Before we begin the technology section of this book, I feel it is necessary to define the types of technology. In my career, I have found that tech always seems to come in two flavors, evolution or revolution.

Evolution is gradual change; it's something that takes time. In technology, it usually means that someone has taken an idea and adapted it to work better, or taken an idea and figured out how to scale it. Revolution occurs when technology fundamentally changes the way an industry does business. Revolutionary technologies are typically new, or present drastically new ways of doing business.

Successful technology platforms really revolve around two things, utility and scale. Utility is key because it is the reason the users come to the system. Scale is important because it implies to the users that the system works (otherwise, why would so many people use it?). Scale also means funding, and funding means that the platform will continually improve.

Let's talk about evolutionary technology.

Evolutionary Technology

I think one of the most successful evolutionary companies in the world is Apple. Now, many people think of Apple as the disruptor, the great revolutionary company, but if you think about it, mobile phones had been around for a long time when Apple came out with the iPhone. Apple evolved it. Nextel, Blackberry, and different kinds of phones were out there for a long time. They even had email—that's what initially made Blackberries different in the marketplace. It was a new idea that you could get your email on a device hooked to your belt (if you were cool, like I was). Blackberries could play music and take pictures. Blackberries even had little games that you could play. I still remember playing Bejeweled and some sort of poker game on my Blackberry Pearl. So what did Apple do different? If all of these features were part of the Blackberry platform, why did Apple disrupt them?

Apple waited around, they watched what happened, and took note of the things that consumers didn't like. One challenge with the Blackberry was downloading applications. Most of the time, to get an app on your phone you had to connect it to your laptop and, as any former Blackberry user knows, connecting your Blackberry to your laptop can often be the kiss of death. I once connected my Blackberry to my laptop to update it before a trip, and it loaded a new operating system. This would've been fine if I had known that it was going to delete all my settings. I spent the rest of the trip configuring the device in my spare time. Apple took note of the fact that it wasn't easy to download applications, that the voicemail function was difficult and clunky, and that Research in Motion (RIM), Blackberry's parent company, needed to continually update devices because of the form factors they choose. Apple resolved each of these issues with innovation.

Visual voicemail, the ability to access voice messages from a visual interface rather than dialing in, was a necessity for Steve Jobs when he envisioned the iPhone. He worked with every carrier until he found one that would support his vision for visual voicemail, and now this feature is a table stake for mobile devices.

To solve the form factor problem, Apple put in the touchscreen, so the device only had one button. This was unheard of before Apple released the iPhone. Finally, the big game changer was introducing the App Store, which was more than just a place to download apps; it was a platform designed to attract developers that would create applications for the device and increase its functionality beyond what the engineers at Apple could envision. Now, one could argue that the App Store was revolutionary, and I could agree with that, but overall, the iPhone platform was an evolutionary process.

Apple disrupted the phone industry like it had done to the personal music industry years earlier. Before there were ever iPods, there were MP3 players. But yet again Apple swooped in with a new strategy, they knew that they were going to create a music service to go with their MP3 players to solve the ever-evolving music pirating issues that was plaguing the music industry. Long before iTunes, there was Napster, a music-sharing service that allowed its users to share any music that they could get their hands on whether they owned it or not. It could be said that Apple was revolutionary in convincing the music business to sell music as singles and implementing the iTunes platform. But I would argue that this was just a natural evolution of the illegal things that were going on with Napster, and that Steve Jobs saw an opportunity to take music in a new direction.

Evolution in Banking

If we look at this opportunity in banking, let's look at the things that have really been evolutionary, that we thought might be revolutionary. I think a good example is personal financial management. In the mid-2000s, personal financial management, or budgeting software, was going to be the next financial holy grail. Every vendor or consultant was talking about implementing a digital way of presenting a consolidated view of a customer's entire book of business no matter which financial institution they banked with on a single screen. The goal was to take all your customer's different accounts, no matter where they reside, and provide a consolidated view where they could see all their financial assets in one place. Mint, Yodlee, and Mvelopes are great examples of this type of technology. These sites are also referred to as aggregators because they aggregate financial information on behalf of a consumer.

Each of these platforms allows a customer to set up each of their financial institution relationships by choosing the financial provider from a list and providing the site with their user name and password for that FI's home banking platform. The aggregator then uses screen-scraping technology to retrieve account balances, history, and other data from the FI's site and display it in an aggregated way. The concern was that if your customers suddenly started flocking to these third-party sites you would lose your opportunity to market your products and services because the aggregators would not be displaying your targeted marketing inside of their site. In fact, most of the aggregators would instead be using the data to cross-market other national credit cards and financial instruments that compete with the FIs that unknowingly provided the data.

Many FIs spent time incorporating a version of this aggregation feature into their own digital offerings to head this trend off at the pass. Over time, though, the FIs that implemented this feature realized that it wasn't widely adopted by the users. The reasons were varied. In some cases, the screen-scraping technology used to provide the balances was unreliable; in other cases, the FI didn't take the time to fully integrate the feature into its entire platform, and because it wasn't front and center on the main page, many customers either couldn't find the feature or decided it was too much work to set up, and as a result, we saw that personal financial management wasn't revolutionary.

Personal financial management never turned into the boom it was supposed to be. To this day, in most organizations that I see using it, about a third of their membership use the personal financial management software. Billpay is a product that suffered a similar fate. Billpay was supposed to be the great game changer. It is often referred to as a sticky product, meaning that if someone goes in and sets up these payees by painstakingly typing in all the information for each of their billers, they are not likely to want to spend time setting up the same information somewhere else, and as a result, they will pay their bills from the FI's DDA account, thus making the FI the primary financial institution for that person. This line of thinking certainly makes sense; however, I haven't seen a lot of organizations that have evolved their bill-paying penetration beyond about a third of their customers.

In both cases, PFM and Billpay, it has taken a long time to achieve a large user base in the financial institutions community. As a matter of fact, Billpay is a great example of an ever-evolving platform. The product providers have added overnight payments, same-day payments, and the ability to do direct payments to billers. Even though there have been many additions to these platforms, they are fundamentally still the same—you put in a biller's address, you say when and how much money you want taken out of your account, the organization or financial institution does that, and the bill is paid.

This service has been disrupted in large part by the billers wanting to have the consumers come to their own sites to pay bills so that they can cross-sell the users on new features or up-sell their service. The billers often encourage the users to pay the bills from their sites instead, using ACH as opposed to paying the bill from the FI's home banking site. This tension often results in the users being confused about the best way to pay their bills.

True Revolution

Now let's examine some examples of revolutionary technology. Revolution comes from the Latin word revolutio, meaning “to turn around.” If something is revolutionary, it changes fundamentally how you think about that thing, how you approach it, and how you go about it. Revolutionary technology is often used as a synonym for disruptive technology. The first name that comes to mind for me when I think of disruptive revolutionary technology is Netflix. I wish I could've been a fly on the wall in the Blockbuster boardroom when it reviewed threats and it was someone's job to update the board on this new competitor, Netflix. I'm sure that the chairman looked at everyone else in the room and said, “OK, what do we know about these Netflix guys?” and an SVP said, “Well, they have a slightly different business model than us.” The chairman replied, “Well what is it?” Feeling a bit silly the SVP stated, “Well sir, they mail DVDs to the customers.”

As he said this, snickers could be heard in the room all around. After a good laugh, the chairman asks the SVP, “What kind of guarantee do they have that they are going to get them back, and how much are they charging for late fees?” To which the nervous SVP replied, “They don't seem to care, sir; they just send you the DVD, and you can send it back whenever you'd like.” This response elicited an even bigger round of laughter than the first round, and they dismissed this silly organization as another of the many weird startups that had been popping up all over the internet and trying to challenge their business model.

We now know the end of this story: In 2000, the CEO of Blockbuster was offered the chance to buy Netflix for $50 million, but Blockbuster passed on the deal, and Netflix eventually killed Blockbuster. Blockbuster didn't see that Netflix wasn't content to just mail DVDs. Its organization recognized that the future of the internet was going to be households having greater and greater bandwidth, and with this development they envisioned a streaming service that would instantly provide access to movies and other digital content in any household. They also recognized that people want to watch videos everywhere—at the airport, at the library, while eating lunch, and they proceeded to work with all the major device providers to make their application available no matter what device you have.

Today, Netflix comes automatically loaded on over 25 different platforms including set-top boxes, televisions, gaming consoles, mobile devices, and major operating systems. Its bet on the future was spot on. Today, there are many services such as iTunes, Xbox, Playstation, and Roku where you can buy a movie that was recently released in theaters, from the comfort of your couch, in your own home and watch it in 4K, full-digital 3D (if you have a TV that can handle it). You can also keep that movie forever by either storing it locally or storing it in the cloud without taking up any physical space in your home. The real key to Netflix being a revolutionary company is that it never stops innovating.

In 2013, Netflix moved on to providing its own custom content, which was also disruptive. Until Netflix started releasing quality shows like Stranger Things and Orange Is the New Black, internet content sites were only known for replaying content from the major networks and movie studios. This was also incredibly revolutionary and disruptive to the networks, the movie industry, and other digital media providers. Consider the fact that Netflix now has major awards from the Emmys and Golden Globes. Apple has not embraced the custom content with its own platforms like iTunes and Apple TV, but based on its history, I would expect Apple to do so soon and to have a different take on it—perhaps interactive television shows where the audience participates in the story.

When Netflix started out by sending DVDs to people's homes, it wasn't even sure that it would get the DVDs back. But Netflix pivoted to delivering a world-class technology platform, compelling content, winning Emmys, and pushing the limits of the internet itself. Netflix had other lesser-known revolutionary moments as well. For instance, it operates its entire platform out of the Amazon Web Services cloud. So if you could go back in time and you knew what Netflix would become, what could your organization have done to take advantage of its success? Would you have approached Netflix while it was still small about payment services? Allowed it to directly debit from your customers' accounts? Maybe you could have started a campaign to encourage your customers to put your credit or debit card into Netflix as their preferred form of payment, or maybe struck a deal with Netflix to advertise its product in return for reduced fees for your customers.

Time Travel Challenge: If you could go back in time and visit your own organization, knowing what you know now, what technologies would you bet on that you didn't before? How would you organize your company to be ready for today? Don't focus on the obvious things, like home banking and mobile, as those are pretty easy. Focus instead on payments, and the things you wouldn't have done. What positions would you hire earlier? What systems would you replace? What products would you discontinue? When you finish, compare these to your organization.

The Financial Revolution

So, what is a revolutionary tech, or what does it look like in financial business? The most revolutionary technology that I can think of that fundamentally changed the way we do business is remote deposit capture. Remote deposit capture, as many know, is the act of taking a picture of a check with your smartphone, flipping that check over and taking a picture of the backside, and then sending the images to the financial institution to be processed in a Check 21 format. The FI would then instantly deposit the funds to your account. Introduced by USAA, this feature quickly became popular and was duplicated throughout the industry. But what's more amazing to me is the fact that my then-65-year-old mother, not exactly a tech-savvy maven, saw this technology and said, “Woo hoo, I'm never going to the bank in the snow again,” and through a sheer force of will, she learned how to use this feature.

She learned how to take her social security and VA checks and process them using the Check 21 feature. More importantly, not having mobile deposit became a deal breaker for many consumers. For a while, they waited for their financial institution to get the feature, but when it didn't deliver, they began the process of switching to a financial institution that offered the feature.

Getting this feature up and running became a challenge for all but the largest institutions. Many financial institutions had to wait to install this solution because of the magnitude of this service's success. Vendors who provided technology services, specifically mobile banking providers, were besieged with requests to implement this feature. This created a backlog of implementations because they didn't foresee this coming, and since mobile programmers were in high demand and other projects were already in flight, many FIs had to wait for a long time before providing their customers with this service. Over that time, how many consumers walked away? How many customers kept their account with the bank but started doing most of their banking elsewhere, so they could take advantage of this feature? This revolution was not spotted soon enough, and as a result, business was lost for institutions at the back of the implementations line.

How do you spot revolutionary technology? How do you handle evolutionary technology? The first thing is when you are looking at revolutionary or what I call innovative tech, right away, if it is not displacing something in your world but it is adding something new, you can at least say its innovative, and if it scales quickly, then it is likely to be revolutionary. If you're replacing your home banking or going to another bill-paying platform, that's not revolutionary. One great example of a revolution that is ongoing right now is the success of the Amazon Echo and the Amazon Alexa platform, the voice-based platform that Amazon has been pushing out into the world.

It's become a normal thing to see in people's homes. It scaled quickly; it was easy to put out there. It was not something I already had in my house. I did not have a talking black piece of plastic that I could ask about the weather or when movies were on or have it turn off and on my lights. I did not have anything like that. That was a great example of revolutionary tech that was not displacing something in my home. It wasn't a new form of my TV, it wasn't a different form factor on my computer—it was something radically different that I had to interact with in a different way.

By contrast, evolution involves scaling or building on a current idea. Electronic bill paying evolved from risk-based versus good funds models. Personal financial management evolved into setting goals for consumers and implementing safe-to-spend models. The mobile phone evolved into an MP3 player plus a mobile phone. It then evolved to include a camera. The mobile phone continued to absorb things that we carried around daily until we got it into a smaller, more compact offering that we can keep in our pocket. But that was ever evolving. If you think about it, scaling that was hard. We had to wait for cell towers to get into place. We had to wait for them to support LTE. We had to wait for them to support 4G. As a matter of fact, there was a time in this country that if two people were on different cell providers such as Verizon or T-Mobile, those two people could not text each other. That may seem crazy looking back now, and I believe we will look back at our payment methods in much the same way. It will seem crazy to our grandkids that we ever carried around a plastic card that we could lose or break. The trick to technology is how to spot things and see them as they come around the curve. To help you learn to identify revolutionary technology, in the next paragraph I am going to share with you some examples of things that I believe are going to be revolutionary technologies. The first one is artificial intelligence, or personal assistants. I mentioned it earlier; I mentioned Alexa. There is a whole new group, such as Siri—another artificial intelligence personal assistant. I think that in the future, you're not going to talk about what kind of cell phone you have. You are going to talk about who your personal assistant is, and how well that personal assistant is connected into your world. We are going to see these personal assistants grow in intelligence, they are also going to grow in their ability to connect to your world. They are going to connect to your email. They are going to connect to your task platforms. They are going to connect to your phone. They are going to read your voice mails. They are going to be able to read to your emails and respond to your emails. They are going to connect to your websites where you do your planning. They are going to be able to go in and make changes to your accounts, all by speaking to them. The next one is distributive ledger technology, also known as blockchain. It is a decentralized network that allows entities to directly interact without a entity in the middle. Understanding this technology is going to be particularly important for the financial institutions of the world. Distributive ledger solves a great many problems that financial institutions face when doing business with other organizations, moving money around, making payments, as well as selling and tracking assets. Blockchain technology, the underlying elegant technology that was invented to support the Bitcoin platform, will turn out to be a game changer in the financial space—and I am going to devote a whole chapter to that later, so hold on to that thought.

Finally, the other evolving technology is sovereign identity. Today, we have a password crisis. We all have too many passwords; we have too many usernames, and it has created fraud, it has created extra work for the call centers of the world, it's frustrating, and now we are going to see that identity is going to become like currency. The impact of this new technology will be felt worldwide, and again I am going to devote a whole chapter to sovereign identity.

What should you do when you identify one of these technologies? The simple answer is to dabble—this helps your organization to gain experience with whatever the technology has to offer. I have drawers full of stuff that I will never use again but I don't consider any of these devices to be a waste of money because I learned something from each one.

Apple Pay, Google Wallet, and Samsung Pay have all recently evolved into the marketplace, and yet none of them has started the payment revolution that everyone predicted. Instead, these platforms are considered just another layer in the ever-evolving payments ecosystem. Each of these systems were built on top of the very old payment rails that exist in the world today because none of them were willing to take the risk to create a new network.

Consider that Samsung bought a company called Loop. Loop had what I would call revolutionary technology that allowed people to translate their credit cards into magnetic communication that could be used at any store that has a magnetic point of sale device (POS) (if the POS doesn't need to have the physical card in it to operate). Thanks to my curiosity and identifying this technology before it was mainstream, I could experiment with the Loop technology long before Samsung purchased it. Understanding how this technology worked helped inform my perspective on its place in the payments world, which, in turn, helped my clients understand how to prioritize it in their project plans.

There are times you must go all in on these things, and there are times that you can just dabble. Dabbling is almost always a safe bet, as it usually isn't expensive to evaluate emerging consumer technology. It's valuable to have organizational knowledge about new technology. If you oversee your financial institution's innovative destiny, then it needs to be on your horizon to look at things like artificial intelligence, virtual reality, and drones. All too often, we tend to dismiss things that we just do not believe are going to have any direct effect on us, and that's really something that we must resist the urge to do.

You might dismiss cars that drive themselves because there's no use case for financial institutions. However, you must also consider the social impact that new technology can have on your business. How will self-driving cars change the way FIs do auto loans? How do you evaluate the impact it may have on the economy? How has a platform like AirBnB impacted your mortgage business? Could a case be made that less people are defaulting on their loans because they have a new source of income? Are new homebuyers considering AirBnB in their purchase plans? How many of the vehicles that your customers have financed are being used for Uber every day? What could your organization do to embrace these trends? Are these trends a threat? Those are the kinds of thinking exercises that executives need to continually be having with their boards and senior management. Just having the skill to recognize whether a technology is revolutionary or evolutionary is not enough. Your organization must also have the courage to capitalize on these insights.

As we go through the technology portion of this book, we're going to point out things that are evolutionary, point out things that are revolutionary, and more importantly, continue to try to help everyone put together a plan to identify the difference.

Here are some things to think about when evaluating a new technology:

1. Would customers be willing to leave your organization if you didn't have it?
2. Does it scale quickly and easily?
3. How hard is it to set up?
4. What kind of utility does it provide, and how often is this utility needed?
5. How much does it cost?
6. Does it replace anything? (If not, it's additive.)