Synergy is the Way Forward for Digital Freight
The Fintech industry is seen as the model for best practice with regards to digital transformation. 10 years ago the ‘Second Great Depression’ was caused primarily by banks falling asleep at the wheel. And what woke them up? FinTechs. These efficient and dynamic upstarts rose up fast and arrived with technology on their side.
But the ending to the Fintech story isn’t the same. Unlike most industries that simply disappeared almost overnight, it’s a kind of happy synergy and everyone involved — banks, upstarts, and consumers — are now reaping the benefits.
In the same way Fintech changed banking for everyone’s good, FreightTech has the ability to do the same.
What Lessons from the successful transformation of banks can we apply to the Freight Industry
Lehman Brothers. UBS. Ameriquest Mortgage. Merrill Lynch. Washington Mutual. Fannie Mae and Freddie Mac. HBOS plc in the UK. All these banks had one thing in common, they lost the trust of their customers and lost their business. The FinTech companies used their software to put the customer first and — customer by customer — killed off these ‘slow to respond’ banks.
“Too big to fail”, as it turns out, was a lie.
The revolution that Fintech represents came about because these new companies also completely changed the way they did business behind the scenes. Fintech companies don’t just provide better customer service. They provide a better way of doing business. Agile, innovative processes delivering superior products to an increasingly digitally inclined customer base
Because these new startups were superior in these areas, their businesses were stronger. They were simply more nimble than the traditional banks, not burdened by layers of bureaucracy, delivering their, already superior, products to the right consumers in a way that matched their preferences. Plus, the products and services they offered were better
All that requires data and this is where Fintechs and banks discovered that synergy is the way forward. This is the kind of data that established banks have in spades. They’ve been collecting data for years, in fact. They just haven’t been using the data to its full potential.
Deep Learning. Big Data. Analytics. These AI-driven client recommendations allowed the new crop of banking disruptors to excel in several key areas. Namely, AI allowed these Fintech startups to optimize all business processes
Once the Fintechs and banks began cooperating the pace of innovation together was vastly accelerated to the benefit of their customers, themselves and their shareholders.
Move over FinTech, FrieghtTech is Here
The digital acceleration in shipping across every sector has been increasing in speed quarter on quarter for a few years now. The industry leaders have a good head start but the FreightTechs are coming. Companies like Maersk, DB Schenker and Kuehne+Nagel have publicly announced digital transformation strategies.
Details are sketchy though on the planned spend, but there is a warning from Fintech that a sticking plaster approach to transformation is not enough
Banks such as BNP with around $50B and 100k employees they are somewhat comparable at the high level with the largest players in the industry.
BNP’s annual Technology/IT spends runs well into the billions and their separate digital transformation budget runs at $1 billion per year. Our information is that every shipping player’s IT/Tech budget is WAY under one billion and rarely, if ever, has any separate new transform budget.
The issue of course is the incredible pressure on profitability the large shipper players are suffering today. Cost savings have to be made but these savings should not miss the root case — the urgent and immediate need to digitally transform.
So, how do you transform if you don’t have a large budget ready to invest in R&D? How will you learn from FreightTechs if you do not embrace them and support their effort to improve the Freight industry?
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