This post is actually the first of a series, a change within the "rethinking business" side of my website, now "rethinking organizations".

In this case, I should say "posts"- as a computer glitch lost previous version(s).

Now, as it is an introductory post to a series, what I drafted today were actually guidelines for future development.

Here, I would like to first explain the title, then show the "roadmap" of the points that I plan to discuss in future posts- focusing, for now, on the "consumer" side of automotive and banking.

First, a little bit of background on my experience in the industries within the title (and few more)- I do apologize for those who read about this in the past (e-zine online since 2003-2005, posts since 2007, and then mini-books 2013-2019).

Background: industry experience

If you look at my CV, you will see that the longest lists of my experiences are within automotive/mobility and banking/financial.

With a twist: while in banking and the financial side of non-banking companies since 1987 worked across countries and companies and roles, in automotive/mobility mainly I had projects since 1986 once every few years in a single group, i.e. companies that used to belong to FIAT.

Anyway, due my other activities (routinely worked across industries, and, except up to 1988 and since 2015, I almost never was five days each week in the same location), in-between those automotive/mobility activities through my foreign colleagues and while travelling around Europe had contacts with companies that either were automotive manufacturers, or were within the automotive supply chain (or at least had automotive customers).

So, ended up routinely updating on the industries I worked on (have a look on the news links I shared on linkedin).

The most interesting part was certainly transferring "patterns" between industries, and seeing how experiences in what I consider "flow" industries (gas/logistics, outsourcing, retail mainly in the back-office e.g. assortment planning and controlling) eventually were useful elsewhere.

I will use examples from my birthplace (an automotive company town, Turin, in Italy, that actually was also host to large banks, as shown also by having two of the largest banking Foundations since the early 1990s).

And now, the main outline.

Outline: the themes


Cars until recently focused on "individuals"- e.g. look at the 1990s Womack's book "The Machine That Changed the World : The Story of Lean Production": personalization was part of the discussion.

Jump forward few decades, and MIT's "Reinventing the Automobile - Personal Urban Mobility for the 21st Century" (my review here, with pointers to other books) discussed automobiles as part of a system: urban areas, integration with other vehicles, up to having "matrioska cars", that started with a larger car and then split into Personal Urban Mobility vehicles for individuals.

As usually I do for any post, first I draft ideas, then cross-check information, and therefore had a further look earlier this week: I still see in research, books, and industry position papers outlines of the automotive supply chain and logistics that reminds make me think of XIX century concepts updated to XX century costs improvements, but still not looking into the future to use already available XXI century technology and business approaches (more about this within the conclusions).

A decade ago, a study assumed that by next year 20% or more of the vehicles would be without a combustion engine: I will avoid posting the link only because anybody who did a forecast knows that there are many factors involved, and the only way to get always a 95% level of confidence while doing forecasts is, as an American colleague said, to become expert in "forecasting the past".

Well, just look online at official EU data- yes, we have the case of Norway, but in most countries, diesel and gasoline cars (and other variants of fossil fuels) stil rule, and we are nowhere close even 20%.

If you think systemically, you should not consider just the system in a specific point of time (e.g. now), but also the lifecycle of all its components.

Not only combustion engines still cover a large chunk of new cars sold, but will also be around for a while, if you consider the 2008 Projection of end-of-life vehicles. Development of a projection model and estimates of ELVs for 2005-2030.

What is the value of forecasts? Dubious- but as General Eisenhower reportedly said, it is the planning exercise that matters (as it allows you to explore all the issues involved), not the plan itself.

Look as an example at the assessments and forecasts on "survivability" contained within a 2006 book whose title was "High Noon in the Automotive Industry".

In Italy, until a decade ago "automotive" (including commercial vehicles) was mainly a synonym for FIAT.

Just looking at a capacity utilization chart on page 24 of that book, FIAT showed the sharpest decline within the industry between 1997 and 2002, and then was forecast to have a continuous improvement until 2006, but still, within the "survivability" section of the book, it was considered to be 12th out of 12 top OEMs, in terms of "stability" (table 22, page 148).

If you look at FIAT now... it is FCA, it isn't an Italian company anymore, and probably soon will merge with PSA (9th in that "stability" table), and become the 4th largest independent OEM.

And this opens another point: if automotive companies consolidate globally, from an Italian perspective, the "sentimental" side states "we are expanding"- but from a business side, Italy still isn't absorbing as many new cars as it used to be, and FCA isn't anymore dwarfing its competitors in terms of sales within the "home" market.

This applies also to other countries: ten years down the road, for any of the main automotive OEMs, will it make sense to talk about a "home" market, or the "home" market is simply the one that is more sustainable long-term (and this might change from one decade to the other)?

If this is the case, would sustainability of the company as an ecosystem conflict with the sustainability of the "territorial" ecosystem(s) that it uses?

Other element to consider is: what will be the ownership and use model? Will it make sense to talk about the "differentiation" between vehicles?

Or will customers just look for the service, e.g. availability of the type and size of vehicle they need when they need, and they will just convert "purchasing" into "subscribing", specifically to a "volume of points", through a "gamification" that will then use those "points" in any combination they see fit?

Example: X points for using a city car for Y km a day, Z points for using a different kind of vehicle over the week-end, adopting a system similar to that used by airlines and hotels for occupancy rates, peak demand, etc, up to costing new services that did not make sense (or would not have been economically viable) until recently.

If you look in my birthplace, many 20s to 30s do not consider buying a car, but instead buy a subscription to a car sharing system, and use it occasionally, e.g. at night when public transport is not available, or when they need to do short travels outside town.

Now, in that age range I did not hear that much complaints about the state of the vehicles (but I heard that, and not just in Italy, about e.g. moped or bycicle sharing).

When such consumer will age, maybe they will still see no reason (and will not have a parking place) for a personally owned vehicle that would sit still 90% of the time.

But while sharing a vehicle, might be willing (going to the extremes, as I wrote a while ago) to have, say, a red car when they go to an event, a blue one for another, and maybe will even pay an additional fee for a car sharing that, between shares, removes or adds a "polymer film" to ensure hygiene or simply alter the interiors and configuration of seats etc to what they set as their own parameters.

It could be a "virtually yours" car.

Once you unbundle it, a car becomes in reality a service platform.

It happened with airlines and utilities: what you can offer is only a function of what you can generate demand for, e.g. look at Eyal's Hooked: How to Build Habit-Forming Products (this is my review).

As stated within a 2017 PwC report: "When the goal is to improve efficiency in capital outlays, a good place to start is with platform (or chassis) and powertrain investments. Now that each auto maker is designing and building its own engines, transmissions, and related equipment, the amount of duplication within the industry is extraordinary. This is especially wasteful because consumers rarely buy cars for the platform — instead, they focus on such attributes as styling, quality, and reliability."

I disagree with the last bit: as I wrote above, eventually there will be probably a different motivation on choice, closer to the parameters currently used by exception when calling for a taxi (e.g. need a taxi able to carry 7 people).

Moreover, another good place to start with all the "aftersales" world: should you still produce and then store worldwide volumes of spare parts based upon a model of consumption/lifecycle, or should you use other forms of predictive analysis to produce and deliver a replacement only if and when needed, maybe even prepaid?

There are other consequences, specifically linked to the concept of smart cities, but first a check on the points concerning banking.


What is banking? For most citizens, until recently it meant retail banking and consumer lending: branches scattered around (again, I will focus here mainly on banking services for consumers).

Already over a decade ago, it was common to access consumer lending via an intermediary at the point-of-sale, e.g. a supermarket chain, which, in turn, had agreements with one or more banks.

Since smartphones became common, most of the services of a retail bank could be accessible to any citizen without even interacting with a bank.

In Italy, in the late 1980s, when I had my first banking project (general ledger) in 1987, the number of banks was approximately an order of magnitude larger than now.

Also if access to Internet is less common for financial services than in other countries in Europe were I lived since the late 1990s or worked since the late 1980s, de facto consumers end up doing what I saw routinely in London in the early 2000s, i.e. using credit extended by shops and other non-banking suppliers, who then use financial intermediaries and banks as their "financial services providers" (mainly due to regulations and compliance: hence, manufacturers already set up their own "in house bank").

Now, what is the point of having branches if, anyway, for basic services there is no need of interaction at all (you can use Internet, mobile Internet, or ATM machines that operate 24/7), and for other services probably a retail branch nowadays lacks the in-house expertise to deliver (unless you are above the threshold to have access to specialists)?

As for specialists, e.g. private banking: when I am told that the threshold for being managed by a private banker is 50k EUR in assets, I am tempted to laugh: it is akin to when, in the 1990s, banks offered "black" credit cards- vanity banking.

Most of those black credit cards weren't "centurion", but as "gold" was inflated, and "platinum" too, black was a vanity affair.

The same is for low-threshold private banking: at that level, you can expect to get "pre-packaged"/"profiled" instead of "off-the-shelf" investment products, but if you really consider the cost of actively managing wealth individually, it is really "vanity retail banking".

Few years ago, to reduce costs, banks started doing something that made sense politically, but not financially.

A form of "intergenerational contracts" included earlier retirement with hiring somebody right out of school: useful if you assume that they can do the same job of those that they replace, and therefore you can move from an end-of-career higher salary to an entry-level salary.

Otherwise, you are just "shaving off" the end-of-career salaries and pushing up those below them, while making space for "new entries", but without any of the economies that would require changing the way you do (as I wrote a while ago, "changing the heads").

If instead the mix of activities and skills changes, you end up with what recently was announced by a major bank: cuts- in branches and headcount.

The cognitive dissonance that was shown over the last week by some commentators is quixotic: in some cases, went even as far as suggesting that a parent might retire, and a son or daughter might take her or his place- I wonder what job they assume that they have been doing in banking for decades, that they assume could be replaced in mere months by somebody with no experience whatsoever.

Already in the 1990s, adoption of technologies supported expanding volumes without expanding headcount- at least for back-office activities.

Now, as most front-office activities are actually becoming integrated within many support systems e.g. due to compliance (ranging from consequences of Basel III to Know-Your-Customer, GDPR), sometimes that old concept of bank teller turns into "somebody who reads the screen to the customer and clicks around".

There is no way that a single employee can memorize and comply with all those regulations in all their finer details, as well as there is no way that said employee can monitor hundreds of products and their evolution.

In banking, since the early 1990s, in Italy and abroad I saw often the impact of the use information technology to streamline activities that had been up to then either manual activities, or converted decades before into computer software supporting corporate behavioral patterns that pre-dated computers.

Now that an increasing share of the population is getting used to disintermediated access to financial services via a smarthphone or computer, including with services that curiously started where banking was not available (e.g. M-Pesa in Africa, to use phone credit as a wallet and for consumer credit), even mobile operators routinely offer an array of (unsolicited) financial and insurance services.

If you blend complexity with ubiquitous computing, ten years down the road it is difficult to understand what retail banking branches will really be useful for.

Already in the 1990s I remember reading material and articles stating that either the Italian Bankers' Association (ABI) or the Bank of Italy said that banks had branches and staff in eccess to demand- some figures went as far as stating that it was 30% above the needs.

Back then, it was routinely reported on newspapers that any new branch used to result in hiring people, not transferring people from existing branches where business slowed down, and eventually also costs were monitored as risk.

Changes within the banking regulations in Europe also removed the need for another element: physical presence, or even "being local" in order to "act locally", for both customers and (partially) suppliers.

If you remove branches for basic services, except to serve a residual customer base that still considers banking as it was in the 1970s (including some people in the 20s-30s), and convert any data exchange into a potential economic or financial transaction, then also the concepts of "banking oversight" and "systemic risk" change.

To repeat what I wrote about automotive: there are other consequences, specifically linked to the concept of smart cities- and this leads to the conclusions.

Conclusions: the consequences of smart cities

I blended automotive and banking not only because I worked in and observed both industries since the 1980s, but also because, within smart cities, what I had the chance to observe and experience in other industries, those that I called "flow" in my definition at the beginning, increasingly will become relevant.

I will write in the future about my definition of "flow industries" (many would disagree)- but the key element: provide patterns that can be adapted and adopted in different environments, while instead other industries have too many patterns that are too dependent on further industry-specific patterns (e.g. due to compliance), that cannot be easily "smartly recycled".

Urban areas will increasingly try to reduce their dependency from rural areas for anything from energy to food: it is not just because "sustainability" is trendy, but it makes business and social sense, considering that technology reduces the size needed for viability.

Having a self-contained ecosystem within an urban area, will create incentives to further lower the size of a self-sustainable environment, e.g. look at what did Singapore.

And also what are trying to do other locations, sometimes with a patchwork of experiments resulting from choices of individuals occupying the right office at the right time, more than a "systemic" approach.

Do we need to consider all major metropolitan areas as "city states"? Or "signposts to interconnect", and consider therefore XIX century "national states" something as "cocoons for networks of interconnected signposts"? And what about new forms of regional integration, e.g. within the European Union?

This implies rethinking not just services and jobs, but also the structure of towns.

Many used the example of "air traffic control": which is nice as a reference paradigm, but forgets few elements.

Within air traffic control, you have a limited number of operators, all consciously licensed to a different level of complexity, but all doing a "synchronization dance", with limited levels of flexibility.

Such a purely mechanistic approach is fine for airlines and airplanes, and even higher level of complexity do exist to coordinate railways.

With urban areas converted into smart cities, now there are many experiments in "governance" (e.g. think at the discussions about the integration of flying or land-based delivery drones within urban traffic).

But in urban areas, you will need to have a "systemic intelligence" that enables seamless integration between "conscious" (e.g. professional) and "unconscious" (e.g. consumers) moving elements within a shared operational theatre, the urban ecosystem.

Having a self-contained ecosystem within urban areas implies rethinking also supply chains.

Technology such as 3D printing and manufacturing 4.0 can help, as I wrote in the past (nothing new here), e.g. by considering to adopt "assortment planning" within urban centres as done by supermarkets.

With further advances, it might be possible to consider economically viable having 3D printing shared facilities in towns, used by many automotive or parts manufacturers, to produce on-demand and on-site parts that meet a specific set of parameters, instead of just having warehouses of spare parts.

Instead of distributing products, at least for industrial products using composites or (for now) a limited set of metal alloys and raw materials, it might make sense to "print remotely" what is needed, when is needed, and pre-paid, on-demand.

Investment? From the shared "printing network", covered by a "standing fee" paid by manufacturers willing to use the facility, plus a contract maybe based on a minimal amount (with "volume lower then agreed" penalties, etc), plus a commission on each object printed, plus the cost of the raw materials used, and any other licensing, local taxes, etc.

Some manufacturers could extend what others are doing, and turning into purely engineering and prototyping companies, building just "showcases" for industry exhibitions (using third-party "prototype delivery" facilities), and then de facto "licensing" the "3D printing" of their products, with no manufacturing facilities at all.

If we have to consider scenarios such as those presented within the MIT's "Reinventing the automobile", or those discussed within a recent divulgative book on "Silicon Germany" (link to my review), we have to consider that both automotive and banking will have to redefine what respectively "manufacturing" and "service" mean.

The last few pages of a 2017 book, "Der letzte Fuehrerscheinneuling", where it referred to the Kodak history and then (page 472) presented a table with the jobs at risk over the following 5 to 15 years, just in Germany and just within the direct automobile industry:
Carmakes 300k
Taxidrivers 250k
Mechanics 390k
Gas stations 100k
Driving school 21k
Car sales 70k

Consider that as "number of families", and you see the real direct social impact (I would add also that, if you remove all those jobs, then you remove larger and larger "rings" of supporting services, from logistics to catering to cleaning and facilities security, to... printing the books for those driving schools).

As an example, for a while there will be mixed modes of transportation, but eventually it will become a nightmare to have too many different systems interacting within the same limited space, with different restrictions and allocation of space, and a keyword will affect product design and use: interoperability.

Already cars have plenty of on-board systems that are due to "compliance": what if the compliance were to be extended to all the "data processing" carried out by vehicles, including vehicle-to-vehicle, or vehicle-to-environment communication? Not "one size fits all", but simply "harmonization" in exchanges and "minimum Service Level Agreements".

And what if, to streamline infrastructure, eventually urban centres were to start adopting a "circles" or "zoning" concept as a structural element, and not just as a temporary restriction (e.g. due to pollution) as it is now? Say: in-town only for zero emission vehicles, but inner-town only for ZEVs that are also interoperable up to size, component replaceability/standardization, etc?

I am willingly ignoring the "autonomous vehicle" issue: many currently complain that, just looking at the question of "ethics of Artificial Intelligence" and related trust issues, there are way too many conflicting frameworks.

Historians of the automotive industry will probably remember how, at the beginning, we have horse-driven mixed with cars that had central, left, right driving, and only gradually there were convergence and standards.

A recent openSAP course on Creating trustworthy and ethical artificial intelligence contained both the EU framework and a list of those proposed around the world.

If you have a look, you will see that most of those frameworks actually are a mirror of the corporate or social or political culture that produced them.

We are now about to begin the 2020s, and on that side we are as "harmonized" as automotive was up to the 1910s-1920s: should we expect full convergence on shared standards by the late 2020s-early 2030s?

Nowadays, it would be easier: simply, whenever an autonomous vehicle approaches the "virtual gates" of an area, its systems might be "challenged" with a twisted form of the Turing test, to check if its "ethics" conform to the expected- if not, then either its self-driving system has to reduce from, say, level 5 to level 4 or 3, or, if not possible, the vehicle will no be allowed access.

It would be an easier solution, and more flexible, and immediately available, than trying to build a "universal ethics for self-driving vehicles" that would be the usual horse designed by a committee (have a look at a similar procurement requirements issue in Pentagon Wars).

More than a centralized air traffic control, probably a "swarm" model will be the only viable one in densily inhabited urban centres with continuous interactions between multiple types of vehicles- including humans on various forms and shapes of individual mobility vehicles.

Between the affected industries, also those producing e.g. traffic lights or road-painting machines probably will become a relic of the past, replaced by ubiquitous sensors that avoid collisions and coordinate the "dance" of various agents.

I wouldn't be surprised if, eventually, also some shoemakers were to offer "smart shoes" able to "sense" other vehicles and traffic conditions or the future form of traffic lights: could be useful also for pedestrians watching their device while crossing a road...

Up to now, these conclusions were focused on mobility, interactions, and overall systemic integration of urban centres, up to the "micro-reshoring" of shared production facilities based on 3D printing, replacing therefore warehouses, shops, and transportation to deliver what can be produced locally.

And banking, notably retail banking?

Frankly, read the lines above: if urban centres will become "smart" and fully integrated, probably there will be no need for retail banking branches: not even ATMs, as cash could be dematerialized (or converted into a "virtual token" to be recharged anywere, if you want to maintain a degree of "anonymous cash").

As for advice, frankly, most bots already now could deliver entry-level advice that is more precise and more up-to-date than any human banking teller.

There will probably be a further segmentation, as some banking advisory might be matched on profiling of the customer needs and risk appetite: but at the lower-end, think more of a "Tinder" for the financial industry, than any loyalty scheme- a transactional approach.

There will probably be a redesign of the mid-range, e.g with "reputational assessment systems" and therefore "matching systems" replacing mere "word-of-mouth", but that "consumer layer" and those above are outside the scope of this article.

While public transport will probably never have that privacy element needed for most retail banking activities, also those not used to smartphones or other devices might still retain the "human touch" by simply using a vehicle that delivers telepresence services with their bank.

Who knows, it might well be that, instead of going to retail branch and stand in line, you could take a self-driving taxi, and, by doing a transaction with your bank via telepresence, offset the cost of the ride.

Retail banking and consumer lending might shift even more than today to the background of business-to-consumer transactions, and a mobility vehicle might actually be providing the privacy and customized, on-demand, and on-time proposals and advice to its temporary inhoccupants or owners.

Frankly, looking at what I saw in retail banking (mainly the "supporting systems and organization" side, or as a small business and individual customer), I observed over the years fewer and fewer services that could not be replaced by such a system.

The "swarm" form of traffic control will require standards of communication that will extend beyond the automotive industry: anything interacting will have to communicate within a "circle of confidence" appropriate to the risk and level of flexibility or detail needed (e.g. a truck or bus might have additional levels, "smart shoes" as the ones described above might just "poll" the environment to ge a go/no go answer).

If interoperability between moving elements will be extended to interoperability with the environment, what is now called "Edge computing" and "Internet of Things" might actually enable any vehicle to do what I saw in London years ago, i.e. my mobile received offers from a shop where I had purchased something before when I passed in front of the shop.

At the same time, all passing moving elements might "sell" data from their sensors to "local knowledge exchange", and obtain in exchange either services or discounts for e.g. inductive charging via the road.

The main issue will be then managing the level of services outside urban areas, and how those living in urban centres will be able to retain the skills needed to live outside its boundaries.

But, frankly, this is something that happens already now.

What is certain is that we need to rethink both the structure and concept of "urban living", as well as the whole supply chain not just in automotive and banking, but also in any industry that will need to interact with customers within urban centres.

I used sparingly "smart cities": because what is "smart" for some is "a luddites' nightmare" for others- and, for many, is just a way to "push" for sales of their own solutions.

Now you can understand why the "tag cloud" above contains the words... "e.g banking within automotive".

As I wrote above, this is just a first post- stay tuned.