THE PLATEAU AND THE CLIFF
Why the plateau? A number of factors, such as roads being predominantly dirt and not suited for cars (paved roads were many years away) and limited distribution networks for cars. Also many of the early automobile models were primitive.
Culturally, there were also issues. For example, laws were passed restricting how fast cars could travel. In some cases, regulation even required people with red flags to march along beside cars.
However, once the automobile did take off it did transform the look and layout of communities – the car allowed the growth of suburbs while the new interstate highway systems were built.
Some cities benefited, some others were diminished.
From this transition the winners were car makers and auto drillers. The losers were stable owners, feed producers, saddle makers, farriers.
There are many parallels here for banks. Similar to the dirt roads, much of the world’s financial infrastructure (and regulations) are not built for a digital age.
Many of the ‘serious’ innovations are still clunky are not ready for wide-use adoption. Culturally, there remains a majority who fear the loss of cash or hard currency if cryptocurrencies take hold.
The part that gave me cold sweats was when I could not find one reference for a successful horse and carriage company evolving into an ‘auto’ company. Could this apply to the banks and other traditional financial service providers of today?
I think a clear lesson is banks have to act with some urgency if they are not to suffer the same fate as the horse and carriage companies of the past.
This does not involve building a faster horse. It involves a radical re-think of what people need, are looking for, and how it can be delivered.
Accepting this reality and embracing digital is the first step in a journey that could take a decade (or two).
Tareq Muhmood is CEO Korea & Managing Director Global Subsidiaries, ANZ
Post -script: some companies did indeed make the transition. Hermes is today one of the world’s most profitable luxury goods companies. But it started in 1837 in the carriage trade, making harnesses and bridles. Hermes evolved with the market but has always maintained its reputation for quality, drawing on its deep history.