Ahead of his presentation at the Chief Innovation Officer Summit in London on April 25 & 26, we spoke to Simon Horner, Head of Policy and Innovation, City of London.
Simon leads the team that works to ensure the City of London plays a full role in new product development, helping the UK to gain competitive advantages within key areas such as Green Finance, FinTech and Cyber Security, by partnering with government, regulators and business.
What are the main challenges London is facing today as one of the world's leading innovation hubs?
Managing the relationships between technology and innovation and the communities it operates in. It is not just about making sure London is a centre for innovation. We need to connect people to it. This means as consumers of products and services that can improve lives and raise living standards, but also in terms of jobs and skills. Automation, Fintech, AI and the IoT all have the potential to make things better but they must do so as part of a community – otherwise support for globalisation, technology and innovation will wane.
Given that we live in times of economic and political uncertainty, how can London's business and tech communities ensure that they benefit from upcoming changes, whilst minimising risk and losses?
There are technological trends that are bigger than Brexit, Trump and outbursts of populism. If you look at the history of business and financial services in London, it is a process of constant evolution. Rapid technological change is not new even if its current pace is. Businesses need to innovate to survive – use of technology is not something confined to certain sectors. If you are not changing you’re likely about to face an existential threat and it’s not from politics.
How can startups, established organisations, and the government benefit from each other in terms of innovative initiatives and collaborations?
Start-ups can sell and incumbents can buy. It is the collaboration of customer and vendor. However, government has a vital role to play in ensuring that incumbents are not also economic rent seekers. Those with better ways of doing things through technology must not have their way blocked by incumbents who may be harmed by these developments. Permissive innovation is a key approach for regulators. Technology will always outpace regulators so it’s important that the latter play an appropriate role in facilitating the former. Project Innovate at the FCA is the gold standard in allowing technological improvements in delivering financial services.
With Industry 4.0 fast approaching, what are your thoughts on mass adoption of the IoT and IIoT technology? Also, given the rise of DDoS cyber-attacks, is there enough security provided for the full industrial and customer adoption of connected devices?
IoT presents fantastic opportunities to foster progress and improve lives. In medicine and healthcare, this technology is empowering individuals to take better care of themselves. There are more prosaic things with equally profound consequences in the IoT field as well. Lights have been turning themselves off when there is no-one there for a long-time. But now they are all connected, they can gather data on building efficiency and occupancy and save businesses energy and money.
On security, the answer is no. The innovation side of IoT is running much faster than the cyber-tech that needs to accompany it. There are new attack surfaces being created all the time, many with far weaker defences than conventional ICT. When you consider that some of these are in cars, planes and home security, the ramifications could be significant unless we put cyber security at the heart of product development.
To what degree has digitisation affected operational processes in your field?
In financial services, we are closer to the beginning of the journey than the end. Banks, insurers and wealth managers have of course taken much of their offer online. But this is essentially taking analogue features and giving them a digital presence. The real change is yet to come. This is giving customers a ‘bespoke to digital’ experience where the customer journey is designed with digital delivery in mind. This means that for a mortgage application for example, there is no decision-tree that ultimately ends with you having to pick up the phone. Credit analysis, dispute resolution and ultimately approval all happens via a smart phone. Customer appetite for these kinds of products and services is likely to be considerable.
It is predicted that automation will replace many jobs. Do you think companies and new technologies would be capable of creating as many new jobs as the number of roles that will be automated? What role can the government play in ensuring this transformation is smooth?
There is no way of knowing for sure. The Bank of England says 15 million jobs in today’s economy are at risk of automation. In 1901, 200,000 people were engaged in the washing of clothes – now it’s 35,000 despite a doubling of the population. This represents significant progress and so will this generation of automation. It’s the Government’s role to ensure any transformation benefits the whole of society but firms, as significant community actors must do what they can even as they respond to competitive pressures. But the Government must use public policy, particularly skills, training and infrastructure to make sure the whole population is bought in.
What will you be discussing in your presentation at the Chief Innovation Officer Summit?
I will be talking about how technology is changing the way financial services provides for its customers and how FinTech is not just a standalone sector of small innovative companies, but the means by which the whole of financial services is disrupted and improved through technology.
You can catch Simon's presentation at the at the Chief Innovation Officer Summit in London on April 25 & 26.