For all the talk of technological innovation it’s surprising how absent it actually is in most companies. Perhaps it’s because innovating any system can sometimes be harder than it looks or take longer than anticipated. This probably explains the resistance encountered generally, but for certain companies, like financials, the stakes of innovation are much higher. Author Chris Skinner made an apt analogy in a recent article:
‘For a bank today to change its core systems is [sort of like trying to service] an automobile that’s running at 1000 miles per hour.’
Any slow down or interference is going to cause the auto to falter and potentially do harm. For a large bank this means downtime and unhappy or lost customers and, maybe more catastrophic, a hit to the company’s reputation. So banks choose not to risk it. Change is made only as a last resort. It’s not hard to see the potential flaw in strategy here. Sooner or later change has to occur if companies want to stay competitive. The good news? It is in fact possible to bypass total system change and still innovate by using new approaches to solve the problem like introducing a customer experience layer on top of the core systems to enable, for example, more control and flexibility.
As Skinner points out, there are some brave banks who have taken or are taking the plunge to change their underlying systems with mostly undesirable outcomes. Yet, despite these outcomes there is something important to remember about innovation. Customers may be disappointed with downtime, but they will be even more disappointed if a bank’s system leaves them behind. It seems to me smart financials are finding ways to avoid the risk of total system change and still servicing that 1000 mile per hour auto without even touching it.