This is a write up of a short talk I gave in May 2017 as part of Leila Johnston’s Site Sessions events. This is what I wanted to say but not sure if I actually did or not (until the video surfaces that is).
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Hello. My name is Aden and the title of my talk is not ‘make art note’ but I was in Amsterdam last week and this old warehouse was outside my hotel and it seemed fitting. My talk is actually called make banks open. I am going to talk to you today about banking regulation (sorry I will try and make it fun)…and hopefully how it will unleash art on the world of finance.
A little bit about me, I worked at HSBC for over 17 years i.e. 6258 days in total. I worked in a variety of technical roles and latterly in the innovation function (no sniggering HSBC customers) trying to make the bank better. I largely failed. But I still work in the industry but I am freelance now. I have unfinished business with banks.
I want to talk about 3 things in the next 10 minutes. How regulations are forcing the banks to be more open. How those changes are leading a lot of companies to believe they can solve the problems of our financial lives. And finally, thankfully a little bit about how these changes will let the art into banking, I hope.
In 2008 banks fucked the world. Over extended credit on massively complex and opaque financial instruments such a credit default swaps and mortgage backed securities brought the whole house of cards crashing down. Leading to massive government bailouts of the banks that were deemed systemically important to the worlds continued operation. This brought about mass austerity and can be blamed for a lot of societies ills today.
This crisis also fucked the banks, less so for certain but still caused them a lot of pain. Historically low interest rates rendered a lot of their old business models almost useless and they made enemies in very powerful places. The governments and the regulators. This should not have been possible and it should never happen again. A raft of huge regulatory programs were unleashed…
Now you may think this was too little too late….and you may be right but the changes that have been put in place have largely been about protecting consumers from the casino like attitudes of large banks, betting the house on fallacies. These regulations came in many shapes and size and with many weird names…two of the largest were…
Dodd-Frank a set of measures aimed at US banks (the ones that largely caused the disaster) to improve the transparency of the banks especially with regards to products like derivatives.
This also introduced the Consumer Financial Protection Bureau, an agency designed to protect consumers from banks treating them unfairly….
This set of measures is currently under attack from the Tangerine Despot who hates its figure head Elizabeth Warren, the scourge of banks in the US. This is a disaster that will hopefully not come to pass.
The other large global set of measures are Basel III. These measures mean that banks have to hold a far higher percentage of actual liquid capital i.e. real money to avoid them over extending themselves again. Also a series of stress tests are undertaken at regular intervals to test the strength of banks all over the world to try and simulate similar crises to test their resilience now.
There is a new set of regulation that is coming to our shores soon. It is an EU wide piece of legislation AND I AM VERY EXCITED ABOUT IT.
….are you ready for this?
Boom. The Payments Service Directive 2: The revenge. Or PSD2 as it is more commonly known. It is, in my humble opinion, going to change the face of banking to a greater extent than anything I have seen in my adult lifetime (most of which has been spent working for banks).
Well my dear….let me tell you how and why it is so exciting.
There are a whole host of measures contained within the page turner of a document. Ultimately the ones that will impact us most are the following.
This set of regulations is an attack on the middle men of payments. Predominantly the big ones. Visa, Amex and Mastercard. When was the last time you did not buy anything without using those? This will introduce measures that will open up payments.
This will be achieved by the introduction of the snappily titled Payment Initiation Services and Account Information Services. New regulated entities that will be allowed to put in and take out money from your bank accounts directly in the case of the PIS. And for the AIS the ability to receive your transaction and balance data automatically in near real time.
And that is very exciting because it enables a lot of very interesting things to become reality.
Open Banking UK – doing great work to ensure the slow bureaucracy of Europe is not hampered by inertia, or lobbying from those affected etc. This is a shift that is happening across the world. Canada, Singapore, Australia and the US are all starting their own open banking programs and the tide is not going back out….
(Since I gave this talk the API specifications have now been published https://www.openbanking.org.uk/read-write-apis/)
These functions form around 90% of day to day banking functions for most people
If new regulated companies have access to these services they can be pseudo or neo banks and that means we should see some real innovation in the space which has been sorely lacking.
PSD2 is signed into European Law on the 12th of January 2018. The technical measures included need to be in place within 18 months of that law being in place. Which is a long time to wait but thankfully the Competition Markets Authority in the UK has stepped in and put some tighter timescales in place around the data part of these requirements. The first banking APIs for transaction data in the UK must be live by January next year…or else.
So the pipes are opening….what comes next? Efficiency dreams.
Throughout history the organisation of your finances has made people about as a happy as these two. I am sure you have all been in similar situations where one person in the relationship weighs your money, while the other partner stares into space wishing they were dead. It is a dull affair for the majority of us. Either a chore of indifference or something that we blissfully ignore.
The Money Changer And His Wife by German painter Ludwing Von Langenmantel
There are some that love it of course. Accountants, Spreadsheet nerds, organised people that will pour over their finances and models for hours. Planning everything to the nth degree. You know, sociopaths. For most that is out of reach both skill wise and desire wise. The stereotype I would like to lean on is that creative people are less organised / bothered by money? Anyway I hate managing money and I wish I was a spreadsheet nerd.
This is not helped by most internet banking interfaces. They may as well be bank statements sellotaped to a monitor for the purposes of making a point in presentations. This statement is from 2013. Nothing has really changed.
Little has improved since the desktop apps of the 90s that took money management to a fine art of budgets, bar graphs and pie charts. Their are lots of people who remember these so fondly.
Some banks have attempted to introduce money management features to banking. In the industry these are called PFM (Personal Financial Management). Does it really help you manage your money? Kind of I guess. Does it make you feel anything at all? Meh.
There are people that might be thinking but I have an app and it is perfectly acceptable. And I am sure it is lovely in a perfunctory kind of way. Most people have not seen what good really looks like.
In retail banking startups like Monzo are eyeing up current accounts and thinking they can build something better…something more loveable both from a using and viewing your money point of view but also as a compnay. Something that they describe as ‘the bank of the future’
And there are many, many others who are excited about being the bank of the future and what PSD2 brings to them as they can build better products, more quickly than the tardy old incumbent banks. So they see PSD2 as the second coming. They are right to think like that.
The perceived path of all this is to beautiful place where we all have our own AI powered financial advisor. A digital private banker for the masses running our financial lives perfectly and removing all worry. That is the utopian dream of financial services…as a technologist I am intrigued as to how this utilitarian dream plays out…
But…it all feels a bit boring. More regulated industries making solutions they think fit in with what the mythical person of today (largely millennials) want from finance. That we want to be organised and efficient and that is the goal. It bores the arse off me.
What is not clear in these regulatory measures is can I have access to my own data to build my own things? In the UK it looks like this will be available for data. And this gives us some more interesting possibilities. If you can code then you can make. You can solve your own problems. Make niche solutions only you would use…but others may find useful. This has long been the source of real innovation.
And this is where I see real opportunities to let the art in. Because I don’t just want VC funded white men building the banks of the future. While they may well be perfectly designed to improve my white metropolitan elite life and reduce my flat white intake to save me money I want more…
Artistry in banking is largely limited to the notes we use. As I am sure you are all aware this is the bank note of the year for 2016. I will be honest I find it quite ugly and confusing.
This years hot favourite however is beautiful. I mean look at it. I want more if this but applied to the digital interfaces of money. And for that we need more artists.
I want interfaces designed by people like Stef and Giorgia. For 52 weeks in 2015 they set themselves a data recording challenge and then posted the results to each other. Their brilliant hand designed visualisation posted across the world every week a few years back are inspirational in many ways. A great book and now permanently installed at MoMA in new York. What would banking services made by Stef and Giorgia look like?
What would Sheffields Own Universal Everything think finance should look like via their imagined new screens and interfaces? I don’t know but it would be nice.
You can see more of their work on this project at https://www.instagram.com/p/BTbfnz-Fq0I/ and https://vimeo.com/215164746
How about Manchester based artist Brendan Dawes with his algorithmic art. This is a piece of work he created last year in conjunction with dutch payments company Adyen to visualise payments
‘With this piece I asked myself what if you could peer inside this system and see payments being added to the network. Rather than create some kind of representation of networks I instead wanted to create a world where these delicate moments seemed to float down into the network and suggest they are almost delicate in nature. Each representation is constructed from various parts of the data — the shape is born from the transaction category / vertical whilst the texture is derived from the type of device that was used. The colour is then informed by where in the world the payment took place’ Lovely.
How about local pirates and purveyors of fine gadgetry pimoroni? What would they make from the mixture of transaction data and payment ability with their marvellous machines? The physical to digital and back to physical has not really been experimented with in financial services. I think this is a rich seam of wonder.
As James just said about his shop Makers, there are many ludicrously specific economies out there and I am hoping that the PSD2 regulations opening up access to more varied companies and individuals will lead to some ludicrously specific solutions that might be built for the few but actually end up being beneficial to the many….not in a Tory way obviously.
One piece of work from a few years ago that really stuck in my head was Heidi Hinders Money No Object. Heidi researched new ways to make museum donations more interactive. This image shows the handshake agreement, RFIDs contactless payment methods built into the gloves, there is also a hive five interaction, a tap dance payment where the payment method is built into shoes.
Using RFID to bring physical interactions to payments…here is the hug and pay. Bringing different gestures and human contact to payment.
You can watch a short documentary about the project there is also more written about it over here
and returning to currency this was also by Heidi…she took everyday coins and left them in petri dishes to see what delightful bacteria formed. A vice versa of where there is muck there is brass…either way I find it quite beautiful
This is what I want to see a lot more of. I want more poeple like those mentioned above building things to do with money. Thanks to the regulations forcing banks open and releasing new data and materials into the world to make with hopefully they can.
I will end with this quote from John Maeda on design and art. I want better and different questions than the ones currently being asked by banks of fintech firms. I want to see something truly different and I have a feeling art and artists have an important role to play in that. Thanks.
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Slide 4: In the new world of PIS. No card details are exchanged. Instead a token based connection is made, The merchant makes a request to Ada’s bank / card provider for a token based relationship to be formed. This then creates a direct link to Ada’s account. Unique to the merchant. Ada is in full control. A failing at the merchant means she does not have to cancel cards. The merchant must be licensed in some way to be able to move money in this way. They will be known as PISPs. This change also cuts out all those other pesky mainly American card scheme and allows new players to emerge, it also starts to make current accounts more platform like.
