Coming from IBM Research, I think of innovation in two dimensions.  First, there is the continuous innovation that goes into IBM’s products and services.  This innovation provides important advances to current technology as well as helps IBM introduce breakthrough products.  The benefits of this approach are clear in IBM’s next-generation computing platform PureSystems.

But we also look for more exploratory challenges that help us advance science by leaps and bounds.  We call them grand challenges.  Meeting them requires a very different set of practices and capabilities – and presents some interesting problems.

And that was the topic today as the Information Technology and Innovation Foundation in Washington, DC hosted a forum with the White House’s Office of Science and Technology Policy, IBM and Qualcomm to discuss how we can meet the next Grand Challenges.

So, what makes a grand challenge?  It must be difficult, inspiring and risky.  These are scientific game-changers by nature – with broad implications for industry and society alike.  Some call them ‘moon shots.’

And as the Apollo program of the 1960′s proved, grand challenges often demand new, cross-discipline thinking and rich models of collaboration among various institutions.

Creating a computer that could compete against human chess champions was a grand challenge. Since the late 1960’s popular wisdom suggested it would be impossible for a computer to ever beat a human grand chess master.   The Deep Blue computer’s winning match against Gary Kasparov in 1997 was a landmark in showing that we understood computing technology enough to take on the task – one we thought was restricted to human intelligence.

The late 1990’s saw a grand challenge of another kind.  In 1997, the Japanese government announced plans to build the world’s most powerful supercomputer – the ‘Earth Simulator.’ In 1999, IBM announced plans to build a new class of high performance computing system that would be even more powerful. BlueGene would go on to, among many other things, crack the complex problem of protein folding.The project represented a deep collaboration between IBM, the Department of Energy and the agency’s National Nuclear Security Administration – in a shared mission to apply the new technology at extreme scales in a highly energy-efficient manner.  And in 2004, it would become the world’s most powerful supercomputer.

Our newest grand challenge is of course the IBM Watson computer.  In the mid-2000′s it had become increasingly clear that deep search and deep analytics were becoming a challenge for commercial computers. Watson was developed to tackle question/answer problems on the largest of scales – and it famously showcased that capability in its Jeopardy! victory.

We continue to pursue this challenge today, extending Watson’s capabilities to industry, medicine and science.  This requires deep collaboration with domain experts like Citi and the Memorial Sloan-Kettering Cancer Center.

These models of collaboration are quickly becoming the standard for tackling today’s grand challenges.  This is why we work closely with our partners as well as encourage our own researchers to work across disciplines.  These are the things that produce the big breakthroughs – and are the blueprint for addressing the grand challenges of tomorrow.

IBM created a culture that embraces the idea of tackling the most difficult challenges. It’s been a priority for us no matter the business environment, so when necessary, we made the tough choices that allowed us to continue investing in the future.

By working together, with both private and public entities to drive research and innovation, we will continue to tackle the world’s largest problems, transforming society and making the world work better.

Technorati Tags: IBM, Information Technology and Innovation Foundation, Qualcomm, White House Office of Science and Technology Policy

I think we can all agree that internet banking has proved itself to be a BIG thing! And yet, banks seem to be way off the pace in terms of quality of service and functionality provided to corporate and business customers online. In fact, I would say that internet banking for business is in a ten year time warp. It feels similar to where retail banks were back in 2000 – when they were still trying to understand what customers would do online and figure out if they could make money from that new-fangled ‘inter-web’.

It’s strange, really. These are the business accounts that are worth hundreds of millions – you would think banks would be lavishing money on them. However, business and corporate banking has remained a largely person to person relationship business. Internet banking has been a hygiene factor rather than a differentiator. This is especially as, by and large, it is small business people or junior finance clerks who most regularly use online services.
But I think this is all about to change – and for a few good reasons (and this list is not exhaustive):

Banks are waking up to the fact they can save money:

• The cost of a person to person service is growing. As relationship managers have to care for larger and larger portfolios of customers, banks will have to beef up their online offerings to compensate

• Collaborative working tools will give banks the ability to work more efficiently with clients – which will save banks money and save customers time. For example, web-chat built in to internet banking will allow banks to share information with customers in real time – answering questions in one touch.

It is becoming apparent that internet banking can differentiate service and  deepen relationships:

• Banks will be able to provide new functionality as a value add – particularly for top end users. By adding quality reporting functionality to online services and making it accessible via mobile / tablet devices, banks can deepen relationships with CFOs

• By offering broader ranges of functionality and more user friendly processes, banks will be able to help their business clients to save time and cut costs – particularly important in the current environment

Customer expectations have grown:

• Online customer experience leaders like Apple and Amazon – as well as retail internet banks – have raised the bar. Customers are already becoming frustrated that they cannot do the things they expect to be standard.

I recently co-authored a white paper on the future of internet banking for businesses – spanning both the corporate and SME markets.  As part of that process, I spent time reviewing all the major business internet banks and talking to users – both small business owners and corporate users. This conclusively confirmed that users want a better service.

Users want banks to get the basics right – which many do not do today. Users want their internet bank to provide a decent user interface – with simple to follow processes, a convenient log in process and proper multi-signature functionality. SME customers want access to a greater range of functionality. Corporate customers want more configurability – and to be able to fulfil their foreign exchange and money market transactions for themselves. However to truly differentiate themselves, I think banks need to look to the future – to the services that customers don’t even know that they need yet – or that banks are too scared to offer (online corporate lending anyone?). As all the banks bring their online services up to the standard of retail banks, that is where I think the true differentiation will lie.

So internet banking for business is in a ten year time warp – but it is starting to fast forward. There are clear areas for immediate improvement (banks need to get the basics right) – but differentiation will be achieved through innovation. Banks need to move now, before they get left behind by their competitors and their customers.

Alex is a retail banking and internet / mobile / social media professional with over 10 years experience.

Alex joined Lloyds TSB in 2000. During his time at Lloyds, Alex worked in both product teams and distribution. In his first permanent role, he managed a customer service call centre team of 100 people. He went on to work in Lean Sigma for Personal Lending and strategy for General Insurance. He also held roles in Telephony and Branch Network Operations.

Over the last few years, Alex specialised in internet and mobile banking. He started as a change programme manager and then moved into product management. In his last role at Lloyds, Alex was the product owner for Loans and Mortgages across the Lloyds TSB, Halifax and Bank of Scotland internet banks – the largest internet bank in Europe.

Since joining IBM, Alex has held implementation roles with UK online banking clients. He has also consulted on Retail, Corporate and Business internet & mobile banking and social media with European and Asian financial services clients.

Technorati Tags: alex bray, banking, banks, mobile, retail

Enter IBM. As part of its African expansion strategy, the company today announced the opening of a new branch office in the capital city of Luanda–following quickly on branch openings in Senegal, Tanzania,and Ghana. In fact, this move represents a re-entry for IBM. It was active in Angola in the 1950s and 1960s. Now the focus is on helping to build a modern technology infrastructure to help the country’s economy continue its growth trajectory and the government provide better services to citizens.

The expansion in Angola gives IBM a direct presence in over 20 African countries including South Africa, Kenya, Morocco, Egypt and Tunisia.  In 2006, the company had a direct presence in just four African countries.

IBM’s smarter planet strategy offers African countries the opportunity to leapfrog other more mature economies. As these countries build out infrastructure ranging from telecommunications and utilities to transportation and health care, they can take advantage of new technologies that make it possible to harvest and analyze vast amounts of data, helping them operate businesses and institutions more effectively and efficiently. The advent of cloud computing offers companies and government agencies the opportunity to access cutting-edge computing capabilities in the form of convenient and affordable services.

Banking will be a key focus for IBM. Already, IBM is helping one of Angola’s major banks transform its core banking technology infrastructure and support business growth. It’s doing projects like this throughout sub-Saharan Africa, including for the First National Bank of Namibia and Union Bank of Nigeria.

IBM is engaged actively in corporate citizenship across Africa. Since 2008, IBM Corporate Service Corps has deployed 250 of its most talented employees on projects in Tanzania, Kenya, Nigeria, Ghana, South Africa, Morocco and Egypt helping to solve local problems with the aim of fostering economic development and job creation. The company plans on increasing its commitment in the coming years.

Doing business in these markets is risky. But, in Africa, typically, some countries are on the rise even while others run into trouble, which is why its smart to place a number of bets. There’s no denying the opportunities, though. African and Western economists and business analysts believe that Africa is at last emerging as an important player in the global economy. IBM aims to play an key role in helping that happen.

To learn more about IBM’s approach to doing business in Africa click here.

Technorati Tags: Angola, IBM

But the bank’s plans for the future are what truly make it stand out. The bank, with two million account holders now, plans on increasing the number of accounts by 25% per year, establish 200 new ATMS per year and open 500 new branches over the next five years. Its mission: to become a world-class commercial bank by the year 2025.

Zeleke and the bank demonstrate that state-owned organizations can be drivers of economic expansion in Ethiopia and all across Africa.”The bank is on a mission to transform its operations,” says Dan Kazungu, IBM’s country representative in Ethiopia.

IBM hopes to help the bank accomplish its mission. The company recently signed a deal to provide it with $3 million in computer hardware, software and services, which, in addition to making the aggressive expansion possible, will also enable mobile and Internet banking services.

Zekele has been a progressive force at the bank for some time.  Last year, he announced plans for a new 42-story headquarters building in the Ethiopian capital of Addis Ababa, which would be the tallest building in the country and the first to be accorded green building certification under international standards.

It goes to show; entrepreneurs can turn up in unlikely places.

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To read a report about IBM’s approach to doing business in Africa, click here.

Technorati Tags: Bekalu Zeleke, Commercial Bank of Ethiopia, IBM

This message came through during a media panel sponsored by IBM in New York recently. The event, “Driving Mobile Payments Adoption in Developed Markets,” featured as panelists Tomasz Smilowicz, global head of mobile banking, Citibank; Kate Kingberger, of the CTIA wireless trade association; and two IBM executives, Alberto Jimenez and David Mangini. “There will be two distinct markets,” said Jimenez, the mobile payments leader for IBM. “One market will be the developed economies and wealthy people in emerging markets. The other will be majority of people in the emerging markets.”

In the United States, it seems likely that mobile money will primarily be a means of conveniently paying for things and interacting with retailers. In emerging markets, its could become the main doorway to banking services for masses of poor people.

Kate Kingberger and Tomasz Smilowicz

Citibank is betting on that outcome, and plans on being the most aggressive mobile money advocate in the world. “Citi was the bank that made ATM’s successful. Now we hope to make mobile banking successful–even moreso,” Smilowicz said.

In spite of the fact that mobile money will develop differently in developed markets from emerging markets, Smilowicz believes that businesses in the West can learn from the experiments elsewhere. One of the deterrents to adoption of mobile money in the US is the fact that a new generation of point-of-sale devices would be required–or seemingly so. He pointed out that Kenya’s Safaricom, the mobile money leader in Kenya, is exploring the idea of putting near-field communications chips in handsets and installing wireless point-of-sale terminals. The cost: an affordable $10 for the phone and $30 for the terminal. “In Africa, they don’t have wired point-point-of-sale terminals, so they have to think outside the box. We can learn from them,” he said.

The panelists were optimistic about the potential of mobile money. Smilowicz stuck his neck out and predicted that in just three years the phenomenon will be mainstream.

Many factors have to come together for mobile money to take off in the US, but the main thing is large numbers of people will have to see a benefit in it. That hasn’t happened yet. Maybe Google Wallet will provide a tipping point. What’s needed is the proverbial killer app.

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Here are links related to this topic:

pymnts.com

The Deal

Technorati Tags: Citibank, Google Wallet, IBM, mobile money

In two weeks I head to Barcelona for GSMA’s Mobile World Congress, the largest annual gathering for the mobile communications industry.

It’s always a great conference, but this year is particularly exciting for us; GSMA’s invited IBM and several of our clients and partners, like AT&T, Ericsson, Korea Telecom, Qualcomm and Vodafone, to exhibit in the Embedded Mobile House.  The house is a new specialty pavilion that gives visitors a chance to engage with an entirely interconnected environment and experience the benefits.

As I prepare for the trip, it’s easy to imagine the potential of embedded mobile technology – if I leave my house without turning down the thermostat or starting the security systems – it would be handy to be able to do either from my smart phone.

But the opportunities that mobile technology creates extend far beyond consumer electronics.  Mobility is the very foundation of a smarter planet.  Given that communications service providers furnish the fabric of the world’s mobility, it stands to reason that pervasive mobility creates tremendous opportunity for these companies – well beyond what’s possible in the saturated traditional communications market.

By expanding service portfolios with specific offerings for key industries like healthcare, retail, banking, and government – the aperture for growth opportunities dramatically widens for agile service providers.  Consider the roll to be played when,

• hospitals transmit patient data to physicians’ mobile devices and integrate it with health records and medical applications.
• transportation agencies aggregate data for all modes of travel and serve them up on a consumer’s mobile device.
• banks allow customers to manage a secure electronic wallet via a smart phone.
• utility workers control electricity networks using real-time mobile monitoring technology.

Each of these systems is dependent on the communications industry to connect them. By reframing the role of the service provider, communications companies gain access to – and create value in – new markets.

The Embedded Mobile House gives us a compelling way to explore these scenarios.  I hope you have the opportunity to experience it yourself – I think it will inspire you to think about how you can you help your clients become smarter with better communication.

Scott Stainken is IBM’s General Manager for the Global Telecommunications Industry.  Please visit www.ibm.com/events/mwc2011 for more information on IBM’s presence at Mobile World Congress.

Technorati Tags: communications, csp, GSMA, mobile, mwc, stainken, telecom, telecommunications

Indeval, a privately-held company that manages the central securities depository and trade settlements for Mexico’s financial markets, is pioneering near-real-time securities trade settlements with a system called Dalí. The system makes it possible to settle trades in seconds, reducing risks for the parties involved and cutting in half the amount of money institutions must have on hand to cover trades. As a result, Mexican banks have saved more than $240 million in interest in 18 months.

At the heart of Dalí is IBM’s ILOG CPLEX optimization software. Its algorithms match thousands of transactions simultaneously, so that only net amounts of securities and cash need to be transferred among the participating financial institutions.

Dalí settles more than $250 billion in securities trades per day, representing about 20% of Mexico’s GDP. It’s  the first system anywhere that operates a near-real-time trade settlement model. “Mexico now has a very efficient system, notwithstanding any other system in the world,” says Jaime Villaseñor, Indeval’s chief risk officer and the leader of the Dalí project.

Thanks to its stellar results, Dalí is getting the attention of other bank monitors around the world and winning accolades from operations research experts. Earlier this year, for example, Indeval won the prestigious Franz Edelman award from The Institute for Operations Research and Management Sciences.

The shift to near-real-time settlements won’t happen overnight, though. That’s because most settlement systems in use around the world now employ complex, multi-step processes. To streamline them and add powerful new analytics features, settlement organizations will have to  fundamentally transform the way they do business–which can be expensive and risky. In some ways, its easier for institutions in emerging markets to make big bets like this, since, often, they have less to undo. So you can expect this sort of financial innovation to come to other emerging markets earlier than developed ones.

Securities trade settlements is just one example of an emerging market leapfrogging in enterprise technology. Now that China and India are establishing themselves as two of the leading global economies, more frogs will be leaping.

Technorati Tags: IBM, ILOG CPLEX, Indeval, Institute for Operations Research and Management Sciences, Mexican banking system, securities trade settlements

The clue: Two of the greatest human Jeopardy! television game show players, ever.  The correct response:  Ken Jennings. Brad Rutter.

Just as IBM set its sights on defeating a chess Grandmaster with Deep Blue in 1997, the company’s scientists have developed a Natural Language Processing, Question Answer machine, named Watson (after company founder Thomas J. Watson, Sr.), to challenge two of the world’s trivia grand masters, to be aired on U.S. television from February 14-16, 2011.

Click here to view the embedded video.

Win or lose on national television, Watson will answer the immediate questions, “does it answer questions accurately?” and “does it answer questions quickly?” with a resounding “yes.”

Beyond excitement for the match itself, the team of IBM scientists is motivated by the possibilities that Watson’s breakthrough computing capabilities hold for building a smarter planet and helping people in their business tasks and personal lives. Watson’s ability to understand the meaning and context of human language, and rapidly process information to find precise answers to complex questions, holds enormous potential to transform how computers help people accomplish tasks in business and their personal lives.

Watson will enable people to rapidly find specific answers to complex questions. The technology could be applied in areas such as healthcare, for accurately diagnosing patients, to improve online self-service help desks, to provide tourists and citizens with specific information regarding cities, prompt customer support via phone, and much more.

Like Deep Blue, Watson represents a major leap in the capacity of information technology systems to identify patterns, gain critical insight and enhance decision-making despite daunting complexity. But while Deep Blue was an amazing achievement in the application of compute power to a computationally well-defined and well-bounded game, Watson faces a challenge that is open-ended and defies the well-bounded mathematical formulation of a game like Chess. Watson has to operate in the near limitless, ambiguous and highly contextual domain of human language and knowledge.

Watson’s technology furthers IBM’s leadership in analytics solutions, which help organizations use the vast amount of information they collect to improve their business operations and service to their customers. Additionally, Watson harnesses IBM’s commercial POWER7 system, showcasing how IBM workload-optimized systems provide unmatched capabilities for processing thousands of simultaneous tasks at rapid speeds, once the realm of only scientific supercomputers.

Read more about the technology behind Watson at ibmwatson.com.

Technorati Tags: business analytics, finance, grand challenge, healthcare, human versus machine, Jeopardy, natural language, question answer, supercomputers, transportation, Watson

So how can we humans get smarter about investing? Through a combination of analytics and data visualization. Marco Monti, an Italian scientist who was hired by IBM in July, is developing methods that investment advisers can use to help investors make wiser long-term decisions. “Technology will allow us to develop a better understanding of behaviors and the role of emotions like greed and fear,” says Monti. “I hope we’ll be able to help common people who are not experts understand that those emotions should be considered over a long perspective. They shouldn’t be a cause for impulsive action.”

Monti does applied research for IBM’s analytics consulting business. He’s a specialist in cognitive sciences and the psychology of decision making with a Ph.D in economics from Bocconi University, in Milan. Through a pre-IBM project, Cognitive Banking, which he led as a post-doc for the Max Planck Institute in Germany, Monti established that if investment advisors had a better understanding of the needs of different kinds of investors and the most effective ways of communicating with them, they could improve decision making and investment outcomes.

Now he’s combining data visualization techniques with other analytical tools to come up with ways of using visualization to get through to people with different levels of financial sophistication. “You can use a more metaphorical language for people with low skills and more statistical visualization techniques for more sophisticated people,” he says.

It’s interesting–and encouraging–that the the power of vision can be used to overcome the powerful motivators of greed and fear.

Technorati Tags: IBM, Marco Monti

There’s no shortage of contests for tech startups in this world, but IBM’s SmartCamp is different. The focus is on companies that aim to make the world work better, and is aligned with our Smarter Planet agenda. We launched the program last year in Dublin and conducted regional contests this spring and summer in Stockholm, Boston, Tel Aviv, London, and Silicon Valley. (This video tells the Silicon Valley story.) There are still two contests left, in Paris on Sept. 24 and Copenhagen on Oct. 7, before the finals in Dublin on Nov. 16. So there’s time for entrepreneurs to get involved. Check it out at www.ibm.com/ie/smarterplanet/smartcamp.

Technorati Tags: IBM, smartcamp, Smarter Planet