I read with interest this week of the launch by IAG of a low-cost long-haul airline and was surprised to note that it was greeted with comments that this could be a key staging post in the development of the growing trend for cheaper and longer flights. People have short memories. Remember “GO” the low cost airline of British Airways - it was sold to Easyjet for a song. Likewise “Buzz” a low cost effort by KLM, sold to Ryanair at a bargain basement price. Let’s just say, the two radically different business models of a “Full Service” airline with its complex fleets, global reach, high employee per passenger ratios (the list is endless) should never try to compete with this model versus a sleek and (despite its size) nimble, pure low cost model like Ryanair.
This put me in mind of my ongoing work with Ireland’s larger Banks assisting them to build out their top Technology talent. I have learned that all established banks, by virtue of their length of existence have had to bolt on different technology platforms and infrastructure in order to grow. These mammoth core platforms do not open themselves easily to change and transformation. Like the “traditional airlines” seeking to compete in niches with business models that are not fit for purpose we see “traditional” banks grappling with the world of Digital, appointing digital officers, formulating strategies to deliver a miraculous “transformation” through innovation pods or labs…or so it seems.
Banks are intrinsically slow movers and, we could argue, rightly so as their raison d’etre is to provide core banking services in a highly regulated environment providing assurity, reliability and security for their customers. Do we really want them to be experimental – even if their embedded culture, systems and process would allow them to be?
Just as the “traditional” airlines looked at Ryanair and Easyjet with fear and responded with attempts to deliver a similar product to the consumer but delivered with their very different (and significantly more costly) business models, Banks today are looking to emulate some of the more transformational, user friendly, digitally enabled technologies and user experiences that Fintechs are developing. But let’s remember, each small Fintech company is purely focussed on often a single technology looking at for example, a particular point in the chain of a payment experience. They are nimble and quick because their lense of focus is very narrow in comparison to a large Bank and they are operating with radically different talent mind-sets.
Given the complexity of a Bank’s organisational model the solution may lie in embracing fintechs and buying in their expertise to keep them current and ahead of the competitive field. The Banks that come up with a solution whereby they can assess, import and integrate the best technologies to match their customer propositions stand the best chance of growth and success.
Of course organisations need to respond and anticipate to changing environments and ever more demanding consumer requirements. But, a word of caution. The most successful organisations know what they are good at and stick to relentlessly, even ruthlessly. I often recall Michael O’Leary commenting when asked what the biggest risk to Ryanair was in ca. 2006 – he said “Our greatest risk is ourselves, that we take the eye off the ball”. By this he meant – stay focussed, play to and build on your strengths. Allow nothing to distract you. Play in the space in which you are set up for success. To thy own self be true.