Often called the father of Finnish online banking, Bo Harald is someone who would rather talk about the expertise of his team than of himself. Nowadays, the former executive vice president of Nordea is busy working with data-driven economy — and updating his Goodreads profile. We pick his brain to find out how a real-time economy can be built and what it will mean.
What is a real-time economy?
A real-time economy is an economy where all financial and administrative transactions are generated automatically in a structured form and completed throughout the value chain in real-time. In a real-time economy, the valuable data is available without delay. What is meant to be forwarded is forwarded right away. What is meant to be stored is stored in secure places — increasingly in distributed and thus more secure blockchain ledgers. Needless to say, real-time automated data will save mountains of money and take service levels to new dimensions.
Where did the drive towards a data-driven economy start for you?
I saw payment process automation as an important mission for banks when I joined Union Bank of Finland in the 1970s. When we launched home and workplace banking back in 1982, we could see that it increased customer satisfaction dramatically — but some customers complained that we had outsourced the keying in of payments to them. Eventually, we were able to eliminate this work by introducing e-Invoicing.
So e-Invoicing was a major step in moving towards a data-driven -economy?
Yes — from the users’ point of view to begin with. But soon after the launch, we learned from the Finnish Federation of Industry, the State Treasury and the Federation for Municipalities that the annual cost saving potential from automating data in incoming e-Invoices could add up to 3 billion euros. That’s when we started to feel really important.
E-Invoicing is nearly done. What’s next?
Some 400 million structured e-Invoices were sent in Finland last year (out of some 550 million) — a world record in relative terms. The next building block is the e-Receipt in the same Finvoice format as the e-Invoice. The estimated number of receipts is some 1.7 billion and as approximately a tenth of the purchases are done with corporate cards, the first target is to get the data automatically into accounting. The cost savings potential is estimated to be around 900 million euros a year. Big money — but also building the base for a real-time economy big data revolution!
Is the real-time economy building a big data revolution?
Yes! We are now moving far beyond just automating accounting with the help of over 2 billion structured e-Invoices and e-Receipts. The purchase lines in these can add up to over 20 billion “data baskets”, containing not only the amount and VAT but also EAN code specific information about the goods that are bought (how many pieces, what colour, date of production, best-before, how many hours, how many kilowatts, how much CO2, how many calories, bought together-with and so forth). To take this thought further: adding one number to the EAN code would make every Coke bottle in the world an individual. All of this data is both MyData and, when added up, Bigdata — and indeed important information for the seller and the buyer. This is, naturally, an area where small enterprises would benefit from more analyst support from their accountants.
However, the real revolution steps in when the purchase lines create automated VAT reports and Tax will be able to automate its processes, forecast the cash flows for itself as well as forecast the economy while creating big data about what is bought where, when, by what segments, together with what — and how this all relates to regional and income development and product news. All in real-time. In an ideal world, this real-time and trusted big data should be available to enterprises and consumers alike — naturally without causing risks to business secrets and privacy.
What are the other building blocks in a real-time economy? And what will they all together enable?
The human-centric approach to Service Design is gaining momentum. In fact, the Finnish Ministry of Finance has set as a target to make Finland the first real-time economy in Europe. The EU commission has established a horizontal initiative — using our real-time economy name. Many reasons to be proud.
So a real-time economy is the core of a data-driven economy?
Yes — both as the model and as the data it supplies. Automation of financial and administrative data is a massive improver of productivity and it should also be the model for all other data. The payment service directive (PSD2) is the trailblazer both for data standardization, availability and the Single Market. It means that if you give an application authorisation to withdraw money from your bank account, it has to work in the same way in Rovaniemi and Rome. We can thus proceed data-by-data — with the support of very much needed data protection regulation (GDPR) and the global Finland-headquartered MyData thought leadership rise to “Life event-driven” Service Design.
What do you mean by life event-driven service design?
Life event-driven service design was called customisation in the 1990s, so it is not new, but it is so much more needed today. AI will help to make services radically more user-friendly. In simple terms, it is all about starting from a person’s (later also a robot’s) life event at home or at work. A life event is anything humane that touches us all: looking for a job or for a new home, establishing a business, searching for financing, going to the doctor, seeking education, getting married, having a baby. They add up to thousands of situations in which you need data. Some of that data is data that you are aware of and can find effortlessly, some is not — but you should have. You then empower a service provider to go and get access to the data (wherever it is). Their AI will then suggest data to suit your needs and combine it with big data to make the best suggestion for you or solve the whole need right away.
The slogan for this revolution could be: do not serve your customer, serve their life event!
So the mission is to improve both productivity and service experience. What else?
These are the two biggest reasons. But by driving ecosystems and applications to serve better, we will at the same time speed up adoption of distributed ledger technology and Single Market harmonisation. Finland is so much ahead both in building and using the needed ecosystems that it is a responsibility to use our pole position not only for us, but for Europe and beyond.
To summarize the mission — the ‘Why’ we press forward with RTE building blocks and the MyData driven service design:
- Productivity leap (RTE eco-systems and applications)
- Service design leap (GDPR/MyData for life events)
- Technology leap (DLT)
- Artificial Intelligence leap
- Single Market leap (PSD2 and GDPR as foundation)
So AI is not just hype?
No — even if it has such characteristics. However, AI needs data and the value of real-time, verified, trusted and GDPR protected data is central to its success. We should also try to make the journey understandable — and that is best done by looking for what data we can add and improve with AI when serving life events. What is simple is understood, what is understood is repeated and what is repeated will change the world.
On the topic of GDPR-something we have all talked about a lot this year — should GDPR be global?
Absolutely. Apple’s CEO has already stated the obvious — that it is needed in the US next. Google and Facebook already have to live by it in Europe anyway. You only have to read Yuval Noah Harari to realise that democracy is threatened if personal and corporate data is used in wrong ways.
GDPR and MyData are the foundation for both Digital Human Rights and making data much more useful.
Why is all of this so urgent right now?
Many reasons, especially for Finland and Europe at large.
The need to improve productivity in the global economy in face of a rapidly shrinking workforce is more than obvious. In addition to that, the evermore cost-efficient technology (cloud computing, DLT, IoT) and regulation (PSD2, GDPR etc.) actually force enterprises into digitalization of processes and services. It will be a do-it or die for a growing number of businesses.
When you look at society at large, citizens will have less and less time and even less patience to surf around for bits and pieces of data and we can now also serve people who do not use Internet as they can empower data service providers (on paper or over the phone with face recognition) to go and get the data needed for a life situation. The data driven economy can boost a true Single Market more than any other measure in sight — and once there, it will be the biggest in the world.
There seem to be huge possibilities to grab, but why are concrete and so simple steps so difficult? None of this seems utopian.
The challenge today is that the information and to-do overflows have led to changes in the human brain that has reacted by cutting our attention span to around eight seconds (the goldfish has an attention span of nine seconds, they say). This means that we spend too little time trying to see the big picture. In my small company (and we are some 20 million in Europe) I will not save that much money by moving to e-Invoicing or e-Receipts. I do not believe that automated accounting, VAT reporting and credit processes will cut costs very much. And even if it is huge for society at large some do not really care. Some AI enthusiasts do not perhaps see how important data a so-mundane e-Invoice and e-Receipt can deliver.
So, what should we do?
Either we continue to improve our message and hope for the best, or we go for regulation. Surprisingly small things can make a surprisingly big difference. For instance, households did not save that much money and CO2 through the outlawing of light bulbs, but it was the right thing to do for the sake of our planet, of course. The whole world of trading, telecom, transportation, retail data and so forth, is very strictly self-regulated as well as government-regulated into mandatory standards. In addition to this, we have now moved forward with, for example, PSD2, GDPR, and the National Income register. The truth is that we cannot stop here — especially as we know that the Single Market is important. We do need more good regulation. That being said, it is still important to work on the narrative — the push part being direct savings of 5 billion euros a year in Finland alone — and then, perhaps now more importantly the pull part: the right to get your GDPR protected data into your life situation and have it enriched with BiG Data, at home and at work. Action is all.
Words: Bo Harald Photography: Bryan Saragosa