This article was taken from the November 2013 issue of Wired magazine. Be the first to read Wired's articles in print before they're posted online, and get your hands on loads of additional content by subscribing online.
On 1 July this year, Wired launched the first of our new series of one-day summits by focusing on a sector facing imminent disruption -- money, banking and finance. Onstage, a series of A-list speakers who are transforming finance in the digital age highlighted the trends and risks that are shaping innovationand the future of money. With a focus on keynotes and one-on-one interviews rather than panel discussions, the event attracted financiers, investors, startup entrepreneurs, regulators, technologists and policy-makers to Canary Wharf's new accelerator space, Level39.
On the main stage, among many other speakers, MIT Media Lab's Kevin Slavin argued that market trading needed to be rebuilt for humans, IDEO's Anne Pascual made the case for banks to be remade as platforms and PayPal's John Lunn revealed how we'll be using wearable technology to make payments in the future. In a separate pitch room, a series of exciting financial startups announced their bold plans to an audience of potential investors and influencers.
You can watch videos of all Wired Money talks in our video hub, or read Wired.co.uk's full reports from the day by clicking the names below.
30 things we learned at Wired Money:
Banks need to understand what "customer first" really means
"Investment banking is a perfect example of banks forgetting who their customers are," said Giles Andrews of peer-to-peer lender Zopa. "The banking industry needs to do what low-cost airlines have done: identify what is important to consumers and simplify accordingly."
Customers stick to what they know -- particularly where their money is concerned.
"Even if they're not good, protocols tend to stick around," said
Peter Vessenes, founder and CEO of CoinLab, a Bitcoin exchange. "The email protocol designed in the 60s is terrible, but we still use it. With money, it's doubly sticky -- you're almost paid to implement this protocol."
Banks have a very long and hard road ahead of them.
"It could still end very badly for banks," said Richard Johnson of mobile-payment service Monitise. "Banks could just end up as the dumb pipe, the rails over which other people provide high-value services."
Many of us still choose our bank predominantly because our parents are customers, or because it's nearby.
"You wouldn't choose music, fashion or food like that -- why choose financial institutions like that?" asked Yoni Assia, founder of social trading and investing platform eToro.
Infrastructure is a problem...
"Payment systems are holding back online progress," said John Collison, co-founder of online-payment service Stripe.
...and hardware firms need to get wise to that, and fast.
"If you're a company that only produces payments hardware, you better start thinking about how to stay relevant in the future," warned Jacob de Geer, CEO and founder of card-payment platform iZettle.
A little transparency can begin to fix banking's image problem.
Trading platforms need to offer fairer deals without any hidden surprises, said Michael Laven, CEO of foreign-exchange platform The Currency Cloud.
The mid-market exchange rate doesn't exist at your bank.
Taavet Hinrikus set up TransferWise to help us exchange currency at the rates banks do: "Ask your bank to explain the mid-market rate. I guarantee it'll be fun," he promised.
The sector's smaller retailers struggle with data analysis.
To this end, has Darren Oddie formed AGILE Customer Insight to offer easy-to-use, low-cost shopper insight software.
Technology needs to be invisible.
The best type of payment is one you don't see. That's the future of spending money," insisted John Lunn, global director of PayPal Developer, which helps startups integrate their systems with the payment giant.
Emerging markets in the developing world need a dedicated B2B foreign-exchange platform to help them discover the best possible rates.
Leslie Onyesoh founded Kwanji for that reason. "Think of us as... a money supermarket for the foreign-exchange market," he said of the soon-to-launch company.
Banks still don't understand the concept of open source.
By sharing their API with developers, banks can let trusted tech companies do their research and development work for them.
Developers can enhance the banks' apps and digital offerings while ensuringthe banks retain control of their data. That's the idea behind the Open Bank Project, according to founder Simon Redfern.
You've been lending to businesses since you had a bank account...
...you've just had no control or say in the process, and it hasn't always been done necessarily to your advantage. We need to learn to lend smarter and more directly, urged Ed Wray of Funding Circle and cofounder of Betfair.
Investing in startups isn't just for angels and venture capitalists.
"This is the time for investing in startups," announced Jeff Lynn, cofounder and CEO of crowdfunding platform Seedrs. "We need to get that investment out of the hands of the so-called established elite and into the hands of the masses... The model is working, this shouldn't be a surprise."
Wonga isn't going away.
"People want short-term loans, no matter what a loud minority says," insisted founder and CEO Errol Damelin of the digital finance company.
We need to demystify trading.
Major market crashes have occurred, and will continue to occur, because the market no longer has a human interface, said Kevin Slavin from MIT Media Lab.
The VC system is broken.
Stephen Piron founded consultancy Bright*Sun to offer a curated database of businesses for mid-range investors, aimed at countering the herd mentality of VCs. "The best ideas will get money," he said. "The resources will be well distributed."
The basics of saving should be taught as early as possible.
"There is a fundamental disconnect between the way young people today view money and the way the previous generations did," said Lisa Halpern, founder and CEO of Kiboo, which offers budgeting and personal-finance tools to children.
We need to prevent reputational damage caused by our growing digital footprints.
Expectant mothers are posting ultrasound photos on Facebook, so people have a digital footprint before they're even born, said
Alastair Paterson, CEO of cybersecurity company Digital Shadows. "Almost every interaction we have is recorded."
Social media has created a "currency of reputation".
"Personal reputation is going to become a currency and cornerstone of our society in the next decade," said Collaborative Lab founder
Rachel Botsman. "People are realising that their reputation data has tremendous value -- it can help them get a job, a lease or a mortgage."
Banks need to see themselves as peer-to-peer networks.
"Peers drive motivation, not experts," said Anne Pascual of design agency IDEO.
The consumer predicament is like a plot from a sci-fi movie.
"We need data artists to save zombie borrowers," said ZestFinance's Douglas Merrill.
There won't be a Terminator-style rise of the machines any time soon -- but the reality will be just as scary.
"Anything I've learned about giving computers autonomy is that they crash, so I'm not so much worried about them taking over as I am about the present in which they fail dramatically," said Kevin Slavin, founder of MIT Media Lab's Playful Systems group.
Machines may soon need their own social networks.
Stan Stalnaker, founding director of Hub Culture, the social network that runs Ven Currency, revealed that the winner of a hackathon it instigated allowed robots to pay each other using the currency and could share more than just information online.
Financial institutions need to combine forces to face off the threat of cyber attack...
"The relative inability of commercial organisations to share threat information and to collaborate is hampering the resilience of the industry as a whole," said Meline Von Brentano, forward deployed engineer at Palantir. "Hackers often target many institutions. One organisation has only one part of the puzzle. Cyber defence is not about competitive advantage but combating a shared threat."
...And the response needs to be pre-emptive, not reactive.
The reconnaissance phase of a cyber attack has become the most critical phase, according to Alistair Paterson.
"One-snap" payments are coming
Soon, you won't need a chip-and-pin machine, or even a card reader, to make instant payments using your smartphone -- just its camera, according to Stevie Graham of mobile-payment platform Zap.
There's no such thing as bad data.
"If misinformation moves the market, it's valuable to traders," said Paul Hawtin of Derwent Capital Markets, which used social-media sentiment analysis to trade financial derivatives.
Regulators need to understand how banks work.
"We need a regulatory framework that accepts tolerable risks and losses," suggested Sean Park, founder of Anthemis. "Let's start an incubator of regulators. We can crowdsource it. We've got a blank slate, so let's not go straight back to the box-ticking mentality.
Some financial regulations are so inflexible that they're nonsensical
That's according to John Fingleton, former head of the Office of Fair Trading. "Tesla employees, for instance, aren't allowed to tell consumers prices, offer test drives or sell cars," he explained. "This is how regulation can get in the way."
This article was originally published by WIRED UK
