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Smarter Money

Ones and zeroes can help the world be smarter
about dollars and cents

Money rarely changes hands anymore

Thanks to banking technology, few transactions actually use cash. In fact, hard currency represents only 11% of the money supply in the U.S. The rest of our "money" flows digitally from a paycheck to a bank to a retailer, and then through the retailer's supply chain, to be deposited in another business' account... to start the journey over again.

That means our money has been transformed into zeros and ones. It's intangible, invisible. It's information. Which is central both to the problem we face—and to its solution.

To make money smarter, we can start with smarter banking technology. By applying unprecedented computing power to perform advanced analytics using technology such as stream computing and deep computing visualisation we can turn this numerical ocean of credit and risk into actionable insight and intelligence. That technology is already in play across other industries that have embedded sensors in their supply chain. Sensor technologies are in use to improve supply chain performance (US), healthcare network efficiency (US), city management (US) and even the monitoring of natural systems like rivers (US) by capturing information that can lead to better decision making.

Money has been transformed into zeroes and ones. It's intangiable, invisible. It's information, Which is central both to the problem we face-and to its solution.

The trillions of transistors that are already embedded into the real economy are starting to feed previously unimaginable data back to the global financial system—providing new sources of information to create value and manage risk.

We can see intelligence making an impact with the emergence of smart banks. For instance, the Operational Riskdata eXchange Association, a consortium of 52 leading financial institutions, uses blinded data to improve statistical modeling, more accurately quantify risk exposure and address regulatory compliance needs. We also see intelligence transforming entire global markets. Consider foreign currency exchange, the world's largest single market. Intraday settlement risk of more than $2 trillion in daily volume—more than 60% of foreign exchange transactions—has been reduced to zero.

This new kind of high-speed, high-security, high-transparency system is how smarter banking technology can lead to smarter money.


50%. Percentage of customers who would give their bank only two chances to fail before considering a change in banks. 25 billion. Global trading system are under extreme stress, handling billions of market data messages each day.


Chart: The percentage of respondents who anticipate regulatory changes within the next five years. Transparency requirements - 31%, Capital requirements - 22%, Global harmonisation - 13%, Security - 11%, Retirement regulation - 11%, Conflicts of interests - 7%, Climate change - 4%, Other - 2%. IBM financial markets survey, 2009.

Toward transparency and sustainability: Building a new financial order

How will the financial markets industry make money in the future? The current financial crisis has exposed the problems with creating and exploiting "pockets of opacity" across the system. If the industry is to deliver sustainable returns, it will have to embrace change. It will need to begin by working with regulators to build a financial system that is stable while still allowing for healthy innovation. Individual firms will also have to specialise and learn to fulfill their brand promises.


Undressing in public: Harnessing the power of Web 2.0 to rebuild trust in banking
More customers are online than ever before. This IBM Institute for Business Value white paper spells out why banks should learn to use methods such as blogging and social networking to cost-effectively and efficiently reach an increasingly fragmented and dispersed customer base.

Growing trust, transparency and technology: Insurance customers' perspectives in a global context
This updated IBM Institute for Business Value study shows that insurers in the Americas, like their European counterparts, suffer from a lack of consumer trust and that heightened transparency, service and flexibility will be necessary to reach the customer of the future.


If you have $5,000 to invest, how do you search for information on where to invest it?

Internet search
Friends or family
Your local bank branch