I like buying stuff at Amazon. There, I said it. This is despite the fact that I live within a short drive of major department stores, bookstores and a variety of other specialty retailers. Ironically, with each purchase I feel a bit guilty for not supporting our local economy, yet I continue to use their service. Why? It’s easier to use, more convenient and, well, just done better.
Apparently, I’m not alone either. Just this past month the stock market took a hit based upon the prospect of lower than expected Walmart earnings. Analysts are saying that the increased pull of Amazon is a prime reason for the decline. They were late to recognize the power and potential of Amazon and were caught flat-footed. Walmart’s ecommerce site launched in 2000, a full five years after Amazon’s Jeff Bezos brought his online bookstore to the masses. By the time Walmart realized the tremendous online income potential of the internet, it was too late. Amazon already had revenues of 2.6 billion and had gained a strong foothold in the minds of consumers.
By allowing a disruptor to build a more convenient offering, gain valuable market share, and develop a devoted following before they took action, Walmart unknowingly opened themselves up to online irrelevance or even extinction. Former executives from Blockbuster, Kodak, Borders, and others, may tell you this scenario is reminiscent of the nightmares that they lived. Each was a victim of disruption by something that was easier to use, more convenient and, well, just done better.
That’s where I think banks are right now. Banks are late to the game and are justifiably worried. New disruptors are popping up daily in the financial technology sector and venture capital firms are bending over backwards to give them capital. In the past 12 months there has been over 14 billion invested into FinTech. Companies with names like LendingTree, Venmo, Kabbage, Stripe, Yodlee, and Wealthfront are lining up to take on the big banks. Each is attempting to become the next Uber, the next AirBnB, and the next Netflix. They are well funded, agile, and most importantly, taking aim at offerings provided traditionally by banks.
Banks are justifiably nervous. It’s incredibly difficult to pivot the banking machine at the pace of technology. The traditional banking model has to change and change quickly.
Banks need to be more convenient, easier to use, and, well, just done better.