Breaking Digital Gridlock: Improving Your Banks Digital Future by Making Technology Changes Now + Website

PRAISE FOR BREAKING DIGITAL GRIDLOCK

"As a science fiction writer I am interested in all aspects of the future, including the future of business, finance, and money. This book is a manual for that future, and it′s a fascinating and insightful read."

Kevin J. Anderson, New York Times bestselling author and noted futurist

"John Best does a brilliant job of breaking down complex topics such as blockchain, AI and machine learning into the what, the why, and the how for non–technical executives. It′s the new desk–top reference for our executive team."

John Janclaes, CEO, Partners Federal Credit Union, Author of Doing What Matters

"In such a fast paced and complex world in technology, John does a great job of breaking down emerging digital technologies. A must–read for any executive looking to digest topics such as blockchain, machine learning, and the future of identity."

John Ainsworth, CEO, CULedger

Foreword xi

Preface xv

Acknowledgments xxi

Introduction xxiii

Five Myths about Going Digital xxiii

John s Story xxvi

Part I Processes 1

Chapter 1 How to Improve Internal Processes 3

Regulatory Gridlock 3

Regulatory Gridlock in Action 4

The Risk Spectrum 5

Flawed Bank Processes 7

Continual Improvement 9

Project Management 10

Waterfall 10

Agile 11

When to Use Agile versus Waterfall 13

In–house Staff and Outside Vendors 13

Process Management 16

Team Organization: Centers of Excellence 17

Cultural Considerations 18

Part II Technology 21

Chapter 2 Tech Evolution versus Tech Revolution 23

Evolutionary Technology 23

Evolution in Banking 25

True Revolution 27

The Financial Revolution 29

Chapter 3 The Cloud 35

The Financial Cloud 36

What Are You Afraid Of? 39

It Is Hard to Control 39

It Is Insecure 40

Data Will Be Shared with Others 40

It s Unreliable 41

It s Super Expensive 41

There Will Be Staff Cuts 42

The Internet Could Go Down 43

It Is a Direct Expense 43

What about Our Data Center? 44

The Cloud Won t Conform to Regulatory Needs 44

The Cloud Kills Baby Seals 44

Types of Cloud Services 45

Infrastructure as a Service (IaaS) 45

Software as a Service (SaaS) 46

Platform as a Service (PaaS) 46

Major Players in the Cloud 47

Amazon Web Services 47

Microsoft Azure 48

Google Compute Engine 48

Commonalities between Each of These Platforms 48

How to Choose? 49

Capital One in the Cloud 49

Strategies for Moving to the Cloud 49

Note 52

Chapter 4 Artificial Intelligence 53

Computers Will Be Trainable 53

Machine Learning: Familiar Names 54

Artificial Intelligence versus Intelligent Augmentation 56

The AI Threat 67

Notes 70

Chapter 5 Application Programming Interface (API) 71

Why Create an API? 71

Getting Started 83

For the Technology Organization 83

For the Services Organization 83

The Second Step 84

The Third Step 84

Chapter 6 Blockchain and Cryptocurrency 87

Bitcoin: A Brief History 87

Decentralization 88

Security 90

Blockchain 91

Permissioned Networks 97

How to Use a Distributed Ledger 99

Part III Security 103

Chapter 7 Sovereign Identity 105

Trust Frameworks 110

Encryption and Data Security 111

Sovereign Identity in Practice 113

Weaknesses in the Current Identity System 115

Phishing 115

EMV 115

Consumer Privacy Concerns 116

An Opportunity for Financial Institutions 116

Note 123

Chapter 8 The Hacker Threat 125

The Artificial Intelligence Threat 127

Planning for the Worst 128

Operation Ababil 132

DDoS Attacks 133

Be Afraid When Things Are Down. Be Very Afraid When Things Are Going Well 134

Security as a Process of Innovation 136

The Equifax Breach 137

Scenario Planning 141

Scenario 1: NSA Backdoor 141

Scenario 2: Ransomware 143

Scenario 3: Cyber Infrastructure Attack 144

Scenario 4: Internet of Things Breach 145

Notes 147

Part IV People 149

Chapter 9 The Digital Change Is for Everyone 151

Human Resources 151

Remote Employees 151

Evaluations 153

Career Paths 153

Incentives and Compensation 154

Recruiting 154

Training 155

Dress Code 157

Facilities 157

Workspaces 158

Wi–Fi 159

Equipment 159

Meet–ups 160

Accounting: Software Depreciating 160

Chapter 10 Who Can Break Gridlock? 165

Common Symptoms of People Problems 168

Lack of Consistency 168

Cost and Time Overruns 168

Human Solutions 169

Chief Digital Officer (CDO) 169

Chief Analytic Officer (CAO) 170

Data Is Money 171

Part V Culture 175

Chapter 11 Culture and Innovation 177

Where Does Culture Start? 178

Culture Breakdowns 180

Contents ix

Culture and Talent 181

Steps to an Innovative Culture 185

Collaboration 186

Communications 188

Rewards and Evaluations 191

Achievement versus Alignment 191

Notes 194

Chapter 12 Culture and Technology 195

A Tale of Two Cultures 195

Having It Your Way BYOP 200

Part VI Strategy 205

Chapter 13 The Long View 207

The Problem: Banking and Financial Competitors 208

Threats: The tions 209

Interchange Compression 209

Cannibalization 211

Digitization 212

Mobilization 212

Disintermediation 213

The Reality of Change 213

Changing Features or Services 215

Cost 217

Service 217

Security 217

Features 217

How Solutions Can Fail 218

Note 224

Chapter 14 Digital Governance 225

Review Proposed Products and Integration 228

Change Control 229

Review Security 229

Accountability 229

Business Continuity 230

Schedule Approval 231

Build versus Buy 231

Final Approval on Recommended Vendors 232

Data Governance 233

Data Quality 236

Data Security 238

Data Duplication 238

Data Engineering 239

Chapter 15 Using Data Analytics 243

Look Ahead 244

Credit Card Usage 246

Usage Monitoring 249

Digital Why 101 250

Digital Marketing 252

Chapter 16 Big Data and the Zombie Apocalypse 259

Apocalyptic Risk 261

Staffing in an Apocalypse 261

Creating Value 264

Digital Insight and Intuition 265

Data Is Valuable 266

Data Is a Discipline 269

Types of Analytics 273

Note 278

Conclusion 279

Cultural Issues 281

People Strategy 282

Process Changes 283

Technology 284

Security 286

About the Companion Website 289

Index 291

JOHN BEST is a thought leader recognized throughout the FinTech arena, with a particular affinity for credit unions. John is the founder and CEO of the financial technology firm, Best Innovation Group (BIG), which focuses on industry–wide code sharing and API prototype development. He speaks regularly at industry events, hosts a weekly FinTech podcast, and facilitates a highly interactive financial technology forum.