Sponsored by Offit | Kurman, Attorneys at Law, KatzAbosch, CPAs & mindgrub

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Forecasting the next decade of global opportunities and challenges in emerging technology

Alec Ross is a technology policy expert, former Senior Advisor for Innovation to Secretary of State Hillary Clinton, and author of the New York Times bestselling book The Industries of the Future. Drawing on its author’s years working in both the private and public sectors on issues involving innovation, public policy, international relations, and communications, The Industries of the Future maps out the sweeping global changes we can expect to see over the next ten years, addressing opportunities, challenges, and difficult questions along the way. Now in its sixth printing, the book covers emerging technologies in fields such as robotics, cybersecurity, genetics, banking, and defense. The New York Journal of Books lauded it as “a riveting and mind-bending book,” and Google CEO Eric Schmidt called Alec “one of those very rare people who can see patterns in the chaos and guidance for the road forward.” Alec is also currently distinguished visiting fellow at Johns Hopkins University.

Alec Ross spoke with citybizlist publisher Edwin Warfield for this interview.

EDWIN WARFIELD: You’ve told us about robotics and genetics. What’s next for the banking and finance industry?

ALEC ROSS: Banking has gone from being what we think of as a big building with Doric columns on Main Street that we walk in to transact our banking, to right now everybody pretty much wants to be able to reach in their pocket, pull out their mobile phone, and engage in as complex financial transactions as they want to or choose to. I think this is an inevitable trend, especially when you look at the behaviors of millennials. Millennials never want to walk inside a bank, and this is true not just for millennials inside United States, but globally. And so I see financial services broadly becoming less place-based and more based in zeroes and ones. The means for connecting and transferring those zeroes and ones are our smart phones.

Now, the challenge for the banking industry is to keep up—and then, if they can keep up, to lead. There’s a very significant amount of R&D and M&A activity that takes place inside big banks so that they can keep up, but it would not surprise me if five years from now one of the biggest banks in the world is a bank we hadn’t heard of yet but that was designed to be all digital from the outset. I do think that digitization and the rise of mobile banking is something that the financial services sector is coming to grips with but not always happily.

What’s interesting too, when you think about mobile banking, is it’s not just about payments. You know, many of us know the story of Square, which started off as a little white thing that you could push into your cell phone and then swipe a credit card through—which basically took, you know, $1,000-$2,000 worth of hardware and turned it into a little white square that you could put into your phone. It made everybody a merchant. That’s really interesting and important. But what’s even more interesting to me is the potential for mobile banking to transform not just the transfer of funds but also lending itself.

I see this with Square Capital. With a real-time view into the books of everybody who’s using its product, Square obviously has access to great data about the creditworthiness of these small merchants, and these small merchants oftentimes are in need of short-term working capital, but they’re too small necessarily to get involved in a months-long process of getting a credit line or something like that, or maybe they simply don’t want to. Square Capital did a little pilot where they said, “All right, well, let’s see if our omniscience into their books allows us to create sort of a microloan program.” And in its first year of operation, they made more than $100 million worth of loans to 20,000 merchants. So, in addition to just the paying for things and the transferring of funds, one of the things that’s really interesting to me to see is will lending be turned on its ear by digitization and by mobile technology?

Q. How does the idea of the sharing economy play into all this?

A. The sharing economy is, in my opinion, the most interesting thing that’s taken root in the internet space in the last five years. With the sharing economy—although I hate calling it the “sharing economy” because nobody’s sharing anything in the sharing economy—try to participate in the sharing economy without your credit card, and so I’ll call it the “on-demand economy.” In the on-demand economy, a lot of what we’ve seen is that it can make a micro entrepreneur out of anybody and a marketplace out of anything. Taking latent goods like an empty apartment or a spare bedroom or something like that and turning it into a financial asset, into an economic asset, I think is an overwhelming good. It’s not a surprise, for example, that Airbnb took root after the financial crisis. When people were underwater in their mortgages, suddenly that spare bedroom became an asset that it became increasingly important to try to put to work. And with a platform like Airbnb to enable that, it helped a lot of working class and middle class families make their mortgage payments, and it’s now an indispensable [source of] income for a lot of people.

Similarly, Uber has done interesting and important things in transportation. You know, the idea that an almost cartel-like system of the taxi medallions being only open those who can provide transportation services in a city—that’s pretty much been wiped out by Uber. Now, for all of the good that these on-demand businesses do, what does concern me a little bit is a lot of the kinds of worker protections that we think of as being employer based—you know, workers comp if people get injured, family leave if a family member gets sick, employer-based health insurance, all of these sorts of things—with those largely not existing in the on-demand economy, what I do think it does is it forces us to ask hard questions about “What’s the social contract here?” I’m not saying that Uber and Airbnb have to basically take out their checkbooks and pay for all of the traditional employer-based entitlements, but I do think that as larger percentages of the workforce go from employer-based systems to project-based, on-demand systems, we have to recognize that as those folks get older, as they do get injured, as they do get sick, as they do need things like retirement accounts, and pensions, we have to think about what’s going to fill those gaps because it can’t just come all down on the shoulders of government.

Connect with Alec on LinkedIn

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Founded in 1969,  KatzAbosch is one of the largest CPA and business consulting services in the Mid-Atlantic region. Our mission is to provide the highest quality accounting, tax, financial and management consulting services to our clients. We understand the needs and challenges of our clients and we have made it our obligation to create, grow and protect asset value. The experts at KatzAbosch offer a full service solution while maintaining a tradition of ethics and incorporating the latest technology and unique business practices. Excellence in an industry often begins with how those closest to the company—its clients and employees—feel about it. For these individuals, KatzAbosch is a place where people and businesses excel and prosper. Our advisors can meet all of your service needs including; Audit & Accounting, Business Valuation & Litigation Support, Consulting, Estate Planning & Administration, Financial Institution Services, Forensic Accounting & Fraud Examinations, State and Local Tax (SALT), Taxes & Planning.

Mindgrub was founded in 2002 by a teacher-turned-technologist, and since then we have devoured every project to come across our plate. We are a team that solves client challenges by harnessing the newest technologies. We are not here to churn out code and pixels, we are here to pioneer new methods of learning and user interaction. You can see us leading the way at conferences like SXSW, TEDx, and NAB.

Edwin Warfield, CEO of citybizlist, conducts the CEO Interviews.

If you're interested in reaching CEOs, please contact edwin.warfield@citybuzz.co

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