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Converging exponential technologies will transform media, advertising and the retail world. The world we see, through our digitally-enhanced eyes, will multiply and explode with intelligence, personalization, and brilliance.
This is the age of Web 3.0.
Last week, I discussed the what and how of Web 3.0 (also known as the Spatial Web), walking through its architecture and the converging technologies that enable it.
To recap, while Web 1.0 consisted of static documents and read-only data, Web 2.0 introduced multimedia content, interactive web applications, and participatory social media, all of these mediated by two-dimensional screens—a flat web of sensorily confined information.
During the next two to five years, the convergence of 5G, AI, a trillion sensors, and VR/AR will enable us to both map our physical world into virtual space and superimpose a digital layer onto our physical environments.
Web 3.0 is about to transform everything—from the way we learn and educate, to the way we trade (smart) assets, to our interactions with real and virtual versions of each other.
And while users grow rightly concerned about data privacy and misuse, the Spatial Web’s use of blockchain in its data and governance layer will secure and validate our online identities, protecting everything from your virtual assets to personal files.
In this second installment of the Web 3.0 series, I’ll be discussing the Spatial Web’s vast implications for a handful of industries:
News & Media Coverage
Let’s dive in.
Transforming Network News with Web 3.0
News media is big business. In 2016, global news media (including print) generated 168 billion USD in circulation and advertising revenue.
The news we listen to impacts our mindset. Listen to dystopian news on violence, disaster, and evil, and you’ll more likely be searching for a cave to hide in, rather than technology for the launch of your next business.
Today, different news media present starkly different realities of everything from foreign conflict to domestic policy. And outcomes are consequential. What reporters and news corporations decide to show or omit of a given news story plays a tremendous role in shaping the beliefs and resulting values of entire populations and constituencies.
But what if we could have an objective benchmark for today’s news, whereby crowdsourced and sensor-collected evidence allows you to tour the site of journalistic coverage, determining for yourself the most salient aspects of a story?
Enter mesh networks, AI, public ledgers, and virtual reality.
While traditional networks rely on a limited set of wired access points (or wireless hotspots), a wireless mesh network can connect entire cities via hundreds of dispersed nodes that communicate with each other and share a network connection non-hierarchically.
In short, this means that individual mobile users can together establish a local mesh network using nothing but the computing power in their own devices.
Take this a step further, and a local population of strangers could collectively broadcast countless 360-degree feeds across a local mesh network.
Imagine a scenario in which protests break out across the country, each cluster of activists broadcasting an aggregate of 360-degree videos, all fed through photogrammetry AIs that build out a live hologram of the march in real time. Want to see and hear what the NYC-based crowds are advocating for? Throw on some VR goggles and explore the event with full access. Or cue into the southern Texan border to assess for yourself the handling of immigrant entry and border conflicts.
Take a front seat in the Capitol during tomorrow’s Senate hearing, assessing each Senator’s reactions, questions and arguments without a Fox News or CNN filter. Or if you’re short on time, switch on the holographic press conference and host 3D avatars of live-broadcasting politicians in your living room.
We often think of modern media as taking away consumer agency, feeding tailored and often partisan ideology to a complacent audience. But as wireless mesh networks and agnostic sensor data allow for immersive VR-accessible news sites, the average viewer will necessarily become an active participant in her own education of current events.
And with each of us interpreting the news according to our own values, I envision a much less polarized world. A world in which civic engagement, moderately reasoned dialogue, and shared assumptions will allow us to empathize and make compromises.
The future promises an era in which news is verified and balanced; wherein public ledgers, AI, and new web interfaces bring you into the action and respect your intelligence—not manipulate your ignorance.
Web 3.0 Reinventing Advertising
Bringing about the rise of ‘user-owned data’ and self-established permissions, Web 3.0 is poised to completely disrupt digital advertising—a global industry worth over 192 billion USD.
Currently, targeted advertising leverages tomes of personal data and online consumer behavior to subtly engage you with products you might not want, or sell you on falsely advertised services promising inaccurate results.
With a new Web 3.0 data and governance layer, however, distributed ledger technologies will require advertisers to engage in more direct interaction with consumers, validating claims and upping transparency.
And with a data layer that allows users to own and authorize third-party use of their data, blockchain also holds extraordinary promise to slash not only data breaches and identity theft, but covert advertiser bombardment without your authorization.
Accessing crowdsourced reviews and AI-driven fact-checking, users will be able to validate advertising claims more efficiently and accurately than ever before, potentially rating and filtering out advertisers in the process. And in such a streamlined system of verified claims, sellers will face increased pressure to compete more on product and rely less on marketing.
But perhaps most exciting is the convergence of artificial intelligence and augmented reality.
As Spatial Web networks begin to associate digital information with physical objects and locations, products will begin to “sell themselves.” Each with built-in smart properties, products will become hyper-personalized, communicating information directly to users through Web 3.0 interfaces.
Imagine stepping into a department store in pursuit of a new web-connected fridge. As soon as you enter, your AR goggles register your location and immediately grant you access to a populated register of store products.
As you move closer to a kitchen set that catches your eye, a virtual salesperson—whether by holographic video or avatar—pops into your field of view next to the fridge you’ve been examining and begins introducing you to its various functions and features. You quickly decide you’d rather disable the avatar and get textual input instead, and preferences are reset to list appliance properties visually.
After a virtual tour of several other fridges, you decide on the one you want and seamlessly execute a smart contract, carried out by your smart wallet and the fridge. The transaction takes place in seconds, and the fridge’s blockchain-recorded ownership record has been updated.
Better yet, you head over to a friend’s home for dinner after moving into the neighborhood. While catching up in the kitchen, your eyes fixate on the cabinets, which quickly populate your AR glasses with a price-point and selection of colors.
But what if you’d rather not get auto-populated product info in the first place? No problem!
Now empowered with self-sovereign identities, users might be able to turn off advertising preferences entirely, turning on smart recommendations only when they want to buy a given product or need new supplies.
And with user-centric data, consumers might even sell such information to advertisers directly. Now, instead of Facebook or Google profiting off your data, you might earn a passive income by giving advertisers permission to personalize and market their services. Buy more, and your personal data marketplace grows in value. Buy less, and a lower-valued advertising profile causes an ebb in advertiser input.
With user-controlled data, advertisers now work on your terms, putting increased pressure on product iteration and personalizing products for each user.
This brings us to the transformative future of retail.
Personalized Retail–Power of the Spatial Web
In a future of smart and hyper-personalized products, I might walk through a virtual game space or a digitally reconstructed Target, browsing specific categories of clothing I’ve predetermined prior to entry.
As I pick out my selection, my AI assistant hones its algorithm reflecting new fashion preferences, and personal shoppers—also visiting the store in VR—help me pair different pieces as I go.
Once my personal shopper has finished constructing various outfits, I then sit back and watch a fashion show of countless Peter avatars with style and color variations of my selection, each customizable.
After I’ve made my selection, I might choose to purchase physical versions of three outfits and virtual versions of two others for my digital avatar. Payments are made automatically as I leave the store, including a smart wallet transaction made with the personal shopper at a per-outfit rate (for only the pieces I buy).
Already, several big players have broken into the VR market. Just this year, Walmart has announced its foray into the VR space, shipping 17,000 Oculus Go VR headsets to Walmart locations across the US.
And just this past January, Walmart filed two VR shopping-related patents. In a new bid to disrupt a rapidly changing retail market, Walmart now describes a system in which users couple their VR headset with haptic gloves for an immersive in-store experience, whether at 3am in your living room or during a lunch break at the office.
But Walmart is not alone. Big e-commerce players from Amazon to Alibaba are leaping onto the scene with new software buildout to ride the impending headset revolution.
Beyond virtual reality, players like IKEA have even begun using mobile-based augmented reality to map digitally replicated furniture in your physical living room, true to dimension. And this is just the beginning….
As AR headset hardware undergoes breakneck advancements in the next two to five years, we might soon be able to project watches onto our wrists, swapping out colors, styles, brand, and price points.
Or let’s say I need a new coffee table in my office. Pulling up multiple models in AR, I can position each option using advanced hand-tracking technology and customize height and width according to my needs. Once the smart payment is triggered, the manufacturer prints my newly-customized piece, droning it to my doorstep. As soon as I need to assemble the pieces, overlaid digital prompts walk me through each step, and any user confusions are communicated to a company database.
Perhaps one of the ripest industries for Spatial Web disruption, retail presents one of the greatest opportunities for profit across virtual apparel, digital malls, AI fashion startups and beyond.
In our next series iteration, I’ll be looking at the tremendous opportunities created by Web 3.0 for the Future of Work and Entertainment.
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The boundaries between digital and physical space are disappearing at a breakneck pace. What was once static and boring is becoming dynamic and magical.
For all of human history, looking at the world through our eyes was the same experience for everyone. Beyond the bounds of an over-active imagination, what you see is the same as what I see.
But all of this is about to change. Over the next two to five years, the world around us is about to light up with layer upon layer of rich, fun, meaningful, engaging, and dynamic data. Data you can see and interact with.
This magical future ahead is called the Spatial Web and will transform every aspect of our lives, from retail and advertising, to work and education, to entertainment and social interaction.
Massive change is underway as a result of a series of converging technologies, from 5G global networks and ubiquitous artificial intelligence, to 30+ billion connected devices (known as the IoT), each of which will generate scores of real-world data every second, everywhere.
The current AI explosion will make everything smart, autonomous, and self-programming. Blockchain and cloud-enabled services will support a secure data layer, putting data back in the hands of users and allowing us to build complex rule-based infrastructure in tomorrow’s virtual worlds.
And with the rise of online-merge-offline (OMO) environments, two-dimensional screens will no longer serve as our exclusive portal to the web. Instead, virtual and augmented reality eyewear will allow us to interface with a digitally-mapped world, richly layered with visual data.
Welcome to the Spatial Web. Over the next few months, I’ll be doing a deep dive into the Spatial Web (a.k.a. Web 3.0), covering what it is, how it works, and its vast implications across industries, from real estate and healthcare to entertainment and the future of work. In this blog, I’ll discuss the what, how, and why of Web 3.0—humanity’s first major foray into our virtual-physical hybrid selves (BTW, this year at Abundance360, we’ll be doing a deep dive into the Spatial Web with the leaders of HTC, Magic Leap, and High-Fidelity).
Let’s dive in.
What is the Spatial Web?
While we humans exist in three dimensions, our web today is flat.
The web was designed for shared information, absorbed through a flat screen. But as proliferating sensors, ubiquitous AI, and interconnected networks blur the lines between our physical and online worlds, we need a spatial web to help us digitally map a three-dimensional world.
To put Web 3.0 in context, let’s take a trip down memory lane. In the late 1980s, the newly-birthed world wide web consisted of static web pages and one-way information—a monumental system of publishing and linking information unlike any unified data system before it. To connect, we had to dial up through unstable modems and struggle through insufferably slow connection speeds.
But emerging from this revolutionary (albeit non-interactive) infodump, Web 2.0 has connected the planet more in one decade than empires did in millennia.
Granting democratized participation through newly interactive sites and applications, today’s web era has turbocharged information-sharing and created ripple effects of scientific discovery, economic growth, and technological progress on an unprecedented scale.
We’ve seen the explosion of social networking sites, wikis, and online collaboration platforms. Consumers have become creators; physically isolated users have been handed a global microphone; and entrepreneurs can now access billions of potential customers.
But if Web 2.0 took the world by storm, the Spatial Web emerging today will leave it in the dust.
While there’s no clear consensus about its definition, the Spatial Web refers to a computing environment that exists in three-dimensional space—a twinning of real and virtual realities—enabled via billions of connected devices and accessed through the interfaces of virtual and augmented reality.
In this way, the Spatial Web will enable us to both build a twin of our physical reality in the virtual realm and bring the digital into our real environments.
It’s the next era of web-like technologies:
Spatial computing technologies, like augmented and virtual reality;
Physical computing technologies, like IoT and robotic sensors;
And decentralized computing: both blockchain—which enables greater security and data authentication—and edge computing, which pushes computing power to where it’s most needed, speeding everything up.
Geared with natural language search, data mining, machine learning, and AI recommendation agents, the Spatial Web is a growing expanse of services and information, navigable with the use of ever-more-sophisticated AI assistants and revolutionary new interfaces.
Where Web 1.0 consisted of static documents and read-only data, Web 2.0 introduced multimedia content, interactive web applications, and social media on two-dimensional screens. But converging technologies are quickly transcending the laptop, and will even disrupt the smartphone in the next decade.
With the rise of wearables, smart glasses, AR / VR interfaces, and the IoT, the Spatial Web will integrate seamlessly into our physical environment, overlaying every conversation, every road, every object, conference room, and classroom with intuitively-presented data and AI-aided interaction.
Think: the Oasis in Ready Player One, where anyone can create digital personas, build and invest in smart assets, do business, complete effortless peer-to-peer transactions, and collect real estate in a virtual world.
Or imagine a virtual replica or “digital twin” of your office, each conference room authenticated on the blockchain, requiring a cryptographic key for entry.
As I’ve discussed with my good friend and “VR guru” Philip Rosedale, I’m absolutely clear that in the not-too-distant future, every physical element of every building in the world is going to be fully digitized, existing as a virtual incarnation or even as N number of these. “Meet me at the top of the Empire State Building?” “Sure, which one?”
This digitization of life means that suddenly every piece of information can become spatial, every environment can be smarter by virtue of AI, and every data point about me and my assets—both virtual and physical—can be reliably stored, secured, enhanced, and monetized.
In essence, the Spatial Web lets us interface with digitally-enhanced versions of our physical environment and build out entirely fictional virtual worlds—capable of running simulations, supporting entire economies, and even birthing new political systems.
But while I’ll get into the weeds of different use cases next week, let’s first concretize.
How Does It Work?
Let’s start with the stack. In the PC days, we had a database accompanied by a program that could ingest that data and present it to us as digestible information on a screen.
Then, in the early days of the web, data migrated to servers. Information was fed through a website, with which you would interface via a browser—whether Mosaic or Mozilla.
And then came the cloud.
Resident at either the edge of the cloud or on your phone, today’s rapidly proliferating apps now allow us to interact with previously read-only data, interfacing through a smartphone. But as Siri and Alexa have brought us verbal interfaces, AI-geared phone cameras can now determine your identity, and sensors are beginning to read our gestures.
And now we’re not only looking at our screens but through them, as the convergence of AI and AR begins to digitally populate our physical worlds.
While Pokémon Go sent millions of mobile game-players on virtual treasure hunts, IKEA is just one of the many companies letting you map virtual furniture within your physical home—simulating everything from cabinets to entire kitchens. No longer the one-sided recipients, we’re beginning to see through sensors, creatively inserting digital content in our everyday environments.
Let’s take a look at how the latest incarnation might work. In this new Web 3.0 stack, my personal AI would act as an intermediary, accessing public or privately-authorized data through the blockchain on my behalf, and then feed it through an interface layer composed of everything from my VR headset, to numerous wearables, to my smart environment (IoT-connected devices or even in-home robots).
But as we attempt to build a smart world with smart infrastructure, smart supply chains and smart everything else, we need a set of basic standards with addresses for people, places, and things. Just like our web today relies on the Internet Protocol (TCP/IP) and other infrastructure, by which your computer is addressed and data packets are transferred, we need infrastructure for the Spatial Web.
And a select group of players is already stepping in to fill this void. Proposing new structural designs for Web 3.0, some are attempting to evolve today’s web model from text-based web pages in 2D to three-dimensional AR and VR web experiences located in both digitally-mapped physical worlds and newly-created virtual ones.
With a spatial programming language analogous to HTML, imagine building a linkable address for any physical or virtual space, granting it a format that then makes it interchangeable and interoperable with all other spaces.
But it doesn’t stop there.
As soon as we populate a virtual room with content, we then need to encode who sees it, who can buy it, who can move it…
And the Spatial Web’s eventual governing system (for posting content on a centralized grid) would allow us to address everything from the room you’re sitting in, to the chair on the other side of the table, to the building across the street.
Just as we have a DNS for the web and the purchasing of web domains, once we give addresses to spaces (akin to granting URLs), we then have the ability to identify and visit addressable locations, physical objects, individuals, or pieces of digital content in cyberspace.
And these not only apply to virtual worlds, but to the real world itself. As new mapping technologies emerge, we can now map rooms, objects, and large-scale environments into virtual space with increasing accuracy.
We might then dictate who gets to move your coffee mug in a virtual conference room, or when a team gets to use the room itself. Rules and permissions would be set in the grid, decentralized governance systems, or in the application layer.
Taken one step further, imagine then monetizing smart spaces and smart assets. If you have booked the virtual conference room, perhaps you’ll let me pay you 0.25 BTC to let me use it instead?
But given the Spatial Web’s enormous technological complexity, what’s allowing it to emerge now?
Why Is It Happening Now?
While countless entrepreneurs have already started harnessing blockchain technologies to build decentralized apps (or dApps), two major developments are allowing today’s birth of Web 3.0:
High-resolution wireless VR/AR headsets are finally catapulting virtual and augmented reality out of a prolonged winter.
The International Data Corporation (IDC) predicts the VR and AR headset market will reach 65.9 million units by 2022. Already in the next 18 months, 2 billion devices will be enabled with AR. And tech giants across the board have long begun investing heavy sums.
In early 2019, HTC is releasing the VIVE Focus, a wireless self-contained VR headset. At the same time, Facebook is charging ahead with its Project Santa Cruz—the Oculus division’s next-generation standalone, wireless VR headset. And Magic Leap has finally rolled out its long-awaited Magic Leap One mixed reality headset.
Mass deployment of 5G will drive 10 to 100-gigabit connection speeds in the next 6 years, matching hardware progress with the needed speed to create virtual worlds.
We’ve already seen tremendous leaps in display technology. But as connectivity speeds converge with accelerating GPUs, we’ll start to experience seamless VR and AR interfaces with ever-expanding virtual worlds.
And with such democratizing speeds, every user will be able to develop in VR.
But accompanying these two catalysts is also an important shift towards the decentralized web and a demand for user-controlled data.
Converging technologies, from immutable ledgers and blockchain to machine learning, are now enabling the more direct, decentralized use of web applications and creation of user content. With no central point of control, middlemen are removed from the equation and anyone can create an address, independently interacting with the network.
Enabled by a permission-less blockchain, any user—regardless of birthplace, gender, ethnicity, wealth, or citizenship—would thus be able to establish digital assets and transfer them seamlessly, granting us a more democratized Internet.
And with data stored on distributed nodes, this also means no single point of failure. One could have multiple backups, accessible only with digital authorization, leaving users immune to any single server failure.
Implications Abound–What’s Next…
With a newly-built stack and an interface built from numerous converging technologies, the Spatial Web will transform every facet of our everyday lives—from the way we organize and access our data, to our social and business interactions, to the way we train employees and educate our children.
We’re about to start spending more time in the virtual world than ever before. Beyond entertainment or gameplay, our livelihoods, work, and even personal decisions are already becoming mediated by a web electrified with AI and newly-emerging interfaces.
In our next blog on the Spatial Web, I’ll do a deep dive into the myriad industry implications of Web 3.0, offering tangible use cases across sectors.
Abundance-Digital Online Community: I’ve created a Digital/Online community of bold, abundance-minded entrepreneurs called Abundance-Digital. Abundance-Digital is my ‘on ramp’ for exponential entrepreneurs – those who want to get involved and play at a higher level. Click here to learn more.
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If you have seen science fiction television series such as Humans or Westworld, you might be imagining a near future where intelligent, humanoid robots play an important role in meeting the needs of people, including caring for children or older relatives. Continue reading →
A digital afterlife may soon be within reach, but it might not be for your benefit.
The reams of data we’re creating could soon make it possible to create digital avatars that live on after we die, aimed at comforting our loved ones or sharing our experience with future generations.
That may seem like a disappointing downgrade from the vision promised by the more optimistic futurists, where we upload our consciousness to the cloud and live forever in machines. But it might be a realistic possibility in the not-too-distant future—and the first steps have already been taken.
After her friend died in a car crash, Eugenia Kuyda, co-founder of Russian AI startup Luka, trained a neural network-powered chatbot on their shared message history to mimic him. Journalist and amateur coder James Vlahos took a more involved approach, carrying out extensive interviews with his terminally ill father so that he could create a digital clone of him when he died.
For those of us without the time or expertise to build our own artificial intelligence-powered avatar, startup Eternime is offering to take your social media posts and interactions as well as basic personal information to build a copy of you that could then interact with relatives once you’re gone. The service is so far only running a private beta with a handful of people, but with 40,000 on its waiting list, it’s clear there’s a market.
The whole idea may seem eerily similar to the Black Mirror episode Be Right Back, in which a woman pays a company to create a digital copy of her deceased husband and eventually a realistic robot replica. And given the show’s focus on the emotional turmoil she goes through, people might question whether the idea is a sensible one.
But it’s hard to say at this stage whether being able to interact with an approximation of a deceased loved one would be a help or a hindrance in the grieving process. The fear is that it could make it harder for people to “let go” or “move on,” but others think it could play a useful therapeutic role, reminding people that just because someone is dead it doesn’t mean they’re gone, and providing a novel way for them to express and come to terms with their feelings.
While at present most envisage these digital resurrections as a way to memorialize loved ones, there are also more ambitious plans to use the technology as a way to preserve expertise and experience. A project at MIT called Augmented Eternity is investigating whether we could use AI to trawl through someone’s digital footprints and extract both their knowledge and elements of their personality.
Project leader Hossein Rahnama says he’s already working with a CEO who wants to leave behind a digital avatar that future executives could consult with after he’s gone. And you wouldn’t necessarily have to wait until you’re dead—experts could create virtual clones of themselves that could dispense advice on demand to far more people. These clones could soon be more than simple chatbots, too. Hollywood has already started spending millions of dollars to create 3D scans of its most bankable stars so that they can keep acting beyond the grave.
It’s easy to see the appeal of the idea; imagine if we could bring back Stephen Hawking or Tim Cook to share their wisdom with us. And what if we could create a digital brain trust combining the experience and wisdom of all the world’s greatest thinkers, accessible on demand?
But there are still huge hurdles ahead before we could create truly accurate representations of people by simply trawling through their digital remains. The first problem is data. Most peoples’ digital footprints only started reaching significant proportions in the last decade or so, and cover a relatively small period of their lives. It could take many years before there’s enough data to create more than just a superficial imitation of someone.
And that’s assuming that the data we produce is truly representative of who we are. Carefully-crafted Instagram profiles and cautiously-worded work emails hardly capture the messy realities of most peoples’ lives.
Perhaps if the idea is simply to create a bank of someone’s knowledge and expertise, accurately capturing the essence of their character would be less important. But these clones would also be static. Real people continually learn and change, but a digital avatar is a snapshot of someone’s character and opinions at the point they died. An inability to adapt as the world around them changes could put a shelf life on the usefulness of these replicas.
Who’s Calling the (Digital) Shots?
It won’t stop people trying, though, and that raises a potentially more important question: Who gets to make the calls about our digital afterlife? The subjects, their families, or the companies that hold their data?
In most countries, the law is currently pretty hazy on this topic. Companies like Google and Facebook have processes to let you choose who should take control of your accounts in the event of your death. But if you’ve forgotten to do that, the fate of your virtual remains comes down to a tangle of federal law, local law, and tech company terms of service.
This lack of regulation could create incentives and opportunities for unscrupulous behavior. The voice of a deceased loved one could be a highly persuasive tool for exploitation, and digital replicas of respected experts could be powerful means of pushing a hidden agenda.
That means there’s a pressing need for clear and unambiguous rules. Researchers at Oxford University recently suggested ethical guidelines that would treat our digital remains the same way museums and archaeologists are required to treat mortal remains—with dignity and in the interest of society.
Whether those kinds of guidelines are ever enshrined in law remains to be seen, but ultimately they may decide whether the digital afterlife turns out to be heaven or hell.
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We profit from it, we fear it, and we find it impossibly hard to quantify: risk.
While not the sexiest of industries, insurance can be a life-saving protector, pooling everyone’s premiums to safeguard against some of our greatest, most unexpected losses.
One of the most profitable in the world, the insurance industry exceeded $1.2 trillion in annual revenue since 2011 in the US alone.
But risk is becoming predictable. And insurance is getting disrupted fast.
By 2025, we’ll be living in a trillion-sensor economy. And as we enter a world where everything is measured all the time, we’ll start to transition from protecting against damages to preventing them in the first place.
But what happens to health insurance when Big Brother is always watching? Do rates go up when you sneak a cigarette? Do they go down when you eat your vegetables?
And what happens to auto insurance when most cars are autonomous? Or life insurance when the human lifespan doubles?
For that matter, what happens to insurance brokers when blockchain makes them irrelevant?
In this article, I’ll be discussing four key transformations:
Sensors and AI replacing your traditional broker
The ecosystem approach
IoT and insurance connectivity
Let’s dive in.
AI and the Trillion-Sensor Economy
As sensors continue to proliferate across every context—from smart infrastructure to millions of connected home devices to medicine—smart environments will allow us to ask any question, anytime, anywhere.
And as I often explain, once your AI has access to this treasure trove of ubiquitous sensor data in real time, it will be the quality of your questions that make or break your business.
But perhaps the most exciting insurance application of AI’s convergence with sensors is in healthcare. Tremendous advances in genetic screening are empowering us with predictive knowledge about our long-term health risks.
Leading the charge in genome sequencing, Illumina predicts that in a matter of years, decoding the full human genome will drop to $100, taking merely one hour to complete. Other companies are racing to get you sequences faster and cheaper.
Adopting an ecosystem approach, incumbent insurers and insurtech firms will soon be able to collaborate to provide risk-minimizing services in the health sector. Using sensor data and AI-driven personalized recommendations, insurance partnerships could keep consumers healthy, dramatically reducing the cost of healthcare.
Some fear that information asymmetry will allow consumers to learn of their health risks and leave insurers in the dark. However, both parties could benefit if insurers become part of the screening process.
A remarkable example of this is Gilad Meiri’s company, Neura AI. Aiming to predict health patterns, Neura has developed machine learning algorithms that analyze data from all of a user’s connected devices (sometimes from up to 54 apps!).
Neura predicts a user’s behavior and draws staggering insights about consumers’ health risks. Meiri soon began selling his personal risk assessment tool to insurers, who could then help insured customers mitigate long-term health risks.
But artificial intelligence will impact far more than just health insurance.
In October of 2016, a claim was submitted to Lemonade, the world’s first peer-to-peer insurance company. Rather than being processed by a human, every step in this claim resolution chain—from initial triage through fraud mitigation through final payment—was handled by an AI.
This transaction marks the first time an AI has processed an insurance claim. And it won’t be the last. A traditional human-processed claim takes 40 days to pay out. In Lemonade’s case, payment was transferred within three seconds.
However, Lemonade’s achievement only marks a starting point. Over the course of the next decade, nearly every facet of the insurance industry will undergo a similarly massive transformation.
New business models like peer-to-peer insurance are replacing traditional brokerage relationships, while AI and blockchain pairings significantly reduce the layers of bureaucracy required (with each layer getting a cut) for traditional insurance.
Consider Juniper, a startup that scrapes social media to build your risk assessment, subsequently asking you 12 questions via an iPhone app. Geared with advanced analytics, the platform can generate a million-dollar life insurance policy, approved in less than five minutes.
But what’s keeping all your data from unwanted hands?
Blockchain Building Trust
Current distrust in centralized financial services has led to staggering rates of underinsurance. Add to this fear of poor data and privacy protection, particularly in the wake of 2017’s widespread cybercriminal hacks.
Enabling secure storage and transfer of personal data, blockchain holds remarkable promise against the fraudulent activity that often plagues insurance firms.
The centralized model of insurance companies and other organizations is becoming redundant. Developing blockchain-based solutions for capital markets, Symbiont develops smart contracts to execute payments with little to no human involvement.
But distributed ledger technology (DLT) is enabling far more than just smart contracts.
Also targeting insurance is Tradle, leveraging blockchain for its proclaimed goal of “building a trust provisioning network.” Built around “know-your-customer” (KYC) data, Tradle aims to verify KYC data so that it can be securely forwarded to other firms without any further verification.
By requiring a certain number of parties to reuse pre-verified data, the platform makes your data much less vulnerable to hacking and allows you to keep it on a personal device. Only its verification—let’s say of a transaction or medical exam—is registered in the blockchain.
As insurance data grow increasingly decentralized, key insurance players will experience more and more pressure to adopt an ecosystem approach.
The Ecosystem Approach
Just as exponential technologies converge to provide new services, exponential businesses must combine the strengths of different sectors to expand traditional product lines.
By partnering with platform-based insurtech firms, forward-thinking insurers will no longer serve only as reactive policy-providers, but provide risk-mitigating services as well.
Especially as digital technologies demonetize security services—think autonomous vehicles—insurers must create new value chains and span more product categories.
For instance, France’s multinational AXA recently partnered with Alibaba and Ant Financial Services to sell a varied range of insurance products on Alibaba’s global e-commerce platform at the click of a button.
Building another ecosystem, Alibaba has also collaborated with Ping An Insurance and Tencent to create ZhongAn Online Property and Casualty Insurance—China’s first internet-only insurer, offering over 300 products. Now with a multibillion-dollar valuation, Zhong An has generated about half its business from selling shipping return insurance to Alibaba consumers.
But it doesn’t stop there. Insurers that participate in digital ecosystems can now sell risk-mitigating services that prevent damage before it occurs.
Imagine a corporate manufacturer whose sensors collect data on environmental factors affecting crop yield in an agricultural community. With the backing of investors and advanced risk analytics, such a manufacturer could sell crop insurance to farmers. By implementing an automated, AI-driven UI, they could automatically make payments when sensors detect weather damage to crops.
Now let’s apply this concept to your house, your car, your health insurance.
What’s stopping insurers from partnering with third-party IoT platforms to predict fires, collisions, chronic heart disease—and then empowering the consumer with preventive services?
This brings us to the powerful field of IoT.
Internet of Things and Insurance Connectivity
Leap ahead a few years. With a centralized hub like Echo, your smart home protects itself with a network of sensors. While gone, you’ve left on a gas burner and your internet-connected stove notifies you via a home app.
Better yet, home sensors monitoring heat and humidity levels run this data through an AI, which then remotely controls heating, humidity levels, and other connected devices based on historical data patterns and fire risk factors.
Several firms are already working toward this reality.
AXA plans to one day cooperate with a centralized home hub whereby remote monitoring will collect data for future analysis and detect abnormalities.
With remote monitoring and app-centralized control for users, MonAXA is aimed at customizing insurance bundles. These would reflect exact security features embedded in smart homes.
Wouldn’t you prefer not to have to rely on insurance after a burglary? With digital ecosystems, insurers may soon prevent break-ins from the start.
By gathering sensor data from third parties on neighborhood conditions, historical theft data, suspicious activity and other risk factors, an insurtech firm might automatically put your smart home on high alert, activating alarms and specialized locks in advance of an attack.
Insurance policy premiums are predicted to vastly reduce with lessened likelihood of insured losses. But insurers moving into preventive insurtech will likely turn a profit from other areas of their business. PricewaterhouseCoopers predicts that the connected home market will reach $149 billion USD by 2020.
Let’s look at car insurance.
Car insurance premiums are currently calculated according to the driver and traits of the car. But as more autonomous vehicles take to the roads, not only does liability shift to manufacturers and software engineers, but the risk of collision falls dramatically.
But let’s take this a step further.
In a future of autonomous cars, you will no longer own your car, instead subscribing to Transport as a Service (TaaS) and giving up the purchase of automotive insurance altogether.
This paradigm shift has already begun with Waymo, which automatically provides passengers with insurance every time they step into a Waymo vehicle.
And with the rise of smart traffic systems, sensor-embedded roads, and skyrocketing autonomous vehicle technology, the risks involved in transit only continue to plummet.
Insurtech firms are hitting the market fast. IoT, autonomous vehicles and genetic screening are rapidly making us invulnerable to risk. And AI-driven services are quickly pushing conventional insurers out of the market.
By 2024, roll-out of 5G on the ground, as well as OneWeb and Starlink in orbit are bringing 4.2 billion new consumers to the web—most of whom will need insurance. Yet, because of the changes afoot in the industry, none of them will buy policies from a human broker.
While today’s largest insurance companies continue to ignore this fact at their peril (and this segment of the market), thousands of entrepreneurs see it more clearly: as one of the largest opportunities ahead.
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