In 1852, Elisha Otis invented the safety elevator. If the hoisting rope broke, its safety mechanism automatically brought it to a halt – as he demonstrated to dramatic effect at the 1854 world fair. As detailed in Lifted: A Cultural History of the Elevator, the
American inventor stood on a platform high above the audience, before making the order to cut with an axe the only rope holding it aloft. To gasps from the crowd, the safety mechanism kicked in immediately, preventing him from plummeting to the ground.
A transformative technology was born – one which powered the rise of skyscrapers and ultimately the modern city.
Over 150 years have passed since then, but there are still some important lessons to be gleaned for today’s businesses, particularly banks and financial institutions.
1. Actions speak louder than words
Banks and financial institutions need to instil the same trust in their customers. That’s a given. But in the years following both the financial crisis of over a decade ago, and a series of high-profile corporate data breaches, trust has become increasingly
difficult to earn.
Talking about how seriously they take their customers’ privacy; writing about the robustness of their data protection processes – these pitches for customer trust can only take banks so far.
When the first passenger elevators were introduced, the adoption rate was slow. And little wonder – there was always the risk that a cable would snap, with catastrophic consequences. The makers of elevators could have dismissed them as one-off incidents,
or showed how statistically rare elevator-related injuries and fatalities were, but it wouldn’t have mattered as people simply didn’t feel safe getting in.
Otis could have simply announced his invention to the world, created some advertisements, made some speeches – but it seems unlikely that any of that would have had the dramatic impact of his world fair stunt – demonstrating irrefutably how seriously he
was taking passenger safety.
For banks and financial institutions, the same lesson applies. Paying lip service to the notion of data privacy and protection is not enough; they must say and do. Banks need to not only convey what they are doing but also demonstrate the tangible and practical
steps they are taking to ensure the safety of customer data.
2. Obstacles can be opportunities
A century after Otis’s demonstration came another major innovation in the world of elevators. In the 1950s, automatic elevators arrived which did not require a manual controller. A fantastic innovation, surely? Power in the hands of passengers?
Not so much. As reported by a professor of architectural history, there are “stories
of people walking into elevators and walking back out”. It took the best part of a decade for the technology to become commonplace and for people to get used to it. Of course, once they did, the efficiencies associated with not having to hire elevator operators
Just like those nervous passengers pushing their elevator button for the first time, banks and financial institutions need to ‘push the button’ of transformation and start harnessing the power of alternative data. As data privacy and accountability increase
they must see the waves of regulation, such as GDPR and PSD2, as a valuable business opportunity to build trust and harness other sources of non-personal data in a creative way.
3. The future is intelligent actionable data
On the surface, elevators may not seem to have changed much over recent decades. In reality, the technology that keeps them moving smoothly is cutting-edge. AI and real-time data are being used by major manufacturers for predictive maintenance - so they
can spot problems before they arise and better anticipate breakdowns. For instance, ThyssenKrupp’s elevators are connected to the cloud, continually transmitting data
from their sensors for transformation into actionable analytics.
KONE uses IBM’s Watson IoT to glean historic failure rates of different elevator parts and the preceding conditions. For example, a temperature
reading that’s slightly above normal could be a sign of engine trouble, however the system can also note whether it’s a hot day, which could be a factor too. As more data is fed into the model the forecasting also improves.
For banks and financial institutions, access to more reliable and intelligent forms of data can enable critical business and investment decisions to be made. Relying on traditional sources of information like earnings, filings and economic reports is akin
to elevator manufacturers depending on written, historical maintenance records.
There is no longer a need to wait three months for a quarterly report – steady streams of intelligent data are the new normal. New sources of information, or what we call alternative data, are constantly generated around us and investment managers can leverage
them to get an unprecedented level of transparency into company performance on a near real-time basis.
Instead, alternative data can be used to make predictive insights rather than responding to events as they occur. This helps investors forecast market movements, trends, and manage risk effectively.
The elevator was once the catalyst for great change in the 19th century. Data privacy – as well as modes of continuous data collection and analysis – can be a similarly transformative force in the here and now.