In 2010, the BBC and the British Museum collaborated in a project called A History of the World. The heart of the project was a BBC Radio program which focused on one hundred objects from the collection of the British Museum, around which you can tell the history of humanity over the past two million years. That history is presented in a series of fifteen minute podcast about each of the objects, written and narrated by British Museum Director Neil MacGregor and broadcast over the BBC throughout the year.
The objects and podcasts are organized into a number of themes. Money is one of the themes. It is represented by four objects:
- one of the world’s first gold coins produced over 2500 years ago in Lydia, western Turkey, whose last king was Croesus, of rich as Croesus fame;
- a 1375 banknote from the Ming Dynasty, one of the world’s first paper banknotes;
- a silver coin minted in Bolivia in the late 16th Century; these were known as pieces of eight and used as the world's first global currency throughout the Spanish Empire;
- and a plastic credit card exemplifying the changing role of money in the modern world.
Money, as one of the podcasts observes, has been one of the great constants in human affairs, right up there with sex and war. Money was not necessary when people lived in small communities where they knew and trusted their neighbors and could therefore exchange labor, food or goods in kind. But the need for inventing money arose once civilization started to expand and people were dealing with strangers they may never see again and could not trust, as was the case in Lydia and neighboring communities a few thousand years ago. Money has played a major role in the world ever since, giving rise to commerce and economies, enabling the organization of companies and public institutions, and helping communities become more productive and raise their standard of living.
What are those key transformative technologies? It is the same list that comes up time and time again:
- smartphones and other mobile devices;
- the Internet and broadband wireless networks;
- a myriad of cloud-based services delivered from massive cloud-based data centers;
- and vast quantities of information, from which trends and insights can be extracted with powerful supercomputers to make just about everything smarter.
It is very hard to anticipate the consequences of disruptive technologies, especially those technologies that end up transforming something that is part of the very fabric of society. Electricity, for example, eventually led to the assembly line and mass production. The automobile had a major role in the rise of suburbs. More recently, it was clear from the earliest days that the Internet and World Wide Web would revolutionize communications and access to information. But the disruptive consequences of e-business, social networks and online music caught most of us by surprise.
Few things are as integrated into just about every aspect of society and our daily lives as money. So, as happened with the Web, we can expect that the transition to universal mobile digital money will bring with it many unanticipated consequences. Let’s examine what some of these might be.
Smart digital wallets. When we leave our houses, we carry a variety of money instruments with us in our pockets, wallets, purses and briefcases. For example, I put coins and small denomination bills in my pants pockets. I carry the larger denomination bills in my wallet, along with an assortment of plastic cards, including my ATM card, and a number of credit cards, some of which I use often, others less frequently. I also carry peak and off-peak tickets for the Metro-North train to New York City, a MetroCard for the NYC subway and another one for Washington’s Metro. When in London, I also bring along an Oyster card.
In addition, I carry a number of ID cards: my driver’s license, and IBM and Citi IDs; cards for the Bronx Zoo, Norwalk Maritime Aquarium and other such institutions and museums I am a member of. I have a couple of health insurance cards, an ID card for my local library, for AAA and AARP, as well as a few store loyalty cards. In my briefcase I have a bunch of airline frequent flyer cards and hotel rewards programs. A number of other cards sit in a desk shelf.
I sometimes struggle a bit to fit my bulging wallet into my pants or coat pocket. It sometimes takes me a while to find the proper cards. And, we can only expect an increase in the number of such cards that we are issued. Which is why all of us are looking forward to the advent of smart, digital wallets as one of the most useful tools in helping us organize our lives.
As their name implies, a digital wallet is a software platform designed to run in our smartphones that supports a variety of money and ID oriented apps. I would expect that my personal mobile phone will include just about all the various items I carry around in my wallet today, making it easier to quickly find the right card and leaving me with a thinner wallet. Just like the browser has emerged as the standard for accessing Web information over the Internet, the digital wallet will emerge as the standard for accessing money, as well as financial and identity information.
Those standards are evolving. Near Field Communications (NFC) technologies and standards, for example, are already being used for exchanging information between devices over very short distances - about 10 centimeters or 4 inches. NFC will enable mobile devices to be used for contactless payments in stores and subways, as well as enable virtual ID cards to get us into museums and passed airplane security checks. Because smartphones have sophisticated software, they don’t need to be told to select the MetroCard app when getting into the NYC subway versus the Oyster app for the London tube, or to access the right virtual card for NY’s Museum of Natural History versus the Bronx Zoo.
Many standards remain to be defined and agreed to, especially around identity and security. Before long, our smartphones will include a variety of biometric features, including perhaps fingerprint and retinal recognition for those transactions requiring a higher measure of security. But, there is no question that smart digital wallets are just around the corner.
Universal inclusiveness. For many of us, the advent of smart digital wallets is the kind of semi-magical technology innovation we have become so accustomed to that we barely notice. But for billions around the world, these digital wallets are their ticket to inclusion in our increasingly global and digital economy. That’s because the digital divide, - the gap in access to digital technologies among people of different economic means, - is much smaller with mobile phones than it has been with PC’s and broadband Internet. There are already over 5 billion mobile phones around the world, including over a billion each in China and India. Mobile phone-based payment services like M-PESA are already in wide use in Kenya, Tanzania and other African countries.
Today, only a relatively small fraction of the 5 billion mobile phones in the world qualify as smartphones. But, over the next few years, that picture will clearly change. I would not be surprised if five years from now, mobile devices that only makes phone calls will be quite rare. Most everyone will have a mobile device smart enough to support browsers and digital wallet applications.
This is a huge deal. People may no longer need to qualify for a bank account or credit card to be part of the world's digital economy. Several billion people will become part of the world's economy through their mobile devices. Companies, from the largest to the smallest, will want them as customers. Governments will provide them all kinds of services. They will be offered new kinds of banking relationships. This will usher a plethora of innovative apps, many of which we can barely imagine today.
m-business and m-government. To me, the transition to universal mobile digital money feels like deja-vu all over again. It reminds me of the early days of IBM's Internet Division, when a lot was starting to happen around the Internet and World Wide Web, but it was not clear where things were heading. The lessons from that experience seem to apply here as well.
The e-business strategy we finally settled on was discovered in the marketplace, not in the labs. This is going to be even more true with mobile devices because of the huge number of people using them out there in the real world. There will be lots of market experimentation. Many apps will be created, some will be silly and fail, but some will be brilliant and transformative. I can’t wait to see what m-business, or whatever we end up calling it looks like five to ten years from now.
In addition, because of the central role that governments play in regulating financial and identity transactions, the public sector will likely have a bigger role in this mobile-driven transformation than it had with e-business. The more inclusive nature of mobile devices will make it easier for governments to develop all kinds of new digital services for interacting with citizens. I suspect that many of the most innovative m-government services and apps will be developed in emerging nations, where the need to find efficient ways of dealing with the billions joining the digital economy is greatest.
Just like with the transition to e-business, every single business will have to embrace this digital money revolution - or else. But for many existing institutions, this transition won’t be easy, because of the cultural transformation required.
In general, it is easier to predict what the future will be like than the rate and pace at which that future will arrive. The transition to universal mobile digital money has already started, but it will likely take many years to play out. But, there is little question in my mind that a couple of decades from now, future versions of A History of the World will include a mobile device with a smart digital wallet and a plethora of innovative apps as one of its historically transformative Money objects.