Kodak history: The Kodak effect is a well-known phenomenon. A leader in the photographic industry in the 1970s, Kodak developed the first digital camera, but the company preferred to focus on the movie market, refusing to believe in the success of the digital camera. Unfortunately, it missed the train and ended up abandoning the competition. Despite the recognition and innovations achieved by this company, Kodak is often used as an example to describe the moment when a company fails to grasp and understand the importance of a strategic change, with disastrous consequences. Over the past 15 years or so, Kodak's story has become a terrifying tale for executives who underestimate the digital revolution and the impact of new technologies.
The risk of banks being left behind
In recent years, banks and financial institutions have been faced with a scenario extremely similar to that of Kodak. As markets such as Europe have opened up, more agile competitors have emerged. Agile players offer innovative products and services that differentiate themselves from traditional banks through digital. Initially, banks tended to reject the change triggered by these new entrants, yet the danger is there, and these players are questioning the banks' positioning. However, banks have two choices: take advantage of the digital revolution and new technologies to innovate or do not react and let their value erode over time. ⏱
Around the world, financial services are experiencing a period of intense technological acceleration via mobile, open banking and APIs, artificial intelligence, big data, and customer experience. Customer expectations are growing, and digital natives have turned away from their traditional banks to mobile banking. The Fintechs have hugely contributed to this digital and technological revolution, making traditional banks slow and reluctant to change, doing everything possible to slow down the evolution and maintain the status quo.
While some banks may not realize the full benefits of this transformation, they will not have to give up or change everything to capitalize on the ongoing digital revolution. Quick and painless methods allow them to focus on digital while starting on a small scale and at a low cost: Greenfield (or Spin-Off) for rapid evolution.
"Traditional banks don't have to rebuild themselves to last, but to change continuously."
Nicolas Pinto - Marketing Manager, TagPay
Ladies and Gentlemen, don't stay on the sidelines! 🚨
Let's take a look at a collaborative game created by Luke Hohmann in his book "Innovation Games: Creating Breakthrough Products Through Collaborative Play". This new way of working enables to design innovative products through collaborative play while justifying the agility of a speedboat. The concept is quite simple. How will your speedboat manage to reach its goal, a desert island (for example, a Go-To-Market), when it will have to face different challenges such as the wind (maybe also in your favor), the anchors which are brakes, or the reefs which are obstacles.
Let's avoid going into the details of this game that we can use at different times in the life of a project (kick-off phase, during or in the analysis phase), this is a real collaborative tool requiring agility, flexibility, and speed to move forward. It is how the analogy speedboat versus ocean liners was born. The speedboats (FinTech or Neo-banks) are fast, agile, and able to swivel easier to attain goals unreachable than ocean liners (traditional banks) due to their weight, size, and challenge maneuvering. 🚤
On this basis, a new reflection emerges, that of creating a new actor with new thinking, new processes, and a new identity. As making a clean slate, gaining independence, and based on the precepts of open banking the latest technologies, the liners (traditional banks) could find themselves creating digital players who will be able to seize opportunities and adapt to market changes. From day one, this new player must have a culture of innovation, with an open, flexible, and modular technology to enable the rapid launch of new products.
By adopting this strategic vision, banks will succeed in splitting their IT and become a sustainable player over the long term. With a new generation of Core Banking that meets the latest technological requirements, banks will operate at the same speed as startups. Kodak could have made this choice, by creating new digital solutions, they would have been able to win new customers while orchestrating a transition with their customers to ensure their place in the market.
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Innovation. FinTech. Digital Banking. Neobanks. Open Banking. Core Banking System. Cloud.
News • February 3, 2021
Open Banking: technological challenges (Traditional IT vs. Open IT)
While the article presents the advantages and income sources of the two main business models: Banking-as-a-Service (BaaS) and Banking-as-a-Platform (BaaP); it shows that the implementation implies a major overhaul of the banks' IT strategy.
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