A final thought for the week on bank transformation. I often talk to banks. Some I’ve spoken to for decades. It shocks me that, after decades, they still have exactly the same issues. Fragmentation of data; an organisation built over decades with systems that are not integrated; data that is split into lines of business and has never been rationalised; management who have no idea and cannot make a decision; leadership that have no idea and cannot make a decision (because it’s too risky); and a broken business that lumbers onwards.
Thing is that the business keeps lumbering onwards. If it’s a broken business with systems that don’t work, how come it keeps lumbering onwards? Lackadaisical customers.
Customers don’t care. Customers don’t see banks as business they love or embrace. Like getting a telephone or electricity or water, it’s just a utility. It’s just a service that has no customer interest and the customer is not interested as long as the service works.
Dumb pipes or smart pipes, it’s just a utility like waterworks.
I kind of agree with this view and disagree. I kind of feel like banks should be compared to airlines. When the airline industry worked, you had a number of national carriers. Like the big national banks, the national airline carriers were cumbersome, fragmented and a bit broken, but they lumbered onwards. Then you suddenly had challenger airlines like Southwest Airlines in the USA and Ryanair in Europe. These airlines changed the game: they cut back the service to nothing and just focused upon getting you from A to B as cheaply as possible.
Funnily enough, we haven’t seen a bank like that in most countries (maybe this is an opportunity).
Then you saw the rise of super-elite airlines who offered far better service at low-cost. Emirates, Etihad, Qatar and others. As a friend of mine said, when you fly from America to Asia, the US airlines is like getting into a grubby old yellow taxi and then you switch to the West Asian airlines and it’s like entering a Rolls-Royce. Great simile.
I see the same simile in the telecommunications industry. AT&T and BT and others have been around for years. They provided dial-up services. Who even knows what a dial-up is anymore? Sure, those companies are still going, but we all moved to being mobile. Vodafone, O2, Verizon and more are now mainstream. Who even thinks about AT&T and BT (except AT&T and BT)?
Now, sure these firms are still around and, luckily for them, managed to become the backbone of broadband services. Great. Yet, it’s still a challenge to move from dial-up to broadband to mobile, so that transition was not obvious or easy.
It’s a bit like USPS and Royal Mail. People mail each other. It used to be mailing envelopes and letters. People actually used to use a pen and paper and write to each other!?!?! Who the hell does that anymore? Then, luckily for USPS and Royal Mail, everyone switched to ordering stuff online, so that’s what’s now sent and delivered. Forget pen and paper, we want boxes sent to our homes. Thing is that it’s also created DPD, UPS, FedEx and more.
In other words, the world has changed, but many of the businesses that were around last century are still here today, because they’ve changed too. Have they changed enough? Can they keep up? Are they fit for purpose today and tomorrow?
Who knows, but what I do know is that American Airlines, British Airways, AT&T, BT, USPS, Royal Mail and more are trying to become 21st century digital businesses, but are struggling with it in the same way as Chase and Lloyds. Yet, when you lift the hood on any of these businesses, there’s an aching, creaking old infrastructure underneath. If you haven’t seen it, just look at Galileo which is the old system that runs the airlines.
Galileo is a green-screen 3270 mainframe system, developed about a thousand years ago. Just go up to any airline desk and ask the check-in person to show you their screen. It’s absolutely archaically disgusting. Nevertheless, by comparison with what some of my bank friends deal with, it’s truly visionary and innovatory.
Refresh and reboot or solve and evolve? What do you think? Galileo or Mars? Where do you want to go?
Related: The Future Has No Flags