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August 28, 2015

How Will The Insurance Sector Handle Aerial Drones?

Posted by Mohan Babu (View Profile | View All Posts) at 8:33 AM

Using drones to survey damage after a disaster [ Source: https://www.youtube.com/watch?v=jCkMf-hFOZo ]

Who knew a day in the park could become so complicated? Ever since man took to flying - first in large balloons, later in planes, and then even in helicopters - there have been miniature versions of these vehicles that have delighted hobbyists and flight enthusiasts for more than a century.

But hook a remote camera onto one of these devices, and you have a completely different device in your hands. At least that's what several countries and a bevy of recent laws have determined. A remote-controlled, unmanned flying device with a camera attached to it is, in many jurisdictions, considered by law to be a 'drone'. Drones are unmanned aircraft systems (UAS) with a wide range of commercial uses such as sports photography, atmospheric research or even goods delivery. Since drones do not have human pilots, they are remotely operated by using data link transmissions. They can be installed with powerful cameras, sensors or facial recognition technology. Operating a drone is a completely different ballgame, as far as the authorities are concerned. Instead of a day in the park flying a model airplane, drones might constitute trespassing or even invasion of privacy on the part of its owner.

Recently, over one of the world's busiest airports, passenger aircrafts had to delay their landings because of the jets' close calls with aerial drones. Although no major crash has been attributed to a drone as of yet (not counting military engagements), its growing popularity has opened up an uncharted territory in the insurance industry. Just what is a drone and what does its owner need to be insured against if he operates one? What about people - the innocent bystanders who might be hit or recorded while going about their business?

The commercial growth of drones is predicted to be significant over the next few years. Sectors like communications, aviation and consumer electronics could see drones accounting for a line of business worth more than $80 billion within a decade, according to experts. And this includes the insurance industry as well. Commercial lines insurers could potentially to be early adopters of drone technology. For example, a property adjuster could make use of drones to capture details of a location or building to gain insights during claims processing. The same holds true for a risk engineer who might use such information for risk assessments. Drones can actually be deployed for faster claims resolution involving catastrophes. Companies like Precisiondrone.com are already offering drone services on their website. Precisiondrone.com lists insurance as one of the markets served, apart from agriculture and public safety. USAA, a financial services company in the U.S., has sought permission from the Federal Aviation Administration (FAA) to test unmanned aircrafts. Several home and auto insurers are also considering the use of drones to improve their services.

While on one hand, insurers are looking at ways to use this technology to improve their services, they are finding it difficult to assess the risks of commercial drone use for the businesses they insure. Insuring an unmanned aircraft system poses a multitude of issues starting from personal injury to protection of privacy to data collection and aerial surveillance. Some insurers are already making a mark in this space. AIG, for instance, has a comprehensive insurance policy called 'Coverdrone' that offers protection in flight, including full cover, along with liability insurance and a host of key extra features. ProSight, a specialty insurance company, has launched a drone insurance coverage designed as a one-stop solution for drone operators. Innovative companies like Skyward uses the cloud to register drones and their operators and to confirm if they comply with regulatory and insurance requirements.

Some of the concerns for commercial users of drones involve the Federal Aviation Administration in the United States (to cite just one country's current situation). The FAA has been roundly criticized by entrepreneurs for lagging behind the boom in drone use. The FAA, they claim, does not have sufficient regulations in place to govern unmanned aerial vehicles. One report used this comparison: imagine a booming automotive industry but with no traffic lights or stop signs at intersections. We could stretch the comparison further: what if there were no roads on which to drive your car? That's not unlike the scramble for air space by drone operators who are beginning to interfere with airline companies that have navigated the skies for nearly a century. Such unchartered territory is yet another reason insurance companies want to underwrite drones and their users in such ways that they are compliant with national (and even global) regulations that are sure to evolve as quickly as the commercial applications of drones.

Recently, NASA held a conference on what some are calling the 'drone economy' in one of its laboratories, which happens to be located, curiously enough, near the world headquarters of Google in Mountain View California. Representatives of Google attended the drone conference, as did executives from Lockheed Martin, Panasonic, and Amazon.com, the last of which has openly flirted with the idea of delivering goods to customers' front doorsteps via drones. What is even more interesting is that NASA is working with private enterprises to develop some kind of drone infrastructure that could in turn be underwritten by insurance companies. Just recently, Amazon.com's founder, Jeff Bezos, suggested that he might initially use delivery via aerial drones in the U.K. because as Bezos said, "the FAA is catching up a little here in the U.S., but the U.K. has been, I'd say, a very encouraging example of good regulation. I think we like what we see there."

Drones, if regulated properly, might also be used as security devices that help insurance companies write policies for manufacturing facilities, banks, or even large corporate campuses when a stationary camera or monitor just won't perform the job as well. On the flip side, insurers might be writing policies for companies that use drones that happen to encroach on private land or record the activities of private citizens. I expect issues surrounding the right to privacy and the rise of the aerial drone to develop into some interesting legal contests in the coming decades.

August 21, 2015

To Create A Global Enterprise, Start With Employees

Posted by Binod Hampapur Rangadore (View Profile | View All Posts) at 5:55 AM

To Create A Global Enterprise, Start With Employees

If you don't think the world is globalizing at a rapid rate, then check out the following statistics: In 1990 there were little more than 3,000 multinational companies. In 2012, that number had snowballed to 100,000.

If you want further proof, watch a World Cup match. The national origins of the companies being advertised around the soccer pitch and on the shirts of the players are sometimes difficult to determine. Those that are easy to determine - McDonald's, for example - are as comfortable in doing business in a bustling city in China, as they are doing business in a small, mid-western town in the United States.

Achieving this level of global seamlessness hasn't exactly occurred overnight. Large enterprises have spent considerable time and funding making sure their global expansions have gone on without a hitch. My favorite story about the pains that come with expanding beyond your shores involve the introduction of the American auto company General Motors' successful Chevrolet Nova to the Latin American market in the 1960s. The car's sales were dismal in that region until someone figured out that 'No va' means 'It doesn't go' in Spanish!

We at Infosys know about the subtleties of global expansion. We've helped countless companies use technology to spread their business wings and open themselves to new markets. Finacle is probably the first global success story - it empowers virtually anyone to conduct banking no matter where they are.

But what about your company's employees? You might have the finest Information Technology in place and your operations are transparent across the globe thanks to Big Data and analytics. But, do your people measure up to your technology? That's a question a group of professors at the Thunderbird School of Management set out to discover. That is, what are the qualities of employees that best prepare them to help drive companies that have big plans to expand globally?

The result was the Global Mindset Inventory, a sweeping study of human capital in an age of globalization. We often scrutinize other forms of capital in our businesses, but what about human capital? It turns out that the people around us can be as valuable as the technology that runs our operations.

According to the study, the ability to grow a global mindset is based on three types of human capital. All three are crucial if an ambitious executive wants to speak and learn beyond her traditional borders. What I found most valuable about the study is that it attempts to quantify that which is unquantifiable - those 'soft' skills that have become very underrated in today's culture of extremely quantifiable technology. Make no mistake: I put the word soft in quotation marks for a reason. These remain skills that are difficult to obtain and they are not for the soft-at-heart!

For instance, the first of the study's three core capitals is Global Intellectual Capital (GIC). By that they mean the cognitive ability of a manager to truly know her business and be able to analyze and interpret global information that will make it easier for her enterprise to grow beyond its current borders. This is a different way of speaking to one's ability to adapt to changing conditions - an ability that's so important when opening offices in a new country where a manager might experience new layers of bureaucracy or local traditions. GIC also speaks to how cosmopolitan a manager is. If you can attend a networking lunch in another country and pick up on the 'vibe' immediately, then you are more likely to make contacts and begin selling your company's products and services faster.

The second core piece of capital is Global Psychological Capital (GPC). At Infosys, we teach our employees about the many facets of Design Thinking because we've found that one of the major components of that way of thinking is empathy - the ability to gauge what other people around you are feeling and thinking. GPC is not unlike the empathy we like our employees to carry with them across the globe.

According to the Thunderbird study, employees who are often chosen for expatriate assignments are those who display tremendous technical know-how in the business, but might not be as empathetic as they should be in a new country. Those colleagues who perform best in a new country are those who view cultural differences as a learning opportunity rather than something to feel threatened by.

Lastly, there's Global Social Capital (GSC). We use this core capital to build long-lasting and trusting relationships with people anywhere on earth. For instance, people in the West enjoy leaning back at their desks and their feet up on the desk. To display the sole of one's shoes to someone in the Middle East-North Africa region, however, is an extreme insult. Someone with high GSC would pick up on those unwritten cues because they can read body language and have an innate sense of local customs and etiquette. When you build trust in a global enterprise through social capital, you ensure that your company is well received in a new country for decades to come.

The best news about these three core capitals from the Thunderbird study is that to a certain extent, much is innate, but the rest can be learned. If you want to be a part of your company's global expansion and success story, build up your own global mindset. But also instill in yourself and others a confidence that your organization can take a very important leap of faith into the global community. Breaking down cultural borders will pay off in big ways down the line.

August 19, 2015

Why Algorithms Are In Everyone's Future

Posted by Dr. Srinivas Padmanabhuni (View Profile | View All Posts) at 9:40 AM

Stanford engineering students teach autonomous cars to avoid obstacles [Source: https://www.youtube.com/watch?v=NNIFNmpB6Oo]

Recently, I was reading a new book about the Internet of Things (IoT) and I was struck by something that the author had written: As markets grow larger and more international, the segmentation of those markets will become all the more precise until each market is segmented to one consumer.

One person! We can thank algorithms for this kind of ultra-focused segmentation. To the average person on the street, an algorithm is nothing more than a mathematical recipe of sorts. But large enterprises are learning to write algorithms that can account for human biases, thereby making the machines that run them more lifelike than ever. We live in an age in which algorithms rule. No longer will senior executives run companies on gut instinct. In the near future, algorithms will be at the core of deep analytics for just about everything: The IoT, financial trading, and, yes, even the driverless car.

Remember how some people had an innate sense of where the capital markets were headed? They would invest their money accordingly and often make big windfalls if stocks rose or crashed. But increasingly those tasks are going to algorithmic trading models that take advantage of the slightest swing in the price of a stock. No gut feelings required.

I was fascinated by the story about Google employees who were working on the very ambitious Google Maps project some years ago. Sometimes the photographs were a little grainy and the employees had a difficult time figuring out whether the images were street numbers on houses or just graffiti. Some engineers at Google wrote some algorithms that turned into what's now known as the Google Brain. It reads the numbers off the photographs of houses and (as you might imagine) has many other uses.

Think about how algorithms are changing the way we travel. Today, the car's computers can anticipate what is transpiring on the road ahead of it faster than a human driver can. Many of us used to think of connected cars and houses as part of a neat home contraption. You could potentially control the temperature in every room of your house as you sat in your office many kilometers away. Or you could unlock the doors to the house or car using your smartphone. The truth is, the Internet of Things has become a lot bigger than just an enabler of home appliances because of the sophistication of the algorithms that run it.

Machine learning algorithms are now a reality. They have already taken control of some industrial systems and have had wonderfully efficient effects on global corporations. Instead of a machine speaking to a manager, a machine talks to another machine - one that is automated and is reasonably intelligent.
 A colleague of mine has said that production lines can now operate for as long as possible and consume as little energy as possible, thanks to machine learning algorithms. They seldom break down and produce items of high quality with the utmost precision. 

Sensors and control systems on production lines that utilize machine learning algorithms can capture vast quantities of data. When these systems are scrutinized with the proper analytical software, it is possible to assess how efficiently and precisely a high-speed cutter mills components. Then, with the benefit of data analysis, manufacturers can optimize their systems to produce less waste, consume less energy, and improve the quality of their products.

Now that all companies, no matter what industries they might be in, are making decisions based on algorithms, their data must be real-time to have the intended effect. Failure to use such tools will cost enterprises dearly. The ones that do use these new 'super-algorithms' and methods effectively will be the market leaders of tomorrow.

August 14, 2015

Updating Bank Technology Results In Rediscovery

Posted by Rajashekara V. Maiya (View Profile | View All Posts) at 7:28 AM

Updating Bank Technology Results In Rediscovery

I was recently listening to a fascinating panel discussion whose members agreed that radio as a medium is enjoying a renaissance. In our high-tech age, who would have thought that a technology as old as radio could have a resurgence?

The fact is, there is a timelessness to listening to that which is entertaining and informative. It might be more than a century since the radio was introduced, but the content has changed very little. It's the devices (from a 10-kg wooden box morphing into a 100-gram smartphone) and the business models that deliver the content that have changed. Broadcasters and producers have state-of-the-art digital editing tools. But people still enjoy listening to their favorite music and news.

This so-called resurgence and rediscovery of radio bears resemblance to the banking world today. The intent of consumers to borrow or deposit money hasn't changed in the last three centuries, but the institutions that serve them are evolving and changing constantly. Banking is necessary...but banks as they are now may not be. To remain viable, banks much make full use of all sorts of technology.

The Cloud is number one on that list. So, why are so many leading banks still apprehensive about embracing it? The answer is: Security. Banks are risk-averse institutions (theoretically, at least) that view such technology with a bit of skepticism. How can a bank vault float around in the ether and potentially be shared with rival firms? I was recently talking to a CIO of a bank in America who proudly told me he had a state-of-the-art infrastructure. Everything at his firm is virtualized. The bank's main network can scale up but updating consumer apps requires someone to work for hours to get things right, he said. These apps are like an old gearbox that doesn't want to behave, he added.

Moreover, the financial services sector is morphing into something very different. Today, you still have a bank vs.bank environment. But, very soon you will start to see a bank competing with a retailer that has a financial arm. In the United Kingdom, Sainsbury's, a grocery chain, is already leveraging a model that includes an on-sight bank. Banks need to respond very quickly to this changing environment. They either have to step up and be first movers or plan on sliding into irrelevancy in the minds of the consumers. 

Moving to the Cloud is not free. My opinion is that the banking industry as a whole needs to step back and look at its budgets, 60 percent of which are locked into contracts that don't involve moving toward the Cloud. This makes it imperative for banks to be more agile about how they approach technology budgeting and purchases. A number of affordable Cloud options are available. In fact, several consumer apps don't need a Cloud interaction at all. Moreover, instead of building out an infrastructure to host Cloud, banks can subscribe to Cloud services on a pick-as-you-go basis. Reputable Cloud providers have plenty of safety and security measures in place. Essentially, there's a Cloud model and an accompanying 'zone' that's tailored for every bank's needs.

The younger consumers are gravitating towards radio. Those same types of consumers are rediscovering banks as trusted institutions of centuries. The only difference is that today, many of those banks are as technologically savvy as the millennials. If not, they should be.

August 11, 2015

Oil Industry Driven By Consumers and IT

Posted by Rajesh K. Murthy (View Profile | View All Posts) at 10:20 AM

Are you fit for 50? : What oil & gas industry is grappling with [Source: https://www.youtube.com/watch?v=YkKhR1lpeHs]

It's easy these days to be bullish about fossil fuels. Like or not, oil still powers the high-tech, digital economy. Sure, some companies have 'gone green' by placing solar panels on their roofs. But a commitment to sustainability can be an expensive one and especially hard to justify when boards of directors are watching how every last cent is spent in a company.

Why does the world remain addicted to oil? Well, because it's relatively cheap and abundant. But what happens when the countries that pump most of the world's black gold decide they want to flood the market with it? Prices of oil futures plummet and have a domino effect on just about every other industry.

I take a longer and more enthusiastic view about the role that alternative energy will play in our future. The prediction that we sometimes hear that the world will only truly develop alternative sources of energy when we run out of the oil is a very pessimistic view. Massive progress is being made around all forms of alternate energy. To be sure, cheap oil prices have lowered the incentive for the development of alternative sources of energy. But the price of oil can skyrocket overnight (much like it has numerous times before). That's why the global community needs to be more prepared to have other sources available that will help industries wean themselves off fossil fuels.

Even in the automotive industry we're seeing an enthusiastic adoption of clean, efficient, electric propulsion. The United States is one of several countries that have come up with very ambitious mandates to reduce fossil fuel emission levels by (in the American case) 2030. Placing massive pressure to increase the supply from alternate sources is smart in many ways. From those who preach 'peak oil' - that we're running out of it sooner than we think - to those who advocate cleaner air and water, the search for alternative forms of energy that are practical makes sense.

Years ago, when a company claimed to be 'going green,' it was often little more than a sleek public relations campaign. But today most of the Fortune 500 companies have real skin in the game. They know that a reliance on fossil fuels is unsustainable in the long run and those who get first-mover advantage - like anything else in the business world - stand to reap the rewards of clean, efficient power sources.

Now there's another player in this scenario that wasn't really present in the past. The consumer. Whereas before, the consumer was passive, today she is an active participant in determining what kind of energy runs her house and business. And when the market speaks, enterprises listen. In fact, the biggest game-changer here might very well be the consumer, not a regional energy cartel. Consumers are increasingly having more say in choosing their source of energy supply. There's yet another new player in the energy markets. And that's information technology. We know with the utmost precision where the world's untapped (and tapped) oil rests, as well as the exact amounts of it. Countries that produce a lot of the world's oil, such as Saudi Arabia, know practically down to the drop how much of it they can expect to extract and store over the next year.

We can thank real-time analytics, Big Data, and advanced geological practices for the ability to know what lies miles beneath the earth's crust. And when it will run out. No doubt about it: Oil is a century-old commodity that's fairly well established as a business. But its days are numbered and information technology is fueling a new revolution. The most successful enterprises of the coming decade are devoting themselves to alternative sources of energy because not only is it a prudent business decision to make. It's a decision that fuels innovation as well. Searching for new and efficient ways of manufacturing and transporting products is good business for all of us: enterprises and consumers alike. Nobody ever said weaning an enterprise off oil that's currently cheap is an easy or popular decision. But in the long run it's the right decision.

August 4, 2015

How Banks Chop Big Data Down To Size

Posted by Dennis Gada (View Profile | View All Posts) at 7:43 AM

Investment banks need big data to thrive [Source: https://www.youtube.com/watch?v=fF8wHSrWQBI]

Your enterprise doesn't have to be intimidated by Big Data if you know how to chop it down to size. Then that data becomes all the more manageable and potent to revving up your business processes. That's just one of several insights that chief information officers often share with me whenever we chat about optimizing their organizations.

One of the key challenges for all banks - no matter at what stage of their IT journey - is how to deal with the promise of Big Data against a backdrop of enormous and often ungainly legacy mainframes that your company might have a difficult time retiring. Part of the issue for large corporations is real estate. Mainframe computers take up enormous amounts of space both off-site and in expensive corporate offices. It's difficult to convince a CEO to dismantle decades-worth of computer hardware because of the promises inherent in the Cloud. Still, it's worth being proactive in convincing your organization to become more nimble and embrace modern technological infrastructure.

Many companies, especially large financial services institutions that (over the decades) have built in-house mainframes, are struggling to reconcile their legacy systems with the ability to efficiently and quickly parse Big Data on various types of Cloud. Some organizations are still working with the traditional ETL model - extract, transform, load - that is a half-century old and completely obsolete. If your organization is looking to succeed in the realm of data analytics and data discovery, using the traditional ETL method can be a nightmare.

The culture of data storage - even at banks - is changing such that in 20 years all enterprises will see storage as a commodity. Big Data might be big, but it's becoming simpler to enterprises that leverage the appropriate technology to use it to their advantage. Given all the new options at their disposal, organizations are becoming tired of the decades-old practice of 'racking and stacking' their technology infrastructure.

I have a colleague who likens the current Cloud storage facilities to gated communities. That is, there are always outside threats from entities that want to get in and steal (in the case of corporations) information. But that's why communities become gated in the first place and then continue to improve their security measures to stay several steps ahead of data thieves.

The act of data consolidation yields a huge amount of savings and cost is a huge driver. In the old days, every enterprise wanted its own warehouse with a unique infrastructure. They wanted things that nobody else had. Of course, such is still the case with leading banks that build on their own legacy systems. But given the tremendous costs these days of maintaining legacy mainframes, many companies are considering the Cloud as a way of boosting their return on equity.

For smaller firms, all the controls are already there. You can buy just about any infrastructure service - and that includes modernizing what you already have in-house. For smaller organizations - and, indeed, vastly larger ones like various agencies of the United States government - Amazon.com offers economical storage space without alerting your organization to others that are sharing that particular Cloud with you.

The hurdle for most enterprises is telling your bank's most prominent stakeholders that sensitive company data is going to be secure on the Cloud. That everything is private and you're not sharing anything with anyone. Indeed, financial firms want to know which virtual rack they are on as well as who might be next to them. Why the obsession with location, location, location? Well, security and data protection remain the top concern of boards of directors and CEOs, the latter of which are bound to lose their jobs over large data leaks. An enterprise must assure its directors that it can encrypt everything that's on the Cloud. Even if the enterprise decides to leave one particular vendor - or even if the Cloud vendor goes out of business.

Then there's the issue of legacy integration. For the largest enterprises, you can't just say that you are going to do everything on the Cloud without looking back to what some like to call the 'the mothership.' If a large enterprise has a number of global data centers, everything changes when you go on the Cloud. Banks must make their Cloud transitions with regulation and compliance in mind.

Not every company has a CIO who is charged by a hard-driving CEO to change the technology infrastructure overnight. In the banking sector, in particular, institutions have been slow to adopt any kind of warehousing situation that is outside their four walls. Banks typically build their own vast, in-house systems, partly because of the prestige and partly because they can afford to do so. The culture of technology at most large banks is that everything is best left internal, especially given changing regulations and industry requirements. But, I think, all of that is about to change.

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