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SaaS cloud banking platform

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.

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.

Are banks in the Asia Pacific region facing a Kodak moment

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Kodak: Are banks in APAC facing a Kodak moment?

Digital technology has changed financial services and is being driven by new entrants that possess characteristics that are increasingly important to consumers and shareholders: the ability to be lean and agile, provide a best-in-class user experience, as well as grow and scale rapidly.

Long term growth lies in geographic expansion, improving customer experience and focussing on underserved markets and SMEs. The right level of service can win over digital natives and the large millennial markets which have ignored traditional banks in search of mobile alternatives. SME lending also offers a significant opportunity for growth. McKinsey has identified a $350 billion untapped lending opportunity within this sector which has numerous new entrants using digital technology to navigate a complex lending environment.

If banks and lenders are willing to change their thinking and take a digital approach now, they can benefit from the same opportunities as they have a distinct advantage, the ability to leverage their balance sheet to help them navigate a rapidly evolving market.

The simplest route is to build a digital banking spinoff which can operate like a FinTech. If we look at established banks as cruise ships: large, expensive to operate, process heavy and slow to manoeuver, the spinoff can be seen as a speedboat: independent, cost-effective, agile and lean. It can be launched within twelve months, unrestricted by geography and able to penetrate new markets.

A spinoff has to be seen as an investment in an innovation arm, created to address a specific market need and unimpeded by traditional organisational processes. If allowed the freedom, it could leap ahead technologically by prioritising APIs, cloud and mobile first thinking, and being able to demonstrate results in a short period of time.

Banks can derive value by leveraging technology to streamline operations, automate processes and significantly reduce overall cost of doing business. Focus can shift from internal systems and processes to the delivery of better service and growth.

Eugene Danilkis

Technology, while a differentiator, is just one cog in the machine. Real transformation is only possible with a change of people, thinking, and processes. This means new leadership incentivised to drive success of the spinoff and not conflicted between the bigger organisation and the new venture. This leadership has to instill a culture of innovation and continuous change from the start to enable it to act like a startup without being held back by legacy processes.

Banks and lenders cannot keep moving in the same old direction, they need a long term strategic approach not a tactical fix. Through digital spinoffs, they can allow themselves the flexibility to play at speeds at which startups operate. They will be able to innovate, explore new growth areas and quickly change direction, and in the process, redesign banking for the 21st century.

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Kodak: Are banks in APAC facing a Kodak moment?

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