Will someone be watching every time you share your personal data, and from Know Your Customer (KYC) to Know Your AI Agent (KYA)
Plus: A vision for the future of ‘Active Wallets’, and what if the web didn’t have adverts that followed us around?
Hi everyone, thanks for coming back to Customer Futures.
Each week I unpack the disruptive shifts around digital wallets, Personal AI and digital customer relationships.
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In week’s edition:
The next big thing in identity - from Know Your Customer (KYC) to Know Your AI Agent (KYA)
What if the web didn’t have adverts that followed us around?
Will someone be watching every time you share your personal data?
AI agents are coming to web3
What happens when my Personal AI shops for me?
A vision for the future of ‘Active Wallets’
… and much more
Let’s Go.
The next big thing in identity - from Know Your Customer (KYC) to Know Your AI Agent (KYA)
Another slam dunk from Jelena Hoffart, now working at Mastercard on digital ID.
“The emergence of AI agents that can make transactions and authenticate on behalf of consumers could require FIs and banks to fundamentally re-think existing KYC procedures.
“For example, fraud detection systems will need to evolve from only identifying IF a bot is detected to determining whether it is a "good" or "bad" bot.
“Longer term, will the standardization of AI agents’ behaviors eliminate the behavioral signals we use in fraud detection?”
This matters not only because Personal AI agents are about to show up at the front door of businesses, but because they will also be able to access pools of my personal data.
Short term, that looks like access to my email and calendar. But soon it will include access to my digital wallets (multiple of them), my devices and my personal data vaults.
It’s why Personal AI is going to need digital ID pretty urgently. My AI Agent will need to be able to:
Prove it’s my agent (identify)
Prove that it can act on my behalf for certain transactions (delegate)
Carefully - and auditably - record what has been asked for, by whom, when and why (audit)
Manage and monitor the data in and out of the wallet (report)
Remember, wallets are going to
Commoditise
Be free at the point of use (likely freemium)
Interact with each other
Be abstracted away from the customer experience
If the best experience is going to be NO experience, then my AI Agents better be able to go through ‘KYA’ easily, at low cost, and everywhere.
What if the web didn’t have adverts that followed us around?
Don Marti has taken a sideways look at a world without ads that follow us around. What if we got rid of digital advertising that requires surveillance and cookies?
Well, let’s look at the money.
He points out that the US alone spends $389bn per year (woah) on advertising. That’s a lot of money trying to reach 335M US consumers. On average, that’s $1,160 per person, or $97 per month.
What if we could replace it?
“Let’s assume that all advertising is surveillance advertising. And ads without the surveillance, according to Professor Garrett Johnson are worth 52% less than the surveillance ads.
“So if you get rid of the surveillance, your ad subsidy goes from $97 to $46. Advertisers would be spending $51 less to advertise to you, and the missing $51 is a good-sized amount of extra money to come up with every month. But remember, that’s advertising money, total, not the amount that actually makes it to the people who make the ad-supported resources you want.
“Since the problem is how to replace the income for the artists, writers, and everyone else who makes ad-supported content, we need to multiply the missing ad subsidy by the fraction of that top-level advertising total that makes it through to the content creator in order to come up with the amount of money that needs to be filled in from other sources like subscriptions and memberships.
“How much do you need to spend on subscriptions to replace $51 in ad money? That’s going to depend on your habits.
“The Association of National Advertisers found that about 1/3 of the money spent to buy ad space makes it through to the publisher. A subscription platform and subscriber services impose some costs too. To be generous to the surveillance side, let’s say that a subscription dollar is only three times as valuable as an advertising dollar.
“So that $51 in missing ad money means you need to come up with $17 from somewhere. A lot of ad money goes to overhead and to stuff like retail ad networks (online sellers bidding for better spots in shopping search results) and to ad media like billboards that don’t pay for content at all.
“So, worst case, where do you get the $17? From buying less crap.”
Digital ads are mostly why online services are free at the point of use. Ads became the accidental business model of the web.
But the knock-on impacts on data security (breaches every day) and civil society (the centralisation of customer data in the hands of a few) are profound.
It begs the question. What other sustainable commercial models are possible for online services? Ways to make money that don’t require businesses to sniff our digital footprints and follow us around online?
I have mapped out at least 11 of them for the Empowerment Tech market.
Each of which will be far more efficient at building lifetime customer value than spending nearly $100 per person, per month, to ‘engage’ and ‘own’ consumers.
Will someone be watching every time you share your personal data?
It’s an exciting time for verifiable credentials and digital wallets. But a couple of the digital ID standards being deployed have an issue around the ‘phone home’ problem.
The way they are designed, any organisation that puts data into your digital wallet can monitor every time you use it.
ID and privacy experts have ben warning about this for a while. And now the American Civil Liberties Union (ACLU) - the a network of civil liberty lawyers and organisers - have published a ‘Digital ID State Legislative Recommendations’.
They share their significant privacy concerns with the latest digital ID implementations across various US states, and specifically the mobile driver’s license, the ‘mDL’ technical standard.
Timothy Ruff summed it up:
“[ACLU] echo every privacy concern I've had with the mDL and its underlying ISO standard (18013). The very serious problem with mDL/ISO 18013, in my view, is #2 from the report: "No Issuer ability to track via phone home mechanism".
“mDL/ISO 18013 has exactly this mechanism when in "Server Retrieval Mode" (surveillance mode), which enables precisely what the report warns about.
"It can enable the issuers of the digital ID [state government] to track where, when, and to whom one shows their ID. This tracking can reveal very private and sensitive information about the digital ID holder — namely, when and where, online or off, they present their ID.
"The only protection we have against this risk: the promise of policy makers not to turn it on.
“The ACLU is right on all counts. Privacy advocates everywhere should vigorously oppose the mDL as long as it continues to use the privacy-invasive ISO 18013.
There’s lots of inside baseball here about formats and standards. But we must be careful what we wish for.
Not all portable digital IDs are created equal.
AI agents are coming to web3
Binance just released a report on ‘Exploring the Future of AI Agents in Crypto’.
It’s even more evidence suggesting that Web3 (tokens) will soon converge with AI (agents). Leading to what Outlier Ventures calls ‘the Post Web’.
From the report:
“An AI agent is autonomous software that can plan, execute tasks, and work towards some defined goal without human intervention.
“AI agents differ from the bots that we are used to seeing across the Internet. Bots are typically pre-programmed, require human intervention, and operate under a fixed set of rules. AI agents can engage in dynamic, multi-step decision making and adapt based on interaction. They can also interact with other agents, protocols, and external apps.”
“Given traditional banks and payment methods generally require human identification, crypto is a natural fit for the AI agent economy.”
It’s been 16 years since the original Bitcoin paper was published. And outside the web3-maxi bubble, Web3 has had little meaningful impact on the digital economy.
Might AI agents be the web3 application folks have been waiting for?
What happens when my Personal AI shops for me?
It’s mad to think about just how much time and money brands are spending to try and nudge us at each stage of the ‘consumer decision funnel’.
(As we saw in the Don Marti post above, that number is on average $100 per person… per month in the US).
So what happens when my Personal AI helps me decide what to buy, when and how? And in some cases, does some of the shopping on my behalf?
Jeremiah Owyang is a Silicon Valley OG that’s now turned his full attention to ‘Agentic AI’.
Here’s written a bunch of excellent posts about what’s coming, and most recently about how AI agents will disrupt consumer spending.
And he breaks down the impacts at each stage of the decision funnel:
Awareness: The agent not only responds to human prompts but also proactively educates users. Picture your AI agent suggesting a personalized diet plan based on your health data, serving you with information before you even thought to ask for it.
Engagement: Soon, we will find ourselves prompting the agent for detailed information about solutions. Yet, the future holds an even more proactive agent that initiates dialogue with users, offering solutions to their potential needs. Imagine your AI agent arranging a travel itinerary for your upcoming holiday, even before you realized you needed help.
Consideration: The phase where humans usually compare products and read reviews is about to undergo a transformation. In the near future, humans will task agents with these comparisons. But the real game-changer will be when AI agents independently shop and auto-compare on our behalf. Consider an AI agent saying, “I’ve compared various headphones, and this model suits your preferences best.”
Purchase: The typical e-commerce transactions that happen via websites and online retailers will progressively shift into AI apps (like into GPT or Claude). Eventually, AI agents will handle (basic) purchases on your behalf, efficiently streamlining the process. Imagine receiving a message from your AI agent: “I’ve placed an order for your favorite brand of coffee.”
A vision for the future of ‘Active Wallets’
Last week I was on a webinar with Inrupt, Tim Berner’s Lee’s startup building out new digital tools for personal data.
The ‘Solid’ platform was originally spun out from MIT as an open source personal data platform (offering users ‘pods’ to store their data). Inrupt are now building a roadmap of Empowerment Tech tools based on the open standard.
Exciting stuff, and the latest is a digital wallet.
Worth paying attention to how it’s positioned. They see today’s digital wallets, including Apple’s, Google’s and the EU Digital ID wallet as ‘transactional’. Meaning they enable ‘request-and-respond’ type experiences, but limited to specific credentials and specific moments.
Like making a payment, flashing your boarding pass, or sharing an ‘Over-21’ check.
The opportunity, says Inrupt’s CEO John Bruce, is to move towards ‘Active Wallets’:
“Inrupt’s Active Wallet expands on the familiar user experience of Apple and Google’s wallets, giving users a place to organize more of their data and safely share it when they want to. This includes transactional data, but now along with private and public data.
“Why does this matter? An interoperable wallet that includes identity and consent capabilities offers a gateway to a more secure and personalized digital ecosystem.
“It’s easy for users to reuse the personal data stored in the Active Wallet in other apps, services and AI systems.
“An Active Wallet allows users — and the organizations they grant access to — to draw the personalized value from the latest AI systems without losing control of their sensitive information.
“Inrupt’s wallet goes beyond just storing transactional information. Its open standards and interoperability enable seamless interactions across platforms while preserving user privacy.”
This is about accessing and reusing much more of my personal data than just ‘credentials’.
Because I have a lot of data that doesn’t need to be in a digital wallet. Especially the stuff that changes frequently (like my moving streaming habits, or driving behaviour) or where the data is lengthy or complex (like all my online receipts, or banking history).
We should be able to run AI over all that personal data without having to pump it all into OpenAI or Anthropic’s data servers. Mainly for data protection reasons, but also costs and efficiency.
Very cool that Inrupt just announced the new Active Wallet at Web Summit in Lisbon. Where the title of the main stage session had TBL himself saying: “I invented the web: Here's how to make it better”.
I think ‘Active Wallets’ are a great framing for Empowerment Tech. One to watch.
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:
News: Booking.com opens up a new Data Portability API to comply with the EU’s Digital Markets Act READ
Report: JP Morgan report (the newly branded ‘Kynexis’ team) on tokenised finance with Privacy, Identity, and Composability READ
News: Block (Jack Dorsey) shuts down decentralized identity initiative ‘TBD’ READ
Insight: Australians are ready for Verifiable Credentials READ
News: Hong Kong is the latest region to adopt Decentralised ID with the digital mobile driver’s license (mDL) READ
And that’s a wrap. Stay tuned for more Customer Futures soon, both here and over at LinkedIn.
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