The Bank of America Deal: MIT Media Lab Opens Doors to More Sponsor Involvement in Research Direction

The Center for Future Banking announced yesterday by the MIT Media Lab and Bank of America is the trailblazing computer lab’s biggest corporate funding win in years—perhaps its biggest ever. But it also represents a new type of industry-academic collaboration for the Media Lab, one in which the company footing the bill will have more say over the questions researchers are studying than previous Media Lab sponsors have been afforded.

That’s the word from Media Lab director Frank Moss and MIT professor Deb Roy, the center’s founding director and principal investigator. I spoke with Moss and Roy yesterday, shortly after MIT released the news that Bank of America will commit at least $15 million, and possibly up to $25 million, over the next five years for research on the future of the banking industry—particularly the ways technology is changing consumers’ experiences of banking and their behavior around saving, spending, risk, and planning. Projects funded through the new center will involve areas as disparate as architect William Mitchell’s studies of the changing ways people interact inside network- and sensor-saturated public buildings and cognitive psychologist (and best-selling author) Dan Ariely’s work on why we often spend money unwisely and other forms of “predictably irrational” behavior. But in a break with past practices with sponsors, Bank of America will help choose the specific questions the researchers consider, and will send visiting fellows to participate directly in the research, according to Moss.

The center’s overall mission is to help the banking industry (and Bank of America in particular) look beyond innovations such as online banking and prepare for the field’s long-term future. “If you look at the big picture of banking for the past decade or 15 years, they have been in the process of re-architecting from the back office on out, with a new focus on consumer banking and consumer services,” Moss says. “They’ve done a great job at Bank of America and other banks of providing self-service access to back-office things that were previously only in the realm of people inside the bank. But the whole world that their customers are in is changing—and what those customers are doing is dramatically changing, as they change their social habits and engage in social networks, and communicate in different ways—and they are asking the question, ‘What is the next step beyond giving customers access to information?’ How can banks be a new factor in the lives of customers?”

These are exactly the kinds of question the Media Lab is used to asking about other industries, such as the news business, robotics, education, and entertainment. But beginning with the Bank of America partnership, it may be investigating these questions with a slightly more practical bent.

Throughout the 1980s and 1990s, under the leadership of co-founder Nicholas Negroponte (now director of the One Laptop Per Child Foundation), the Media Lab attracted a flood of industry research dollars—all in spite of a tradition of “open IP” that bars sponsors from having exclusive access to the work produced. But after Negroponte gave up executive leadership of the organization in 2000—and especially after the dot-com bust brought the days of abundant funding to an end—it appeared to many outsiders that the Media Lab was without a single strong leader who could sway contributors to loosen their purse-strings unconditionally.

When Moss was appointed director in February 2006, he said it was time to apply a business leader’s sensibility to solving the lab’s financial problems, and to better accommodate the needs of the lab’s sponsors. “What has changed over the past seven or eight years is that simply coming here and rubbing shoulders with very smart, creative people is often not enough for our sponsors,” Moss told MIT’s Technology Review magazine shortly after his appointment. “They need us to help them make a connection between all the wonderful creative work we have here and problems they have. The balance is between working more closely with our sponsors and understanding their problems, while continuing to generate the wild and crazy new ideas that they’ve joined us for.”

The Center for Future Banking will attempt to strike that balance, according to Moss and Roy. It will do that by engaging to some extent in varieties of “directed research” that Media Lab scientists managed to sidestep for many years.

MIT Media Lab professor Deb Roy“The Media Lab has an open IP policy, the key behind it being that sponsors have non-exclusive access to the IP,” says Roy. “That sets it apart from pretty much every other [industry-funded] lab out there. But there is no conflict between open IP and directed research.” Roy says faculty and students working through the center will study many questions that are critical to the future evolution of banks, such as changing expectations about the privacy and security of personal information, the social and behavioral implications of a cashless economy, and how to help people use information technology to take greater control over their finances.

In general, Roy says, the center’s work will fall into two categories: rethinking the banking experience and understanding and leveraging insights into consumers’ banking behavior. Mitchell and fellow Media Lab professors Joe Paradiso, Rosalind Picard, and Pattie Maes will focus on the first topic, while Ariely and faculty members Alex (Sandy) Pentland, Andrew Lippman, and David Reed will look at the second. All of these researchers will also continue to study topics that have nothing to do with banking, Roy emphasizes. “There are a lot of areas that the bank cares about that fall outside of what I would generally characterize as banking experience and behavior, and of course there are many things going on at the Media Lab that fall outside that as well,” Roy says. “But we looked carefully at the intersection and at whether there is enough energy and excitement here [about those questions] to justify this level of commitment, and the answer came out to be clearly yes.”

Moss, in describing the new arrangement, is careful to emphasize that the Media Lab isn’t selling out. “It is partly [going to be] directed research—but you’ve got to be careful to distinguish ‘directed’ from ‘secret,'” he says. “We are not going back on our openness. But it is partly collaboratively directed by the bank. There will be certain structures we have to allow the bank to have a voice in what kinds of problems we look at. But the faculty will maintain 100 percent authority over what kinds of students they bring and what kinds of research they are publishing.”

Indeed, if Moss’s words are any indication, the Media Lab has weighed in excruciating detail the question of how much influence its supporters should have over its research agenda. And given the difficulties this question has caused for other prominent local research organizations, such as Cambridge’s Mitsubishi Electric Research Laboratory, such caution is understandable.

“My feeling has been that you’ve got to be able to maintain the openness and the creativity of the research in any strategy that you undertake,” Moss says. “If I began to accept more money that was more directed, and we were just answering [sponsors’] questions, then it wouldn’t be the Media Lab anymore.”

At the same time, he says, “This is an update” of the traditional funding model at the Media Lab. “It’s hybrid between [doing] some directed research and some completely open research. But it’s one that falls entirely within the concept of the Media Lab as it’s been here for the last 25 years.”

Wade Roush is a freelance science and technology journalist and the producer and host of the podcast Soonish. Follow @soonishpodcast

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3 responses to “The Bank of America Deal: MIT Media Lab Opens Doors to More Sponsor Involvement in Research Direction”

  1. Ray Garcia says:

    This seems and a good advance on the possibilities of corporations and universities collaborating on mutual interest without compromizing either’s position on IP. The Media Lab and Bank of America have struck a reasonable balance in creating what seems to be a new model for corporate and university partnership.

    Thus far hiring researchers to work on areas that are not in line with thier intellectual pursuits general results in less that stellar performance. Forcing corporations to fund open ended research without any clear commercial objective is equally problematic. The solve this one needs to find problems that are of interest to corporation and are large voids in the research. This aligns all interest on both the theoretical and practical opportunities to advance and understanding of a particular problem.

    I hope other corporation and universities watch and learn from what MIT MediaLab and Bank of America are doing. With this new model they have taken the first step towards creating the future of banking.

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  3. s.ganesh says:

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