When will Empowerment Tech take off? We first need to Mind the Gaps

Adoption of digital wallets and Personal AI won’t happen as a 'big bang'... but the bigger question is when

Sep 05, 2024

Hi everyone,

Thanks for coming back to Customer Futures. Each week I unpack the fundamental shifts around Empowerment Tech. Digital wallets, Personal AI and new digital customer relationships.

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It might be the question I get asked about the most.

When - or indeed if - the decentralised ID market, and Empowerment Tech more broadly, will take off.

My view is that there will be no big bang. Rather, it will be in fits and starts.

We’ll see a number of little tech explosions appearing on the customer side. Chaotically, in lots of different places, for lots of different reasons.

Like the web (and consumer browsers) before it, Empowerment Tech will be driven by a wonderful range of use cases for individuals. All helping customers, citizens and consumers do things they couldn’t before.

Solving problems one-by-one, sector-by-sector and customer group-by-customer group.

Then, once a few mainstream use cases kick in for ET - perhaps a ‘smart calendar’, better tools to manage bills and money, or maybe a new approach to customer loyalty and rewards - digital wallets and customer tech will spread quickly.

But.

Agreeing when those things will happen, and where exactly, depends on your viewpoint.

Maybe you are in Europe, waiting for the EU digital wallet to drop. Or you are holding out for your government to finally write that paper about Digital Public Infrastructure, pointing to portable digital ID and wallets.

Perhaps you are a Chief Digital Officer implementing a ‘seamless customer journey’ across different business units using a clever new customer digital wallet. Because connecting up existing IT systems with a complex series of APIs will take too long, and cost too much.

Or perhaps you work in a large consortium of businesses sharing a ‘federation’ model. Like a hospital group or a set of credit unions, where together you see opportunities for your patients/ members/ customers to access your services using a digital wallet. Whenever, wherever and however they want to show up, online or face-to-face.

Fits and starts.

Back to the future

Sometimes it feels like it’s 1992 and we’re building the first browsers. Steaming towards the early and exciting use of ‘cyberspace’, ‘chatrooms’ and the ‘web’. Well before the arrival of the cookie (1995, wow) or the dot-com boom and bust in 2000.

But right now, it feels more like 2004.

We’re working on the first iPhone.

At that time, lots of good enough mobile devices existed. Think flip phones, hardware keyboards and early (but very clumsy and slow) mobile browsers. All mostly worked. None were radical.

Small screens, small keys, painful navigation.

Then in January 2007, Steve Jobs introduced the iPhone. A new combination of features that weren’t possible - or rather that weren’t useable - before.

Multitouch, a decent browser, and workable apps. No more fixed buttons or a stylus to lose. A software-based mobile phone app. Yes, the early versions of the iPhone took a while to get mainstream adoption (folks waiting for 3G and ‘copy and paste'). But it was a breakthrough nonetheless.

Empowerment Tech, and digital wallets in particular, hold the same promise. Because lots of similar-ish digital tools already exist that do similar things.

All mostly work. None are radical.

Authentication apps. Password managers. Digital signing applications. Employee badges and platforms. Peer-to-peer messaging tools. Digital ID platforms.

But I sense we’re on the verge of a breakthrough.

The opportunity to combine things we already have, but in a new way. Especially around the user interface. (That’s one of the biggest nuts to crack if we want people to actually use these things.)

A game of Tetris

‘But when?!’ you ask.

These breakthroughs won’t happen all at once. Nor in one place. Instead, there will be lots of little breakthroughs, in different places and for different use cases, in different sectors.

Banks may adopt digital wallets for authentication and to fight fraud. Hospitals may adopt Empowermemt Tech apps for portable ID and employee onboarding. Regulated companies, like insurers and pension providers, might adopt portable customer tools for digital signatures and for keeping audit trails.

And I can see the case for retailers to adopt digital wallets, together with PersonalAI, to build new loyalty and reward programmes. Or to use personal vaults to share and store useful product information for aftercare. And to build out new smart, private and portable customer profiles.

And there will be so much more.

But there’s a difference this time. ET has the potential to happen much faster than the early iterations of the iPhone.

Why?

Because Empowerment Tech will build on a number of other capabilities in the market:

Digital wallet architectures and frameworks - these continue to be developed and evolved by the open-source community (see the Open Wallet Foundation)
Credential formats and protocols - these continue to standardise and enable interoperability (see the Decentralised Identity Foundation)
New user interaction modes and experiences - these are already being normalised (see Apple’s ‘double click’ to open the wallet)
New commercial and business models - there’s been a Cambrian explosion of new ideas here, especially around monetising digital ID and personal data (look up the pioneering work on digital trust registries and paid credentials)
Data portability regulations - these continue to roll out across geographies, and are starting to bite in some countries (see the EU’s Digital Markets Act and early moves by the Very Large Online Platforms)
Private, personal AI models - where LLMs are moving to the ‘edge’ and mobile devices, which are themselves becoming more powerful, smaller and cheaper (see the work on Small Language Models and Large Action Models on-device, with many new AI companies promoting privacy and control over personal data)
Government Identity Schemes - where countries are now endorsing, and in some places mandating, digital identity wallets (see initiatives in New Zealand, Singapore, Canada, Australia, the Kingdom of Bhutan, the EU’s 27 member states, and now several countries across Africa and the Middle East)

On one hand, that’s a very long list of dependencies. Many of them are required before Empowerment Tech and digital wallets can scale in a sustainable way.

But here’s the thing.

These capabilities and tools are all emerging, and progressing, at the same time, and at different speeds.

It’s a bit like the computer game ‘Tetris’ (Google it if you’re too young), where different shaped pieces fall from the top of the screen, all interlocking to slowly build a wall.

And just like in Tetris, these Empowerment Tech blocks are now arriving faster and faster. Not only joining together to form a wall, but each compounding on the last, so that the foundations of Empowerment Tech get stronger and stronger.

Yes, it’s still early. Still messy and forming.

But remember that the original iPhone design was in fact a tablet. It took Steve Jobs to forcefully redirect the design team towards a smaller, more mobile device. The now-famous Apple design team took existing materials, and existing capabilities, and put them together in a new way.

And it changed the world.

I expect (hope?) that Empowerment Tech will at some point get a similar nudge from one or more similarly unreasonable, but visionary pioneers.

Putting together existing capabilities in a new way.

Mind the gaps

But I still have bad news.

Even with all these new customer pieces, these innovations, and with the compounding effects of the wall… it’s still not enough.

Because there are some pretty major gaps in the Empowerment Tech landscape.

Or more specifically, gaps with the solution providers. Some are missing only a couple of things. Others are missing quite a few. But gaps they are.

Here’s my take on what’s missing in the market right now.

The STORY gap. Why should we care about digital wallets, Personal AI, data vaults and verifiable credentials? Who does this impact and when? Businesses and customers, governments and citizens don’t just want new features and functions. They want reasons to believe in a new approach. And reasons to change the way they do things today.
The VALUE gap. What are the use cases? What are the ‘jobs to be done’? What is the value proposition? Who pays who, why, how and when? What’s the business model? What are the incentives to make change last? And who are the winners?
The SKILLS gap. Who are the experts? Who’s just selling snake oil? How can businesses access the right expertise at the right time? Where are the credible teams, and what have they learned? In fact, will AI itself become able to design and deploy these models independently?
The CAPABILITY gap. Which tech should product teams bet on? Which standards will win out, or does that matter? Should companies wait? Which platforms are production-grade, and which are just demo-ware? Which teams are the real deal, and which won’t be here in two year’s time?
The DISTRIBUTION gap (my favourite). Which products have network effects for adoption built in? Which are asking too much of users, killing distribution before the product is even used? Which teams have strategic partners to onboard customers at scale?

Together, these are the biggest issues facing the market. And you’ll note that tech is at most 25% of the answer. This is as much about go-to-market, value propositions and liability models, as it is about verifiable credentials and secure data storage.

(If you want help with any of the above by the way, do get in touch).

Little customer explosions

So standing back from it all, and looping back to that first question, when - or indeed if - will it all happen?

Here’s where I’m at:

We won’t see a ‘big bang’ adoption cycle. Instead, we should look for the places where digital wallets, data vaults and Personal AI will add value to specific groups, in meaningful and sustainable ways. Over time, these hotspots of value will grow and merge, and we’ll be able to unleash the strong network effects that many of us can see coming with ET.
The Empowerment Tech market has many, many dependencies. Piecing them together - building that foundation - is going to take time. And will mean we’ll most likely see an evolution of ET in our lives, not a revolution.
That said, I’m betting there will be some sort of breakthrough Empowerment Tech innovation that will change the game for everyone. One or two providers will put together existing capabilities in new ways. And we’ll wonder why it hadn’t been done before. Maybe that will be at the payment checkout. Maybe it will be with a new Digital Staff Passport. But it will open our eyes to what’s possible.
The Empowerment Tech winners will be those that solve the biggest gaps. I don’t just mean addressing unmet market needs. I mean having the right story, creating the right value, deploying the right skills, building out the right capabilities, and embedding distribution into the product by design.

If these things were easy, it would have been done by now.

Folks are now realising that Empowerment Tech - the new digital tools that live on the side of the customer - will be as impactful as the internet, as disruptive as the mobile device, and as important as Web3.

Putting people at the centre, not users. Focusing on individuals, not just business. Less B2C, more ‘Me2B’.

But it’s not 2004. It’s 2024. The Tetris tiles are falling faster and faster. And the gaps are closing.

ET stories will get clearer and more compelling. The value of ET will become more obvious and immediate. ET skills will become more available and expert. Digital wallets, data vaults and Personal AI capabilities will become more stable and scalable. And ET products will be designed for adoption by networks, not just product-market-fit.

Finally, I believe that Empowerment Tech is inevitable.

Why?

For all the excitement about the tech, ET is about people. About being human. And about empowerment. It’s an age-old story about human progress.

But understanding when all that will happen is of course the question everyone is asking.

And here’s my answer. First, we need to mind the market gaps. Then we can look out for the little customer ET explosions, not just the big bangs.

Thanks for reading this week’s edition. Stay tuned for more Customer Futures soon, both here and over at LinkedIn.

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