Aaaaooooooogaaaa! That’s the clarion call of “disrupt or die!” The horn has been blasted loudly and repeatedly from the mountaintops—mainly by those who get paid for their opinions and guidance moreso than those of us who have to do the work.
There is no wonder we hear we must change our banks from the folks who get paid to tell us to change our banks.
I’m tired of them. And I’m tired of the talk about disruption.
It’s time to talk about discernment.
Let’s clearly acknowledge banks do, in fact, need to embrace change and become active participants in innovation. However, there is a time, place, and pace for everything.
I feel like, now, we’re in a crowded theater, someone yelled “fire,” and we’re in a mad, haphazard dash toward the exits—crushing one another on the way to an uncertain future.
Your job is not disruption. Your job is discernment.
No matter your role at the bank, your job is to determine what needs to change and when.
Disruption is Vogue
“Uber, the world’s largest taxi company, owns no vehicles. Facebook, the world’s most popular media owner, creates no content. Alibaba, the most valuable retailer, has no inventory. And Airbnb, the world’s largest accommodation provider, owns no real estate. Something interesting is happening.” ― Tom Goodwin, Digital Darwinism: Survival of the Fittest in the Age of Business Disruption.
This quote has been shared and misattributed countless times on LinkedIn and poorly-wrought conference PowerPoints. We’ve deified these companies who came along and created upheaval. Even Tom Goodwin has asked us to refocus how we frame these companies—especially considering how varied their paths unwound since the publishing of his book just a short time ago in 2018.
Watching Uber and Airbnb come to life is as exciting as watching an elite athlete put on the performance of a lifetime. It’s compelling to watch magic—someone achieving the impossible. That’s why the Michael Jordan documentary, The Last Dance, put up record viewership numbers. It showed peak Michael Jordan. And there’s only one MJ.
It’s exciting to watch disruption happen, but none of us expect to go out on the court and be like Mike.
Banks Need Change
Along with the excitement of disruption, banks need change. Somewhere along the way, though, we mistook a need for innovation for a need to disrupt.
We watched companies like Chime, Venmo, and SoFi march up to the gates of banking and bang loudly. Or at least that’s how it looked. They actually did something totally different. Yet banks rushed (a little too late) to capture the leftover market with products that don’t live up to the predecessor.
Banks are victims of the pendulum swing all the time. We wait and catch it on the high arc.
We feel like we’re late. We listen to the “sky is falling” consultants—who are also late to ring the bell. And we spend tons of money for marginal results.
Look at Venmo. They popped onto the world stage, and folks flocked to their service. We watched and watched and finally heard:
“Hey, this is a threat to banking!”
“Hey, you need to offer your own P2P. Don’t let others hold your cash!”
“Hey, you’re going to look uncool if you don’t have this!”
But there’s a problem. Venmo had already innovated. They captured the early adopters. They captured the second wave, which was influenced by the first wave. Who was left? Those that Venmo—the Michael Jordan of P2Ps—couldn’t attract. But consultants convinced us we should try our hand at capturing them anyway.
And we wound up with campaigns like “convince Dad to send his college-age daughter some cash” or “split the wine bill with your octogenarian friends.”
There wasn’t much audience left. They already made their decisions to go with technology or to be happy with folding money and checks.
The Incumbent Factor
We tend to look at the darlings of disruption from the wrong angle. We only look at their innovation in their given field. We don’t look at what was wrong in the first place.
Was Uber successful because it was innovative?
Or because cabs suck?
Both. But I don’t think we would care about the former if the latter was not only true but aggressively true.
I’m profoundly unsuccessful at hailing cabs on the street in New York City. I hate the queue at LaGuardia, where you march down the stanchions to get into the next cab. And, to me, the experience only gets worse when you get inside the cab. You’re surrendering your livelihood to a short-tempered person erratically piloting a yellow, foul-smelling sarcophagus on wheels.
My first experience with Uber in NYC was the exact opposite. I exited a plane, summoned a driver as I was walking through the terminal, and was told where to meet my car. He was waiting for me with a smiling face and a clean vehicle.
The experience couldn’t have been more different. But, at face value, Uber was really just “whelming.” A decent person with a decent car with a decent drive. Sure, the technology was cool, but when we think about it, it’s not THAT groundbreaking. It repurposed and repackaged the steps you’d go through to ask a buddy for a ride. But, when this experience is cast against the horrors of riding in a cab, Uber becomes overwhelmingly transcendent.
Disruption has less to do with how good you are and more to do with how bad the incumbent is.
It is well-known incumbents are hard to beat. Good incumbents are even more difficult.
Also, at some point, we were convinced banks are the challenger. You are not the challenger. You are the incumbent.
This perspective is important. It doesn’t mean you don’t need to innovate. It also doesn’t mean you’re always defending your position. But largely, we’ve forgotten we’re in the power position. It’s easier to sell you consulting when you feel weaker than you are.
As with Uber, disruption isn’t always about innovation. Most times, it’s about solving what is wrong.
So what is wrong in the industry that you and your bank can solve?
It’s actually probably not “the industry.” The place you can affect the most change is likely in the communities you serve.
Instead of listening to Chicken Little pundits who make money from “Sky is Falling” rhetoric, look closer to home.
Recently, I was speaking with a client at a restaurant. I’ve had a version of this conversation several times.
- Bank: “A new business is opening. What should we add to our product mix to attract those folks who are moving in?”
- Me: “We’ve never marketed to them. Maybe they really value what you already offer. Instead of coming up with something new, let’s look at what you offer and how you offer it. Most folks don’t want new bells and whistles. They just want their stuff to work.”
At this point, a random couple walks up. Somehow, they’d discerned the bank and listened in on the conversation. They owned a business and had commercial and personal accounts with the bank.
- Random Customer: “What we like is any time something is wrong we can call your bank. We can do most things ourselves through the app and online banking, but we really like that we can talk to a real person if we have a problem or a question.”
Yes, banks have worn out the “our people” message. And it is difficult to frame creatively, but the simple act of being available might be as disruptive in your bank’s service area as any new technology. It’s just not as sexy. And it might not be as expensive.
Look at innovation through the lens of customer’s problems instead of coming trends from a cracked crystal ball. Sometimes this will require innovation. Sometimes this will require focus on what you already do well. But don’t let anyone outside set your pace.
I learned a simple axiom that added to my ability to discern change in my business. You have three options when it comes to innovation.
1. You can be early
2. You can be late
3. You can be right on time
Being early costs a bit more money and comes with more risk, but your potential for reward is higher. Being late costs less money and is less risky, but you lose opportunities. Being right on time is impossible. Once you stop considering this fallacy, decisions become a whole lot easier.