These days, most of us use our cell phones for a lot of e-mail and texting.  When we need to write a more serious document, we will look to a Microsoft, Apple, or Google product to help.  When we type with our smart mobile devices, while autocorrect can be annoying and shocking, it’s still very fast – and often accurate (except for those times when it is so bad it makes some blush).    But when we type in a document writing tool like Google Docs or Microsoft Word, not only does it present us with the “red squiggly line” as Tom Gibbons (former Corporate Vice President for hardware, games, and mobile at Microsoft), when you do spell check to rid your document of the red squiggly line, the first suggestion is often wrong, resulting in even more clicks.

 

We have all come to accept this.

 

But how did we get here?  It’s one of those things that just sounds crazy when you say it.

 

At what point did it become OK for our smart mobile devices, about one 20^th the size of our laptops, to be better at basic tools for helping us write things?

 

When did that fork in the road happen, and why didn’t we raise our hands and say “excuse me . . . but isn’t backwards?”

 

The fact is that all of the major word processing tools we use lag behind the most familiar smart phone technology.  The good news is that there is a simple solution.  Yesterday morning I had coffee with Tom Gibbons and ActiveWords co-founder Buzz Bruggeman, both Seattleites to discuss this.

 

ActiveWords does many things – but at the end of the day, it’s greatest value is in saving keystrokes for the words, phrases, even the paragraphs you type most.

 

Buzz was asking Tom – whom to speak with at Microsoft about how to get ActiveWords embedded in all keyboards, given success ActiveWords has had with their customers – not the least of which is a 92% renewal rate for their product.  Tom said that he’d think of it differently, for a variety of reasons.  He said instead of talking with hardware people (who have an unusual relationship with the operating system team), he suggested that Buzz should present ActiveWords to Microsoft Office, as the bridge to this laptop/smartphone gap – it’s so clear and felt by all of us – Apple, Google, and Microsoft would be crazy not to take that meeting because the problem statement is so clear.  ActiveWords has already solved the problem, they have a very solid installed base in Microsoft Windows with a beta for Apple’s iOS.

 

Big companies like to make bets that will turn into multi-billion dollar revenue streams. Amazon’s Jeff Bezos says many of those ideas should be thought of like acorns that start out as small things that become giant trees – where patience sometimes takes years.  This is no acorn.  This is about protecting the already multibillion dollar revenue streams of Microsoft Office, Google Docs, and Apple’s platform.

 

Sounds like an ovious solution to me.

It’s that time of year when people make predictions and resolutions.  Some make specific predictions about specific companies – this piece is more about tipping point predictions – things that we are ready for, or that need to happen now.  Some of them are company specific, but they are generally more things that need to happen or that we are all just plain ready for. This starts with something most of us have heard a lot about but we still don’t fully understand – and it ends with something most of us understand and we are fully ready for.

There has already been a prediction post on this site on the future of the ICO market (spoiler alert – SEC regulations will be the norm) and since that one is already coming true – here are ten more that seem pretty likely.

So have a look and send me your reactions and feedback.

 

• Most People Still Won’t Understand Blockchain – but that won’t slow its growth. Blockchain is revolutionary in many ways – as William Mougayar explains in his book The Business Blockchain .  But it’s pretty complicated for most people to understand not only what it is – but we  see it will add value to their business.  That won’t change in 2018 – but that’s OK.  POSaBIT and Wyre are perfect examples of companies that use blockchain to solve basic problems.  POSaBIT is a point-of-sale solution used by companies that can’t legally use credit cards for their product – their product is marijuana and until POSaBIT came along, it had to be an all cash business because FDIC insured banks in the US (which is all of them) don’t let you deposit money if you are in a business that is not federally approved (marijuana is not – though some states such as Washington and Colorado have legalized it). POSaBIT solved that using blockchain.  It’s not worth going into in this piece how they did it – and that’s largely the point – as long as it solved a real business problem – and this was a really big one, most people don’t need to understand how they did it.  Wyre is another example of a company that allows people to convert from one currency to the next at very good exchange rates.  It was a big problem and they solved it using blockchain.  This is the trend we will see continuing – people will be talking less about blockchain and more about the real problems they are solving.
• Passwords will go away – fast – and trust will grow. We have so many IDs and passwords for everything from bank accounts to social networking – and when you stop to think about it – it’s pretty crazy.  It’s rooted in a lack of trust in internet communications and we have this strange solution that has persisted for over 20 years.   For that to go away – there has to be very clear trust on both sides of the interaction, and for that to happen without IDs and passwords, a couple of dominos need to fall.  The first is biometrics – fingerprints, voice, facial recognition are already taking the place of passwords on iPhones and other devices.  But that’s not enough beyond unlocking your own personal phone (which had pretty light security in the first place).  The next piece is that the information has to be in a place that’s un-hackable.  That has also been solved with what’s called the “secure enclave” of the smart mobile device.  The final piece of the puzzle is in some ways the hardest – verifying that the person is who they say they are.  It’s one thing to recognize Ulrich’s face with a stored value of his face – but how do we know it’s not just a picture of Ulrich – and how do we know Ulrich has a valid photo ID (valid, not tampered with driver license or passport, e.g.) to match the selfie.  That’s hard because of the hundreds of documents across hundreds of countries to verify a person.  AuthenticID has solved this and while they did not make headlines in 2017, expect to hear more about them and the big companies that are using their technology – soon.  Full disclosure I work closely with that organization – but that doesn’t change the fact that they are positioned to knock over a big domino in trust and security on the path to shedding all of those silly IDs and passwords.
• US Health Transparency Will Begin. In the US if you make an appointment to see a doctor – it is practically impossible to get them to tell you how much the medical visit is going to cost.  When you say that out loud – it sounds even crazier.  But it’s true.    The reasons for this are understood – and the problem won’t be 100% solved in 2018, but the problem is so bad that people like Andy Singleton are well on their way to creating ways to have transparency in some areas.
• Facebook Death Will Have a Huge Ripple Effect. If you have teenage kids or younger, you probably know that they don’t use Facebook.  Some of that’s because they think it’s for old people and some of it is because Facebook has lost its way and gone too far with marketing and sponging information from users to sell things back to them.    So while it’s not news that Facebook is going to plummet – the interesting thing will be who they drag down with them.  Google will suffer, Amazon will suffer – the list is long and while this won’t happen overnight – the impacts will reverberate farther and wider than we might expect.  There was a time I was bitter for not buying Facebook stock – now I am glad.
• Tesla buys GM or PG&E or Both. Tesla is already changing the world of electricity and transportation.  Right now their growth is limited by their ability to make batteries fast enough in large enough volume.  They will solve that and once they do they can grow much faster if they buy a big car maker like GM or Ford.  If that’s too messy and bureaucratic they might just buy a big electric company like PG&E now that they are selling solar panels.  Tesla is not always in the big conversations amid Facebook, Amazon, Netflix (some call them the FANG companies) but Elon Musk never does things on a small scale and I think he could buy one or both of those companies this year.
• Currency and Credit Cards Get a Run For their Money. Having already mentioned POSaBIT for solving a currency problem in the world of marijuana – currency as a whole is ready for a huge disruption.  The point about trust and IDs and passwords around AuthenticID and blockchain relate to this challenge as well on the cost side of banking – costs they have to end up getting customers to pay (Know Your Customer – KYC and Anti-Money Laundering – AML) are tens of billions of dollars every year.  Teal Networks is just one company that is creating its own currency ecosystem – calling out just how silly bank accounts and credit cards are for taking so much of our money from us under what are really false risks and pretenses.
• Uber will collapse. Uber has been an amazing bow wave of rethinking transportation for the last five years or so, but losing billions and facing internal troubles and legal issues, they seem doomed to collapse.  Lyft looks like it can survive and the idea Uber created will live on – it just doesn’t look like they are going to be able to raise prices and still survive and keep drivers.  This is the only one I hope I am wrong about – but it seems inevitable.
• There will be a Tax on driving – OR an insurance company will offer a steep discount to shift to self-driving cars. Uber and Tesla have forever changed transportation and the way we think about it. The self-driving car is both amazing and embarrassing.  It’s embarrassing because I think we believe we are good drivers and that it would take a long time to teach a computer to be as good as we are – but they did it really fast.  Which means we are terrible drivers.  That means it’s very dangerous for us to be driving when a computer can do much better.  So there will be a big push to get us out of the driver’s seat in a hurry.
• Echo/Alexa/Google Home/Apple Will Have a Privacy Disaster. Home devices are already changing the world – Saturday Night Live did this very funny piece about it already.   The problem is the big brother element that they can be listening to everything we say from arguments to intimate moments.  Somehow – Alexa or Echo will be caught up in listening to something they are not supposed to – or a crime will take place and the police will subpoena the recording to find out what happened and we will learn that they are always listening and that we need to be very careful about talking around them.  This will get ugly.
• Predictive Analytics Will Have Consumer Apps. Ending on a positive note, we have been hearing for years about how companies are using Big Data and Predictive Analytics to get smarter about spending money on marketing and personalizing marketing and flat out getting better about getting our money. What’s going to happen in 2018, and I don’t have a company name for this one, is that someone is going to hand the reins over to us so that we can predict good things – like when our kid needs help on their homework or when Mom needs someone to help her get to the doctor.  Those aren’t great examples – but I think if we could have predictors of what friends and family want and need – we can be better friends and family members, and that will be better.

 

Have a great 2018.

 

We are all tired of logins and passwords, and the promise of switching to the use of biometrics to replace all of that.  The new Apple phone has done a fantastic job of explaining what’s possible for going way beyond the easy to hack fingerprint to the facial recognition stored in the unhackable secure enclave of your phone.

But there’s a problem with that.

As great as all of that is – it still starts at the “second mile” of authentication.  A facial recognition like that can confirm that your face is the same face that set up security, but they don’t do anything to confirm that you are who you say you are.  That’s the first mile of authentication and it’s surprisingly rare.

And if, like a lot of people you are diving into blockchain, while a lot of aspects of blockchain thrive, even depend on user anonymity, other industries can’t move forward until the first mile identity problem is solved. Financial Services and Healthcare are the two big ones that will go nowhere until there is a good, fast, trusted solution for blockchain.

UPort and Civic are two companies that have done a fantastic job of making identity an issue on blockchain.  UPort is focused on the private key aspect of things, and Civic is looking to build on the KYC/AML validation that banks need to do for the First Mile, and leverage that for future interactions in a way that add trust and remove friction from the user experience.  There’s also a company down in South Africa that’s starting to stitch together several of the identity companies on blockchain so there is interoperability between the different solutions offered by the various players in the space – it’s a bit under the radar – which is why I am not naming it, so if you want more about that – send an e-mail to me at ric@ricmerrifield.com and I will tell you a bit more.

Banks and employers will do this when they first establish a relationship with you.  They have to do it by law. Banks have a Know Your Customer (KYC) regulation (https://en.wikipedia.org/wiki/Know_your_customer).   This is getting a photo ID issued by the government, like a driver’s license or passport and making sure you are who you say you are.  They also have to do an Anti Money Laundering (AML) check to be sure you got your money from trusted sources.  http://www.investopedia.com/terms/a/aml.asp?lgl=rira-baseline-vertical.  But they only do it once.  It’s expensive for them – it’s at least $20 per customer for KYC and by some estimates AML checks cost over $7 billion per year (IdentityMind’s web site has that stat). Once they know who you are – they let you get a login and password that could easily end up in the wrong hands because all of the ID/Password information is stored centrally.  We know that Equifax and Target have been badly burned by people hacking all of the ID/password information of customers.

So it seems pretty obvious that doing this once is not enough for an ongoing relationship where you have data that you care about.

And our phones/smart mobile devices never do it.

There are services that will do this in varying degrees.

• Jumio will do it but there are people behind the scenes matching photos like a selfie with a government ID so that takes time,
• OnFido is a reseller of services and they are also an option
• IdentityMind is another company that offers this service and it’s hard to know how they do it just looking at their web site, and
• AuthenticID uses a fully automated process that takes less than ten seconds.

So while there are some choices, once you understand what First Mile authentication is, you are probably shocked that more places don’t to more to ensure that you are who you say you are, from banks, to healthcare, even to other things like the babysitter you hire.

It’s probably because until now there wasn’t a fast, easy affordable way to get this done and verify it on an ongoing basis.

So, What’s going to happen?

What’s going to happen is that people are going to start asking for First Mile authentication, and expect / demand it, and because it’s affordable and the biometric data stays on your phone (in the secure enclave making it unhackable), users will maintain control (via consent) of who gets to see it, and because the data will be so distributed, it will be much less likely that you will have these mass identity breaches that we have been seeing from places like Equifax.

This will become ubiquitous.

As it relates to the blockchain, the frenzy right now is around Initial Coin Offerings (ICOs).  Something we are already seeing is the use of a First Mile authentication service in the registration process for the buyers of ICO tokens.  That will continue as countries continue to clamp down with regulations on ICOs with KYC/AML regulations.

 

OK, Then What’s going to happen?

After this becomes an expected and ubiquitous technology for replacing ID/password to reduce the risk of fraud and theft – it will quickly pivot to reduce time and friction in customer enrollment for apps and services.  There’s about a 20%-25% abandonment rate when people start signing up for a new service because it takes too long and it’s too much typing for what we want to do in the moment.  When you can use your biometric (Second Mile) as an authentication and know that it’s trusted from a First Mile authentication, the enrollment process takes a lot less time to move forward to the first transaction, so abandonment rates will plummet, which means customer conversion rates will soar, which means revenues will also soar and we will be better able to get on with our lives.

There you go.

There has been a lot of talk lately about regulations around ICOs lately as South Korea became the latest to ban ICOs.

There has also been a fair amount of talk about Wall Street and how eager they are to get into ICOs, but cannot because they have Broker Dealer licenses that prevent them from even talking about them with their investors.

It’s rumored that a company is going to get a letter as early as this week, from the SEC, stating that their ICO is not a security.  That would (probably) mean that people with a Broker Dealer license could sell them – so all of the pent up demand in the high net worth community would finally get to invest in an ICO.

Obviously not all ICOs are created equal, and for every SNIP that is very clear and simple in terms of it’s value and business model, there are many more that have no technology and just an idea for a solution.

So how much do you think that would change things?  A little?  A lot?  totally dependent on the ICO?

Sometimes people would prefer to be invisible when they are on the internet.  We are not talking about people who are violating company policy by watching the live streaming game on ESPN. This is the CEO or the investment banker who doesn’t want anyone to know he’s in Bentonville, Arkansas because it could tip off Wall Street or a competitor that they are about to do a deal with Walmart.  Millions, even billions of dollars, could be on the line if someone can tell from their cell phone or some message they send.  There was a time when Bill Gates was supposed to be at a party in Seattle in May, 2008m and someone said that he was in Walldorf, Germany (which is where SAP headquarters are).  For the next week rumors were flying that Microsoft was going to buy SAP.  They didn’t, but then the rumors started that because the specific city he was in was leaked – that alone could have killed the deal.  We may never know.  But it amplifies the point about how important privacy can be for certain people in certain roles.

Something that could actually mask your presence on the internet, be totally anonymous, including what network you are on would also be incredibly valuable and powerful.

It might surprise you that this already exists today.

 

But you can’t buy it.

 

Yet.

 

That’s because it exists in the hands of the military.  They have a vendor who allows anyone to be completely invisible when it comes to technology networks.  You can imagine how powerful this is for them.  The big asterisk is that in the wrong hands, it can also be a really bad thing – because a bit like the stealth technology in aviation, there is no “off” button for this ability to be invisible.  So they are already extremely careful about how they use this because in military and intelligence hands, an asset can become a liability very quickly.

So what’s probably going to happen is that vendor is going to take this incredibly cool and powerful product into the business world.  And to maintain the same level of rigor of who’s on it – they are going to use two tools to manage it:

• Invitation only. This is not going to be something you will be able to sign up for. It’s going to be rolled out slowly and carefully, and top executives at banks and tech companies that often need to do deals in secret are the kinds of people who will be invited.
• Vetted IDs. Once invited – people will have to go through a rigorous process to confirm that they are who they say they are (and that the pass all of the background checks you would expect).  That’s where AuthenticID comes in.  That’s what they do.

 

Once in this system – since users are invisible, they won’t know who else is in this private ecosystem – but they will be able to trust at it is secure.  With all of the biometrics being stored in the secure enclave of their personal device, not only will people be unhackable – none of the IDs will be in one place, by definition, so a hacker would have to try to hack each person’s phone to try to get to them, which couldn’t happen in the first place if you have been paying attention.

 

This is very cool.

It’s very powerful.

It’s coming soon.

It will be more desirable than a golden ticket to Willy Wonka’s factory.

 

Stay tuned.

 

Nike CEO Phil Knight has used “you can make any mistake once” as a core of his management style.  It would be interesting to see if Knight would consider the recent mistake of Equifax worthy of his one mistake mulligan.

In case you missed it, Equifax, one of the top credit reporting agencies in the world, which houses not only a lot of our personal and financial data, but also our credit scores.  They recently had a data breach that exposed the personal information of 143 million Americans.  The US Federal Trade Commission issued this “what to do about it” report (https://www.consumer.ftc.gov/blog/2017/09/equifax-data-breach-what-do)

 

It is going to be interesting to see how this unfolds.  An interesting historical reference from a few years ago was the Target stores breach of 41 million American credit cards.  There are some pretty major and obvious differences between the two (credit card is one thing – going all the way up stream to the credit reporting agency is much worse in many respects), but one key piece is that Target lost the trust of a lot of their customers who have never returned.

For Equifax – the short-term implications are clear and unsurprising – lawsuits are flying:

“Meanwhile, Equifax continues to be slammed with lawsuits over the data breach. The latest financial institutions to sue are the $79 million-asset Bank of Louisiana in New Orleans; Aventa Credit Union in Colorado Springs and First Choice Federal Credit Union in New Castle, Pa.”

These bank lawsuits are important for a reason that might not be obvious – that gets to some of the longer term implications.  Banks already spend at least $20, sometimes into the thousands, just to add a new customer.  They are required to run a number of checks that verify the customer is who they say they are (the Know Your Customer, KYC, requirement https://en.wikipedia.org/wiki/Know_your_customer) and they need to know where their money came from as part of the Anti-Money Laundering (AML https://en.wikipedia.org/wiki/Money_laundering#Anti-money_laundering) requirement.

 

The banks are mad because they are concerned their KYC/AML costs are about to go through the roof – and it’s not a cost they can pass on to the customer.

 

To their credit – the credit reporting agencies have been making efforts to make their data more secure.  In May, they announced that they were using blockchain technology and a company called SecureKey to pass data more securely. https://www.econotimes.com/Equifax-TransUnion-join-Canadian-blockchain-identity-network-trial-685195.

 

One of the reasons blockchain is such a great step here is because trust is a core aspect of blockchain. And Trust is what Equifax has lost at this point, just as Target lost trust.  There are many articles – and William Mougayar’s book The Business Blockchain does a fantastic job of describing it.

But there’s a problem with this approach.

 

This Canadian blockchain solution assumes the customer is trusted.  But that’s what just got blown up.

 

This is a “first mile” problem, meaning that banks, and everyone has to assume they can trust nothing about their information and go back and start the KYC/AML process over again for each customer because they can’t trust anyone right now.

 

To make matters worse, they probably aren’t going to be able to ask all of their customers to come back into the bank and re-authenticate their identity to re-establish them from a KYC perspective.

 

What they need, is a KYC/AML solution that customers can do just using their own phone, or any smart mobile device.  This solution has to check a government issued ID like a driver’s license or passport (and it has to make sure it is valid, and hasn’t been tampered, and that it’s not expired, and that it’s actually present) and then compare that with a selfie photo that can be matched to the ID (and lots of checks need to be run on that – that the person is actually there and that it’s not a photo of a photo).  The bank also needs to be sure the phone itself is trusted and that the selfie is actually in the secure enclave of the phone (something which cannot be hacked).  Further – to protect against future attacks, even though blockchain can and should be used to track the trust of the identity that has just gone through another KYC/AML check – the personally identifiable information, PII, of the individual should remain on the phone – where it cannot be hacked.  One of the strategic architectural flaws of Equifax is that all of the data was in one place – so like breaking into a bank vault – you only had to hack one “door” to get all 143 million records.  When you keep all of the PII on the 143 million phones of the individuals – hackers then would have to hack 143 million doors – and in this case with information being on the secure enclave – they are not hack-able.

 

So there you go – that’s the long term solution for Equifax and banking and 143 million Americans.  Oh, by the way, that’s what AuthenticID does.  Today  (hear about their blockchain plans http://tokens.authenticid.co)