In a webinar we hosted recently with Lars-Erik Hion from Rethink we sat down to discuss the current crisis and its effects on the banking and fintech sectors, as well as other industries more generally.
Below are some of the highlights which we covered.
Changing the approach
While the whole banking and financial sector has moved in the direction of slowly becoming tech companies first and foremost, there are still significant differences how product development is approached when comparing to large tech companies like Apple, Facebook, Google or smaller startup players in the fintech space.
The biggest of these is focusing almost exclusively on evolutionary instead of revolutionary improvements to their products.
A good analogy might be how Porsche has kept the 911 pretty much the same car as it was 5 or even 10 years ago, focusing on incremental updates. Meanwhile Tesla has popped up with something completely new, taking a completely new approach to get to the market and now reaching a state where they are competing for the same customers.
Staying ahead vs catching up
Traditional banking companies are not in a too different situation when compared to the relative newcomers of fintech companies, which have started to provide real world competition. Trying to shift gears in a traditional company to play catch-up with fast-moving fintechs, which have a completely different culture and almost no legacy to drag around, will be a very challenging task.
We see that there are 3 main ways how larger companies can prepare for what’s coming and still stay relevant:
· Changing the organization culture — giving more product development freedom to engineering teams, organizing product hackathons and brainstorming sessions to come up with new ideas and break out of the cycle of only delivering incremental improvements.
· Acquiring promising fintechs, integrating them with your business and then allowing them independence to work as they historically have. Good example would be how Facebook handled acquiring Instagram and WhatsApp. And on the other extreme how Microsoft handled Nokia and Skype.
· Outsourcing “moonshot” projects to external development partners. This would allow the flexibility for implementing the ideas while avoiding the need to hire new people or move around existing teams, while maintaining a good overview of the budget and timeline of externally developed projects.
Ideal time for change
The last global (financial) crisis, despite all the negative aspects that it brought with itself, also proved to be a fertile ground for new ideas and new companies like Airbnb that got founded during economic hardships. This has actually been true always — General Electric, IBM, Disney, HP, FedEx were all founded during recessions.
While every crisis is different, there are also a lot of aspects that are constants and finding clever solutions in difficult times is probably one of these.
2020 then seems to be one of these years that will lay the foundation to how successful companies will be during the years to come.
It seems like again a good time to remember the Churchill quote “Never let a good crisis go to waste”.
Lars-Erik is a founder of Rethink (www.rethinkers.co) — a strategic design agency focusing on the financial sector.
Rene is a tech lead at Optimist Digital (https://www.optimistdigital.com) — a digital product agency.
Did this spark your interest and want to discuss these topics in more detail?
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