PHOENIX–There may have been no more appropriate location than Phoenix for one futurist’s forecast for a world in which just about everything is going to be burned up and then reemerge with renewed youth and ways of doing things. And it’s going to impact credit unions and arrive sooner than many expect.
It’s a future that includes realities for credit unions as institutions, as branches may actually disappear, car loans will no longer be a product offering, and homes can be ground up and rebuilt in a day; as employers, as jobs change and disappear for both CUs and their members; and as humans, with the same person predicting humanity will change more in the next 20 years than in all of human history.
Thomas Frey, executive director of the Davinci Institute and who is widely quoted as an authority on what the future holds, told CO-OP’s THINK 18 Conference here that it is widely expected that over the next 20 years the average person will be spending less of their income on transportation, food, healthcare, insurance, education, banking, electricity and housing, and there will be implications as a result of each.
Throughout his remarks Frey cited examples of ways technology is going to manifest itself that few have really given thought to, but will have to. That includes a wave of new types of small businesses with which credit unions will be interacting as both members and vendors.
Backward Looking Society
Frey said it’s human nature for society to look backward, as everyone has personally experienced the past. But it’s a temptation that needs to be overcome.
“My job as a futurist is to get people to turn around and get some idea of what the future might hold,” said Frey. “How does the future get created? It’s in the minds of all of us. People make decisions today based on their ideas of what the future might hold. The future creates the present. Our visions of the future determine our actions today. The key thing is if we change people’s visions of the future, we change the way they make decisions today.”
Frey pointed to a quote from Larry Page, CEO of Google, who once said, “The main reason companies fail is they fail to see the future.”
When it comes to credit unions seeing the future, Frey said it’s best to look at some small things.
“Every future industry starts as a micro-industry,” Frey said. “Usually, it’s just one or two businesses that pop up. A lot of the emerging technology we have today is giving us the tools for creating things.”
As an example, he pointed to the shoe wear industry, which represents 21 billion pairs of shoes sold annually. Within five years, he estimated 5% of shoes will be smart shoes.
“My feeling is we are going to have the ability to make hyper-individualized shoes, with shoes for specific people for specific applications. And as a result, we’re going to have a lot of mom-and-pop operations. Here’s where it gets interesting. If you go jogging at night, your shoes could contact a drone that will fly overhead and light up the path in front of you for X dollars.”
Catalytic Innovations
Throughout history, said Frey, catalytic innovations have been those that create new industries, such as electricity, automobiles, airplanes and sewing machines. But all industries are a bell curve, with a beginning, middle and end, observed Frey.
“Most of the profitable industries we have today end up being in the second half of the bell curve, having to do more with less,” said Frey.
Frey has been often quoted as saying that by 2030 more than two-billion jobs will disappear. But he said that observation is frequently miscast as being gloom-and-doom, when it was meant to instead be a call to create more jobs.
“Every time we download a mobile app, we eliminate a tiny piece of a job. But when we download billions of apps, we eliminate millions of jobs,” he said. “We’re not automating jobs out of existence, we are automating tasks out of existence. It’s not like we are eliminating work to do in the world. There will always be work to do. But will there be an actual job to do the job?”
Where will those future jobs come from? Not surprisingly, said Frey, from future industries that will be part of:
Trillion Sensor Movement
Sensors are becoming very inexpensive and embedded everywhere from skin patches to paint. “The first iPhone had five sensors; today phones have an average of 20. The prediction is we will hit the first trillion sensors by 2022, and this will open the doors for lots of micro-sensors.”
Internet of Things
Similar to the point above, Frey noted, “We are connecting the physical world around us. The prediction is that by 2022 10% of the clothes people wear will be connected to the Internet.”
Cryptocurrencies
A frequent point of conversation, debate and misunderstanding both inside and out of credit unions, Frey noted cryptocurrencies emerged out of the recession of 2008 with the creation of Bitcoin in January of 2009 by Satoshi Nakamoto. There have been 50,000 new millionaires in last two years due to Bitcoin.
Frey said the International Monetary Fund has already raised concerns that crypto could replace national currencies—until it’s regulated.
“Right now, the lack of a legal system, the lack of a dependent constituency, and the lack of overall economic responsibilities are all negatives with cryptocurrencies,” said Frey, who added it’s his view “coexistence is the key to the whole thing.”
The coming infrastructure battle raises the question of what happens to banks, according to Frey.
“Within five years, mobile devices will replace credit and debit cards, wallets, lenders, brokers, insurance agents and more–or will it?” he asked his audience. “Will ATMs still dispense cash, or charge phones, or do something different? We are moving to a world of currency-agnostic debit cards. But how soon will we get there?”
Frey predicted that cryptocurrencies will replace 25% of national currencies by 2030, which he said will open the door to cryptocurrency banks, insurance, loans and mortgages, coaches and advisors.
Digital Twins
Once there are enough sensors on a piece of equipment, a digital twin of that object—a ship, an airplane or a turbine, etc.–it means problems can be anticipated and preventative maintenance can occur. The next step after digital twins, said Frey is “remote robotics,” meaning a doctor or farmer can enter a digital twin model and operate on a patient or run a farm remotely, respectively. Both of those applications are already in place.
Branch Banking Apocalypse
Branch banking peaked in 2009, said Frey, who is forecasting that 20% of branches will disappear by 2022. “Once we can start doing virtually everything on our phones, why do we need the real estate? We are closing branches banks at about 1,000 per year, or three a day, and that is going to increase. So, this is a real transition period.”
Flying Drones
Every time new features are added to a drone, it adds new capabilities. Frey said that means the world is headed toward fleets of drones operated by everything and everyone from police departments to sports stadiums to theme parks to farmers. And that will give rise to drone command centers, forecast Frey.
“If we assume that in any city there are 50,000 drones flying over at any one time, what is the role of the city in managing these drones? What are the legal and privacy barriers that protect people? Who has the right to shoot a drone out of the sky? When do we have an obligation to shoot a drone out of the air?”
There are no good answers at this point, acknowledged Frey.
Future Search Engines
Search engines in the future are going to become much more specific and able to search by all new attributes, including in the physical world, such as where is traffic heaviest, and how close was John Doe to Jane Doe?
Driverless Technology
Frey recently wrote a column on 120 things that will disappear in a driverless car era, one of which could have a big effect on credit unions.
“It’s going to take a while before we actually trust this technology. But as a result, car loans are going to start disappearing over the next few decades. If a car shows up only when we need it, we no longer need to own our own vehicle.”
Other fallout from driverless vehicles, according to Frey:
- There will be more vehicles designed for just one person
- There will be queueing stations in front of most major buildings
- Electric cars will dominate
- Life expectancy of an autonomous cars will be less than a year, as it will be constantly moving
- Each autonomous car will replace 30 traditional cars
- The revenue of certain institutions will be deeply affected, such as airports that depend on parking fees
- The $500 billion spent annually now on health care due to auto accidents will no longer be spent
- There will be a loss of sales tax income to cities (plus traffic violations income—NYC brought in $1.9-billion in traffic violations income in 2015)
- Questions will be raised over at what age a child can travel by themselves in a driverless car. A car could recognize parent on one end, teacher on another, Frey said. “This is going to require all new policy discussions.”
“What I see coming next is driverless automated businesses, such as a convenience store that comes to you, or a mobile bank. How about mobile hotel rooms? If there is a big convention, just summon 500 extra rooms. What if there is a disaster and a need in one place for extra hospital rooms? They could also be summoned. Driverless technology is going to be the most disruptive innovation in all history.”
3-D Printing
From living tissue to hearts to full-sized homes to customized pills, 3-D printing is going to revolutionize everything, said Frey.
“People are thinking we’ll be able to print an entire house in one day. But as this improves, we’re not just printing the structure, but the wiring and the windows and the plumbing. So, once you get tired of your house, you can just grind it up and reprint it. We no longer have the need for flat walls. Architecture is going to have a heyday with this. Our very definition of what a house is is going to change. 3-D printers will be equipped to print with more than 10,000 different materials by 2025.”
Artificial Intelligence
“We are standing on the brink of a revolution,” said Frey. “A lot of things are coming to a head. Self-taught AI has already beat doctors at predicting heart attacks. AI can convert images of food into lists of ingredients. AI will be able to scan brains and guess what you are thinking. Microsoft believes it has AI technology that can reprogram cells and convert them back to health and that it can cure cancer in 10 years. By 2030, the largest company on the Internet will be an education-based company we haven’t heard of yet, due to AI.”
Some Reassurance–Sort Of
If all of that sounds intimidating, it should, say Frey. But he also sounded a note of optimism.
“The future is ours to write. The future is never a destination, it’s always a journey,” Frey told the THNK meeting. “Humanity is going to change more in the next 20 years than in all of human history. Risk factors will increase exponentially. Our children’s children who haven’t been born yet are counting on you to make good decisions for the future.”