Years ago, a ‘Kodak moment’ referred to the capture - on film - of a significant and special moment that would never be forgotten. Nowadays however, since the devastating-but-completely-preventable collapse of the iconic photography giant, a ‘Kodak moment’ is used to describe the point in time when an organisation or leadership team fails to grasp the significance of a market shift, and suffers the very dire consequences.
Executives at Kodak – the market-leading photography company for decades – refused to believe that digital photography would ever challenge traditional film photography, despite the company inventing the first ever digital camera. While it could have diversified its business and become a market-leader in digital photography technology, instead Kodak downplayed the impact digitisation of the medium would have, and subsequently suffered a spectacular collapse. Kodak’s story has become a cautionary tale of what happens when executives underestimate the impact of new technology, and refuse to change with the times.
Innovate and digitise or risk being left behind
Banks and financial institutions around the world are currently facing a similar scenario. Having faced minimal competition for decades, many large and established banks have become complacent and resistant to change. If it ain’t broke, don’t fix it, right? But now, threatened by new entrants to the market in the shape of innovative fintechs and new challengers, incumbent banks are faced with two choices – either embrace change and new technology, or risk becoming another cautionary tale.
Across the Asia Pacific region in particular, the financial services industry has been experiencing a period of intense, transformative change, as mobile and API technology matures and becomes more reliable, and banks, fintechs and challengers begin to realise the size, scale and potential of the Asian market. However, while fresh-faced fintechs have been quick to take advantage of this new digital era, many legacy banks have been slow or reluctant to change, insisting on maintaining the status quo and shutting down any talk of digitisation.
What many of these legacy banks fail to realise, however, is that they don’t need to drop everything they’ve always done and change their entire way of doing things to capitalise on the digital revolution: it can be as quick and painless as launching a small-scale, low-cost, digital spinoff - a ‘speed boat’ - that they can send out to navigate the rapidly evolving market.
Speed boats versus cruise ships
At Mambu we like to use the analogy of established banks being like cruise ships - large, expensive to operate, and slow to manoeuver, but with all the fancy bells and whistles. The digital spinoffs of these large banks are more like speed boats - faster, more agile and able to turn at a moment’s notice, but with no three-course-meal and a little less padding in the seats.
The speed boat needs to be driven by new thinking, new processes and, ideally, new leadership in order to forge its own identity. It also needs to operate much more like an agile fintech than like a traditional bank. Leveraging technology like APIs and collaborating with high-performing cloud and technology partners will streamline operations, automate processes and significantly reduce the overall cost of doing business.
To lead in banking and lending, you need to be able to seize the moment and quickly adapt to changes in the market. Download the Kodak moment guide and find out how you can avoid becoming a picture of failure.