[Dave Birch] I’m doing some work on a technology roadmap in financial services: it doesn’t matter why. But I started to think about the destination: where does the roadmap end? I’ve decided it ends at “the singularity”. The term was coined, as far as I know, by the writer Vernor Vinge back in 1993 (I recently picked up his collected stories but I’m afraid I haven’t started reading them yet). Anyway, he observed that the singularity at the heart of a black hole is the point at which our knowledge of the laws of physics ends: we cannot say anything about what happens beyond the singularity. To paraphrase one of the greatest physicists, Wolfgang Pauli, we can’t even be wrong.

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I couldn’t figure out from the Singularity Institute exactly when it’s going to happen, but I ended my roadmap in 2030, because I thought that the evolution of information and communication technologies indicates that we will reach the processing power of the human brain in a computer before about 2030. This, in itself, is uninteresting. There are, after all, plenty of human brains around already even if they may not always be evident in the payments world.

That’s 25 years away. If we think back 25 years to 1981, nothing much has happened in the payments world has it? In 1981 we already had Visa cards with magnetic stripes on them — OK, so we’ve just migrated to chip and PIN in the UK but the cards still have magnetic stripes on them (in fact my new one still has embossing) — and ATMs, BACS and Western Union. How come it will be so different 25 years from now? The answer, of course, is the accelerating pace of technological change.

We can think about technology singularity, we just can’t think past it. We don’t know (in fact, we probably can’t know) anything about the next generation. By 2040, the processing power of computers will be one step beyond that of human brains and we will, frankly, have no more idea what they are thinking than your dog does of what you are thinking. At this point, a machine may emerge that can work out whether 5.9% balance transfer, 1.5% monthly and 0.5% cash back is better for me than a 0% balance transfer, 1.75% monthly and double BA miles, understand the small print in my house insurance and translate the letter I just got about pension provisions into English.


  1. The problem with innovation in banking & payment systems is that there isn’t any mechanism by which it easily arises internally, and outside innovations are mitigated against. Sometimes things do slip in from outside, such as credit cards, telephone banking, offshore sourcing of support.
    Internet banking is one notable exception, there was even experimentation of different models (download clients, pure web, smart card & token authentication, and even digital cash on smart cards). Maybe this is the exception that proves the rule.
    This lack of innovation derives from the herding effect, which derives from the high levels of regulation. When regulation, or lack of compliance, becomes too costly, an industry adopts a “do-as-we’re-told” posture, so they all end up being the same, as they are all told by the regulator the same things. Basic Porter’s 5 forces stuff, really.
    This is actually good news for their profit levels, as long as the regulator plays fair and blocks outside innovators. (Things like Internet payment systems were not blocked in the US by federal regulators, so arose there instead of Europe where the emoney directive squashed it.) But it is bad news for consumers; I explore how herding effects security in my paper on silver bullets, and as usual, the consumers get the raw deal.

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