If we were the exec board of one of the UK banks, we would be on the phone this morning speaking with Apple and network providers.
If you missed it (not sure how you could), amongst all the glitz and wow of the apple launch last night (09/09/2014) Apple Pay, Apple’s foray into mobile payments was announced and showcased. It looked good. It worked great.
There are, as always, those that chose to find the flaws and felt misplaced pride in arguing, mainly through twitter, with anyone and everyone that Apple Pay fell short of what it could be. “Bah Hambug” they say.
We disagree with the killjoys. Although we have generally been less than positive on the existing mobile payment solutions and their potential impact on payments, we are happy to have changed our minds:
Apple Pay will fundamentally revolutionise the banking industry.
If we ran a UK bank, our eyes would be lighting up. Opportunity is what we see. Apple Pay will come to these shores sooner rather than later. Rather than be a follower and adopter, we would want to lead the revolution, to drive our customer acquisition and make our stamp as a bank for the future.
Apple Pay is not like previous mobile payment solutions. It is delivered by the handset manufacturer, not by a 3rd party. And we have all witnessed the power this particular manufacturer wields when it comes to consumer adoption and behaviour. Yes they have made a few mistakes in the past, but Apple Pay will not join them.
If we ran a UK bank we would want to be the first bank to distribute the iPhone 6 and Apple Pay instead of cards to our customers.
We are deadly serious; we believe this strategy would spur a massive drive in customer acquisition as well as light the fire for new and improved product development processes within our institution. Innovation would be ingrained to our brand.
Today, we are tied to mobile phone contracts to subsidise the cost of handsets. We pay these bills from our bank accounts. The device is independent of the financial services we receive. We can chose to use it to assist our financial management, banking, payments, but there is no real compulsion. Everyone sees the potential of mobile in relation to financial services, but the implementations have not yet fulfilled.
By issuing the phone instead of a card, we believe we would intrinsically tie the phone to banking and drive the use of services, none more so than payments and the supplemental and valuable loyalty and rewards that are overlaid. We would take ownership of the contract for the device, still delivered and serviced by the network providers, but channeled through our bank.
The cost for the handset could be met through fees (paid to the bank rather than the network provider) or perhaps even through minimum spend or balance obligations; nothing onerous and inhibiting (these are usual even today in many countries, including the US). Given data, we may look at our customer acquisition costs and see how our new strategy may allow us to contribute to the cost of the handset without increasing our overall spend.
Of course, we would be silly to just provide the handset to our customers without bundling some apps into the package. User friendly (The key) account view/management, offers/rewards, FX, wealth management, PFM….. An opportunity not to be missed; pre-supplied and ready to use on a device that is is psychologically tied to our bank in the eyes of our customer.
We would need to brainstorm, test and build these apps; fast – ready for launch. Well, build them faster and better than we have previously been able to do. All those proposals for new process and methodology that we have discussed to death; Lean, RAD, prototyping, outcome driven and disruptive innovation…. the transformation of our business and the implementation of new and better product development would be driven forward by our handset strategy.
We will emerge a better, more capable bank. We will have changed the way the industry competes. We will have improved services for our customers. That is real innovation.
If you would like to talk through our proposition; contact us. There is a lot to discuss around this intricate and groundbreaking proposition. But it is worth it; we can help you define, implement and win.
If you were not already aware, University College London (UCL), through the UCL Advances and UCL Enterprise programmes, does fantastic things to help small businesses. They run the awesome Goldman Sachs 10,000 Small Businesses Growth Accelerator Programme, a mentoring programme (UCL SMILE), amongst many other useful and free services.
I highly recommend the internship programme; a bright young thing(s) to help you with your business over the summer. They get paid (by UCL) you get an added pair of hands to help you to grow your business – win-win!
UCL Summer Internships.
If you have friends/clients/yourselves who are London-based SMEs with a desk in an office for 8-12 weeks this summer (value is £2000-£3000), you can apply for a fully-paid full-time UCL student intern. Yes, fully paid by UCL so the host doesn’t need to pay anything. Unless they need help finding a specific student to be the intern. We are holding 4 “fairs” at the end of March (24, 25, 27, 31) where companies can buy a stand (super cheap) and you’ll meet hundreds of UCL students looking for summer opportunities and there you can interview or meet them afterwards to find the one that you want. Together, you’ll submit a proposal for funding by the end of April and if approved, you’re ready to roll! If the company already has connections within UCL or has a student in mind already to be an intern, the fairs are not a requirement. Click here to find out more!
To summarise, the article talks to the lack of investment by banks into back office IT infrastructure. Given the very public issues with payment networks of recent months (lloyds, RBS to name but a few) the article is timely and points to a concerning issue – although the big banks have (finally) realised that they need to invest in technology driven user experience, they are still lagging, critically so, in upgrading their core banking infrastructure, which may have devastating consequences to their customers and, ultimately, to their own competitiveness.
The article echoes some of the issues I addressed in a piece I wrote for Entrepreneur Country magazine several years ago when I was beginning my entrepreneurial journey within financial services. My concern is that the bigger issue of incentives within banking still need to be addressed before we see the major banks put the right emphasis on IT strategy as a core driver of overarching business strategy and competitive advantage.
The analogy of “spaghetti” used to describe the state of bank systems within Chris’s article is one I have myself used in presentations describing bank IT and is appropriate. The front office (revenue generators) in a bank rule – they are the decision makers and define business strategy and tactics. IT managers are expected to implement what the front office says – the faster they do it, the more praise they will receive and the more likely and faster they are to progress in their own careers. Bolting on/fudging code to deliver new IT services yesterday becomes the norm as the IT leaders respond to the incentives put in front of them. Dare they suggest to do things properly? No, as it will lead to them being sidelined and suffering significant barriers to career progression until they conform.
The front office managers have no desire to suggest an overhaul of IT systems for the greater good of the firm. Although the cycle of promotion has lengthened since 2007 and managers are staying in their posts for longer, the average is still 3 to 4 years before a manager moves on. Do they want to be the ones seen to suggest and preside over massive capital investment in IT, in the 10’s of $millions (given the still prominent waterfall project methodology), without clear and tangible uptick in revenues? Unlikely, if they want to keep going on their trajectory of pay rises and increasing responsibility.
Pressure to conform and address the issues must come from the business leaders on the board. IT strategy must come to the fore and their team must be made to feel that they will be rewarded, not penalised, in their careers by making the right investments in technology. Changes in approach – agile, lean, experimentation – to ensure failure is fast and cheap, should be gradually cascaded through a bank to ensure capital is spent wisely.
The simple fact is this; my kids, our kids, will not want a bank branch, will have higher expectations of the e-services they receive from banks, and will be more likely to penalise a bank for inferior services by changing their provider. We ourselves, as we progress in life and increasingly become the core target market for capital markets, commercial and retail banking, will have moved along the line of normalcy in terms of the technology we accept and use and will demand and expect more from our service providers. Banks will become less sticky; they cannot rely on an apathy to change going forward. There will undoubtedly be more competition for services; pushing for change now, acquiring new knowledge and experience in best practice for technology design, development and delivery, investing in building a true competitive advantage and core capability in technology will ensure the longevity of a bank and its future competitiveness.
We are absolutely market focused in helping our clients with their growth strategy. Although we do work on refining operational and finance strategy as part of client engagements, we find that marketing is the core driver for achieving a client’s business potential.
Below, we share a few of the frameworks we use to help build out practical marketing strategy and associated plans. We hope you find these useful – please tell us if you do, or if you have any suggestions to refine the models further; we welcome feedback!
We work with a number of SMEs helping them to define and implement their growth strategy. Unsurprisingly, given the nature of the entrepreneur, they are bristling with ideas for growth. Also unsurprisingly, given the nature of the entrepreneur(!), they will use any and all arguments to justify that their favourite ideas are the right strategies to follow. A process that involves a lot of luck rather than logic and will ultimately result in some hit and miss.
What we ask each and every business/entrepreneur we work with is to blank their minds and start at the top of the funnel: understand their business, their customers, their competitors and the world around them, to work down to ideas and implementation plans. This technique leads to some pleasantly surprising results – strategies that seemed obvious become weak and new ideas/strategies are uncovered that are far more robust then any previously conceived.
The Science of Growth Strategy can be a complex discipline. We simplify and make it practical as well as easy to understand. We also believe in transparency; the template/guide below is a generic overview with some examples of how we take firms through a strategic process down to actionable plans. We hope you find it useful. Don’t hesitate to contact us via the form below to find out how we can train you and your team to make the right decisions for future growth.
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Originally published in Entrepreneur Country, 12 December 2011
I have been struggling these past few days as to whether I should write this. After all, what do I know about politics and what could I, above others, express about the events of the past week that has inference on my life and business? I decided that I, as everyone else, have a right to express my opinion, to be concerned at the impact of decisions made by our government and their implications on the UK, on our future. So I write. My concerns cut deep and wide – the consequences of Cameron’s actions on Friday seeded thoughts of the UK’s competitiveness, of what can be done to resolve the unfortunate situation we are in and my conclusion that the long-term solution must rely on fostering a better environment for entrepreneurship.
My initial reaction on Friday morning was of excitement – I respect leadership and relish change, and, for the first time in a long time, I felt that a British Prime Minister had not crumbled, had not caved in to pressure and had stood his ground for what he believed was right. I like the fact he stood up to “Merkozy” and, from what I was reading of why, I believed he was right. We, the UK, must come to terms and accept that the only thing the rest of the world wants from us, aside from Arms, are our Financial Services. That is where our comparative advantage lies. We account for over 50% of Financial Services activity in Europe. In 2010, the £36 Billion surplus in Financial Services, helped to counter the £98 Billion deficit in Trade and Goods. It directly accounts for 10% of the UK’s GDP, with the likely indirect impact closer to 25-30%. What right do the French and Germans have to erode our core industry? The French have Agriculture, the Germans have Engineering, we rely on financial services to keep our economy ticking, with the benefits of the wealth created trickling down to all corners of society. I don’t condone the current state or management of our banking sector in any way, in fact I am working hard to change it, but the unparalleled skill set we have in finance is undeniable.
However, over the course of the weekend my thinking has changed a little. It appears that Cameron may have made a bit of a faux pas. It seems as though he would have been able to veto any resolutions impacting the city even if he did sign the agreement. It appears he pushed a little too hard and in the wrong way. Continuing to be part of the EU, we now don’t really have a say on future rules that will impact this country. He did not ask for an opt-out of certain clauses, but actually asked for unanimity voting on certain issues related to the city that would currently be resolved by super majority vote. There was no way it would have been supported, particularly and further given the way he apparently presented the demand; a late distribution of a paper documenting the proposal, without any prior attempt to build support through face to face lobbying/discussion with individual stakeholders.
I have serious concerns about the proposal signed on Friday morning – it sets a precedent for a United States of Europe, controlled by the Germans (or maybe the French? – nah) in the aftermath of a euro breakup and, potentially, sovereign defaults. The agreement answered questions that the French and the Germans wanted answering, not the questions that needed to be answered.
I doubt there is much that can be done to stop the redefinition of Europe and the Euro, save the European Bank pumping billions of Euro’s into the system to help cover the interest payments that need to be paid. See, just like for a business, cashflow is king for an economy too. Just like in a business, an immediate impact to cashflow can only be made by slashing costs (public spending) while looking for solutions in the mid to long term to increase revenue/growth through sound economic investment and stimulus.
The way I look at it is that European countries have gotten fat and lazy; with the continued lowering of inter-country trade barriers, we are losing more and more of our advantage against the rest of the world, but still like to parade around like Emperors. The throne is crumbling. In respect of the UK; I think we, as citizens, over estimate our position: The international demand for UK government debt (gilts) relative to euro debt is alarmingly low and acts as a barometer for foreign sentiment; nobody wants to invest in the UK any more. Across Europe, we have spent way beyond our means and our prospects. We have supported our economy with debt rather than look to grow revenues through innovation and diversification.
The key, for me, to the UK’s future prosperity, is in the foundations that Government can create for private business to build new areas of comparative advantage for the country. Entrepreneurs, by their nature, seek out and leverage excellence, nurturing the skills needed to address market opportunities, improving Total Factor Productivity for the nation. Entrepreneurship is fundamental to a country’s competitiveness and growth.
The improved EIS incentives announced in the Autumn Statement are a good start, the push for tech city is another. Indirectly, investment in infrastructure/transportation will also help. Arguably, we, the public need to lend a hand – the approach to risk in the UK hampers our potential; compare to the US, where more are willing to take punts in venture capital, to invest in gambles, to take chances and work hard to help their investments succeed. We sometimes forget that the wealth of this country lies in the hands of a few – starting a business, making it robust, and ensuring success requires CAPITAL. It is only a few that have the capital readily available and those few need to be incentivised to help those less privileged to progress and shape ideas into the businesses that will be the future of this country.
We can’t rely on the government solving all problems – for all the good our democratic political system delivers, it is hampered by a lack of long term planning. Government can never be secure in a lengthy tenure nor of unilateral stakeholder (public) support, and thus focus on short-term policy to deliver impact to win the next general election. Comparing again to business, I remember reading the case study of Jack Welch at GE, who asked outright for his major shareholders to support him through thick and thin, to question and criticise his decisions constructively, but to give him the leeway to shape the company for the long-term. Bill Gates, Steve Jobs, Michael Dell…there are countless examples of how business leaders, having confidence in their tenure and support, were able to shape competitive advantage and grow world leading organisations. As for countries, look to Singapore and what it has achieved. More controversially, look at China.
I do not advocate (soft) dictatorship. I do advocate unity. Regardless of individual political sentiment, we have voted them in by majority to lead our country. I feel privileged to have at this time a bipartisan board running UK Plc; a more representative government with differing opinion – a model of good governance for any company. The Government does need to make tough decisions – they need to turnaround a country. They need a cushion of confidence to be able to do so. The Government must address critical immediate issues by being harsh; cutting spending, as discussed earlier, is the only way to have an immediate impact. But the UK Government must also be supported and encouraged to build the structure and institutions that will enable entrepreneurship to flourish and drive our economy forward, to ensure we don’t get into this mess again, to ensure we maintain dignity and a place of influence on the world stage. British entrepreneurs, by creating new sources of comparative advantage, will ensure the world continues to need us.