I heard a good anecdote the other day.
It was about a guy who owned a camera shop. He’d owned it for several year’s. The business had been moderately successful making money from developing photos. Then along came digital cameras. Instead of embracing them, he stayed the course thinking “This is only a fad, people want actual photos.”
Business continued to slow down, but still he stuck to his opinion that people wanted real photos not a digital or online version only. As the profits of the business declined dramatically, the man relented. “Alright”, he said, “Digital cameras aren’t going away. I’ll change to digital”. But by this time everyone had a camera on their phone, and no one wanted digital.
It’s a cautionary tale with a lesson worth learning.
So what is the next “Camera in a Phone” I need to know about now?
You may have heard the term “Fintech”, it’s been thrown around a lot in the last couple of years, and even more so in the wake of the Royal Commission. It’s an often misunderstood* portmanteau of the words finance and technology, and it refers specifically to the slew of emerging companies investing in and developing technology to challenge traditional finance institutions to make money more accessible to both businesses and consumers.
Most FinTechs are started by someone from the financial sector who have identified a gap in the market that traditional finance companies are not filling. It may be because it’s a niche market and the investment required for a larger institution is simply not profitable enough. It may be because they haven’t thought to do it. Or it may just simply be they don’t care to fill it.
Here’s the thing. A lot of the time, one of the major factors that limits software is hardware’s ability to keep up. You could have a great idea, but it may not be practical or even possible to build it because the technology just doesn’t exist. The problem this causes is that longstanding financial institutions developed their technology infrastructure years ago, but since then technology has advanced to such a point we can do things that weren’t even conceivable then. This infrastructure is what’s referred to as legacy systems, and, combined with regulation they are a major limitation that banks and older financial institutions have in trying to keep up with emerging technology. Trying to update these systems is a long, difficult and costly process. FinTechs don’t have this problem, they are far more agile, can be a lot more flexible and respond to new challenges quickly, often creating bespoke solutions for clients, and are often not tied down by the same stringent regulations.
Where are you going with this?
My point is this; embrace change. Finance professionals, in my experience, can be especially resistant to new ideas. For so long the finance industry has been able to dictate what customers have access to because there has been simply no alternative, no one to challenge the status quo. But that’s not the case anymore. Fintech’s and new technology shouldn’t be seen as the enemy, as some strange force laying siege to the gates of traditional finance. FinTech’s should be embraced, not just for how it will improve the experience for customers, but for the advantages to our profession as well.
Now don’t get me wrong, I’m not saying you need to drop what you’re doing and go out and convert your business into a fintech powerhouse.
So what should you do?
Embrace change – Here’s the thing a lot of businesses don’t do; they don’t look around and see if anyone is doing what they do… but better. Do you know what you can’t adapt to? The threat you don’t see coming. Take the time to look around and see if there’s something you could be doing better. Is your business still relevant, is your nearest competitor doing the same thing you are and more?
Ask the tough questions, be honest with your answer, and don’t be afraid to change.
Embrace new tech – and I mean actively embrace it. Keep abreast of what’s going on. See what other people are doing. Join newsletters. Read forums. Creep Linkedin. Know not just what’s out there but what’s going to be out there. Think of it like upskilling for your business.
Spend the money – Once you know what’s out there, invest in some! I can almost, sitting here right now, guarantee you that there is something out there somewhere that will improve your ability to better provide for your clients or make your life easier. It might be partnering with a new kind of funder, it might be a new kind of software, or it might be something that absolutely revolutionises the way you do business.
Whatever it is, don’t be the guy who’s trying to develop photos in a digital world. Embrace change!
By Brad Tefft
*Not in the sense that people don’t understand the etymology of the word, but more in the sense of just what exactly what kind of business it refers too.