs. digitized, and likens scanning ID documents to ‘ripping CDs’.
It’s an analogy that won’t make sense to anyone under 35 (you’ll need to Google it). But it’s a helpful way to think about today’s nonsense of taking selfies and photos of documents.
“Remember endless hours ripping your CD collection to digital… why are we spending endless hours scanning analog ID documents over and over again? Alternatives exist.
“”Let’s think differently about how Mobile KYC fails customers
Manually taking a quality, flat, well-lit, high-res picture of a card is hard
Taking an ICAO-quality, well-lit, machine-matchable portrait is difficult. Everybody wants to smile (or make duck lips …idk…) in a selfie
Webcams are very low resolution compared to phones and vary widely
PDF417 Barcodes from the back of DL/ID cards are easy to generate and nearly every Fake ID has the same information on the back and front
Connections to databases that would verify the authenticity and validity of a DL/ID are expensive or restricted to law enforcement (makes sense)
Most hard-to-forge security features of an ID card require multi-spectral light, are tactile, or require magnification. Phones capture visible light
Cropping the card portrait results in a small, low-res photo for machine-matching that has security lines, holograms, and indicia through it
Cropping a portrait from a poorly captured, low-res ID card will not give sufficient resolution to measure the facial features for matching
You need cloud/phone processing power to determine that a human is live and real for the probe image — called Presentation Attack Detection
I have to ID myself repeatedly with each new service that wants (notice I didn’t say “needs”) ID and each KYC system differs, creating doubt
He goes on to say it’s time to fix this mess. And that a Mobile Driver’s License (mDL) is a smart option. Not least because it’s already available for nearly 1 in 5 people in the US who carry an identity card.
Soon, this standard will add “consented, selective-disclosure, digitally-signed mDL sharing to apps on the same device AND to websites over the Internet”. Good stuff.
There are a bunch of standards emerging for native digital ID, and it’s happening fast. mDL is one, so too is the W3C standard around ‘Verifiable Credentials’. And there are a number of options for new digital identity wallets for people to receive, hold and share their verifiable identity data.
It’s all part of the arrival of The Empowerment Tech Stack. And it’s going to solve so much of the pain, and chaos, that David rightly complains about in the list above.
It’s time to move beyond digitized ID. To finally go truly digital.
Not least so I don’t have to take another awful and awkward selfie holding that damn driver’s license.
Privacy is already big business - but we are missing a huge part of the ‘market’
Liminal has released a new market analysis on ‘privacy and consent management’. They estimate the total addressable market will be worth $2.2Bn this year. And growing at 20% each year, reaching $5.4Bn by 2028.
Of course, it’s a broach church of a study. And includes everything from consent management tools for online services to privacy platforms to help manage data breaches.
Still, it’s a market of $Billions. And notice the market trigger?
Data protection for businesses.
So I have two questions
What could be the tools on the customer-side of this market? Helping customers manage their own privacy, not just consenting and protecting data that’s already at risk inside the enterprise? What if customer consent was a persistent preference for the individual? After all, I say the same thing to the same companies over and over again (I hate the ‘remember this for one day’ setting on the web). I want a portable private privacy profile for all the businesses I deal with.
Should we therefore also include the market size for this consumer-side market? That would include, for example, ad blocking. Joyce Searls once called ad blocking “the biggest boycott in world history”. That was in 2015, when there were about 200M people blocking ads. It’s now nearly a billion people and growing. 1 in 8 people online? Now that’s a market to size.
There’s a side point here about ‘markets’. My long-time colleague and personal data expert Alan Mitchell (who started writing about Empowerment Tech over 15 years ago) wrote to me recently about how we miss much of the value of personal data by only describing costs, prices and market sizes.
There is a vast set of wider benefits, beyond money, that account for data value on the side of the customer. Time saved. Confidence built. Risks lowered. Emotion triggered. And much more.
Helpfully, Alan wrote up his thinking about ‘markets’. See the link below.
Liminal says the ‘market’ for consent and privacy will be over $5bn in 3 years. If you account for the customer side too, I believe it will be many times that. But that’s just the money.
Next time you see ‘market’, think ‘personal value’. Which can, and should, mean different things to each of us.
And you can’t put a price on that.
LIMINAL REPORT, JOYCE SEARLS, AD BLOCKING, ALAN ON MARKETS
Bilt Rewards and the Future of Loyalty
They say that ‘payments is the killer app for identity’. More often than not, when people talk about payments, they really end up talking about customer data identity.
Because payments and fraud are really a customer data problem. Which account. Which person. Which device. Which authority.
It’s why most payments companies also end up exploring the Data Opportunity. All the adjacent things you can do with customer information.
Loyalty. Reputation. Personalisation. Customer engagement. And inevitably the conversation then turns to Portable Data. Verifiable Data. Digital Wallets.
Simon Taylor’s weekly Brainfood newsletter is my go-to on all things fintech, payments and banking. For the last few years, he’s been hammering the same points about payments → data → opportunity.
This week his jam is the future of loyalty.
And he’s bang on the money:
“We have barely scratched the surface of loyalty and consumer engagement. The prize for getting it right is massive.
“The two biggest memes of Fintech content demonstrate this point perfectly.
“Airlines are banks that offer flights as a reward. During the pandemic, United Airlines' market cap dropped to $6bn, while its loyalty scheme was valued between $19bn and $31bn. Airlines create loyalty points out of nothing and sell them in advance to banks. Consumers can use those points for flights; the banks make money from the swipe fees. Consumers charged 1 percent of U.S. GDP to Delta's American Express credit cards.
“Starbucks is a bank that offers coffee as a reward. 29m people use the Starbucks loyalty app, and if they pre-fund their Starbucks wallet, they get double points for every purchase. The gift cards are used by 53% of all Starbucks customers. With $1.6 billion in deposits, consumers are "lending" to Starbucks at 0% for those sweet sweet points.
“Of course, they're not actually banks. But they are making up a magical currency (points) that might never be redeemed and monetizing the perceived value to consumers.
“Bilt is positioned to be a bank. More accurately. Bilt is positioned to be the next monster loyalty case study by becoming the account that rewards rent payments.
“Who's building Bilt for everyone else? This is the grand prize for financial inclusion. Whoever figures out the loyalty scheme to get the lower FICO scores paying more rent on time and building credit unlocks a massive underwriting opportunity. Maybe that's Bilt, maybe that's someone else?
“Why doesn't everything reward us? The short answer is usually that the economics don't work. What Starbucks, Airlines, and Bilt have in common is they found ways to bring together a flow of funds and data to drive a flywheel effect.
“Bilt is a badass company that's just getting started. Everything should work this way; we're missing the link between data and payments.
Regular readers will see that the missing piece is Empowerment Tech. Making all the above data completely portable, instantly verifiable, and remaining private so businesses can’t just track everything, everywhere all at once.
Empowerment Tech has the potential to provide that missing link between data and payments - but from the customer side.
I highly recommend signing up for Simon’s newsletter. It’ll make you realise how powerful the payments opportunity is.
And how, over the next few years, Empowerment Tech will likely first transform loyalty. Before flipping identity, customer engagement and much, much more.
Klarna AI assistant handles two-thirds of customer chats… so why not my finance too?
Klarna has just announced the details of its new AI assistant. They say it’s the first step towards a fully AI-powered financial assistant. Aimed at saving consumers time, worry and money, with a live human agent option if customers prefer.
Here are the stats they’ve been shouting about:
The AI assistant has had 2.3 million conversations, two-thirds of Klarna’s customer service chats
It is doing the equivalent work of 700 full-time agents
It is on par with human agents in regard to customer satisfaction score
It is more accurate in errand resolution, leading to a 25% drop in repeat inquiries
Customers now resolve their errands in less than 2 mins compared to 11 mins previously
It’s available in 23 markets, 24/7 and communicates in more than 35 languages
It’s estimated to drive a $40 million USD in profit improvement to Klarna in 2024
You can see the consumer benefit story here. But really, this is about better business.
Faster. Cheaper. Better.
700 fewer agents mean likely layoffs. Or perhaps keeping the existing contact centre employees and offering faster response times for the human-related stuff. Watch out for the inevitable staff cuts announcements.
But what about the customer opportunity here? Naturally, Klarna plans to offer an AI-powered personal assistant. But what will that do?
“Your AI personal financial assistant offers real-time updates on your outstanding balances and upcoming payment schedules, ensuring you never miss a Klarna payment”
Woohoo.
“It also provides a clear understanding of your purchase power, explaining your spending limits and the reasons behind them, empowering you to make informed and confident shopping choices.”
OK, so helping me make sense of my (their) credit score, and the documents I already signed. Fair enough. Apple and Google will probably do that. Klarna will also likely recommend (nudge?) products to me based on what I can afford.
I’ll give Klarna a C+ on this.
Because AI should be able to do much more for the individual. Right now, it’s framed as a solution to be paired with the business benefits.
Faster. Cheaper. Better.
But what if you flip the model? What if the AI really is my AI assistant, working for me across my wider ‘money life’? Including my Klarna payments, savings accounts, credit cards, mortgage and much more?
Let’s re-write that press release, this time from an Empowerment Tech PoV.
“Customer Futures today announced its AI assistant powered by [PRIVATE LLM]. Now live for Jamie for 1 month, the numbers speak for themselves:
Jamie’s AI assistant has already had 6,529 automated conversations with organisations, which is over 400x more than Jamie is normally able to do via email, chat and on the phone
It is doing the equivalent work of 17 full-time Jamies
It is on par with Jamie’s performance regarding business satisfaction (sharing the right data at the right time, reading messages and taking action when required, and so on)
It is more accurate in errand resolution, leading to a 276% drop in the frustrating issues that Jamie normally has when dealing with businesses
Jamie can now get things done with businesses in less than 2 minutes (compared to the previous average of 3 weeks)
It’s available across 72% of the companies Jamie and his household interact with, and works 24/7
It’s estimated to have already saved Jamie over £1,855 this year
But more importantly, it’s also saved him over 71 hours this month
“Due to language support, Jamie has also seen a massive improvement in communication with contact centres, where Jamie’s AI automatically deals directly with business employees in more than 35 languages. All those businesses now don’t need to worry about the language - or timezone - of their contact centres.
Available in the Customer Futures app, Jamie’s AI assistant is designed to enhance the shopping and payments experience for Jamie, capable of a range of tasks from managing bills, making payments, household reminders, managing subscriptions, negotiating discounts, refunds and returns, and fostering healthy financial habits.
“This launch marks a significant leap forward in Customer Future’s vision of a fully AI-powered financial assistant aimed at saving Jamie time, worry and money, while making the entire digital economy more efficient and consumer-focused. Exciting new features are already in the pipeline and will be added to the AI assistant soon.
“Jamie can always still choose to interact with a real human being when it’s preferred”.
Ok, so who’s building this?
How Can Digital Identity Create a Better Travel Experience for Us All?
Francois Blanc is leading a quiet revolution in travel. He’s the head of TravellerID at Amadeus, a new digital travel wallet solution for passengers.
He’s been writing about the potential for this new digital approach for a while. Putting the traveller at the centre of their digital trip using a digital identity wallet. Unlocking new passenger experiences, and unleashing a wave of new opportunities across the travel sector.
“Digital Identity has the potential to enhance travel experiences, from the shopping phase and also right throughout the booking and the travel experience.
“During the shopping phase, Digital ID sharing could be used for instant onboarding, even with first time customers, replacing the account creation step. For the travel company, it enables the creation of an attractive, personalized offer based on the traveler's identity, frequent flyer program and preferences shared in previous steps.
“During the booking phase, Digital ID could streamline the process by providing a “one click order experience”, including traveler's identity and payment details.
“When fully deployed, travel providers will be able to offer the instant onboarding and payment experience travelers have become used to in modern e-retail in a cybersecure manner, thanks to their personal device security.
“On trip, Digital ID could be used to provide a personalized experience and streamline processes too. For instance, upon arrival at a hotel, the technology can be used to automatically check-in, offer directions to a room and adjust settings, such as temperature and lighting, based on known preferences.
“Finally, Digital ID could enhance post-travel engagement. By understanding an experience, businesses can personalize their communications, providing relevant content to inspire future trips.
“Reviews left through a verified ID could also be more trusted and handled with appropriate diligence. Business travelers could also benefit from a smoother process for travel expense reporting.”
There's a lot to be written about the Empowerment Tech disruption coming to the travel sector. But for now, keep an eye on Amadues. They power much of the hotel, flight, hotel and car rental ecosystems around the world. From booking and payments to check-ins and loyalty.
As a B2B player, they are mostly hidden from view. But when one of the main barriers to digital innovation is distribution, they’re positioned to be quite disruptive.
The opportunity, of course, is to trigger an explosion of Empowerment Tech solutions for passengers. Embedding digital wallets and verifiable credentials into existing traveller apps and services.
And where the best 360-degree view of the traveller, is the traveller.
OTHER THINGS
There are far too many interesting and important Customer Futures things to include this week.
So here are some more links to chew on:
Post: We need to use technology to do things better, not faster, nor cheaper READ
Article: What Happens to Your Sensitive Data When a Data Broker Goes Bankrupt? READ
Article: Google Pay replaced Google Wallet — now it’s going away to make room for Google Wallet READ
News: Government of Bhutan Wins Award for Empowerment Tech Innovation READ
Blog: Personalisation Needs Data Science and Customer Science READ
And that’s a wrap. Stay tuned for more Customer Futures soon, both here and over at LinkedIn.
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