Author: Chris Papathanassi – oneirosolutions.com
It’s the millennial year 2000. Some guys from a young start-up company present their business to Blockbuster with a $50 million price tag. They promise to revolutionize the movie rental company’s online division.
Blockbuster “laughed them out of the office”.
Perhaps you’ve heard the story? That start-up was Netflix.
Fast-forward to 2010 and Blockbuster files for bankruptcy with one billion dollars of debt.
Fast-forward to 2022 and Netflix is worth $99.7 billion.
Quite the turning of tables.
It’s telling what Blockbuster’s former UK Chief Marketing Officer said:
“I am sure 99 out of 100 people involved in Blockbuster would have told you the future was in digital downloads and online ordering, but the chief executive had a retail background and his priority was to save the high street business at all costs. Perhaps we would have benefitted from a different perspective.”
A different perspective
Blockbuster would be a huge commercial smash no more. They really should have heeded Billy Beane’s advice in Moneyball to “adapt or die”.
All businesses need to adapt, transform even, to move with the changing habits of their clients and customers.
Blockbuster missed a colossal opportunity as the CEO was so focused on bricks and mortar. In hindsight, let’s question why. I can imagine it’s because:
It was familiar.
It was working.
It was how it started.
I implore business decision-makers in the corporate banking industry to ask themselves: is what we’re doing familiar, working just about, and how we’ve always done things?
If the answer to any is yes, ring the alarm.
The truth is most banks are using technology that is thirty years old and counting! Can you believe it? It’s 2022 and the industry still uses fax machines.
The future of corporate banking
As we’ve seen in retail banking, an online platform is now not only a nicety but a necessity. Customers expect it. They expect to be able to move money around using their devices. They expect to be able to check their balance in real time, at any time.
They don’t expect to have to walk into a high street branch. They don’t expect the handling of their money to be prone to human error.
Why should the service within corporate banking be any different?
There’s a cultural mindset of: this is familiar, this is working, this is how it’s always been done. This perspective is blinded by an unyielding allegiance to the way things are.
In my experience, in any organization there will always be someone in the room who is opposed to next generation technology. Why do we need an online platform? The way we work works alright. Do you realize how much effort, how much cost it would take to change?
This is the Blockbuster mindset.
It’s settling for little tweaks; superficial plugs to their aging dam.
In effort to compete with competitors, Blockbuster stopped charging people late fees. But then people held onto DVDs for longer, meaning others couldn’t rent them, and so this intended plug made a double crack in revenues.
Netflix understood that a flood was coming. They took the technological, game-changing approach. They looked forward and said, take the physical disks away, utilize next gen technology, stream the movies, let there be no limit to how many people could watch a film at one time.
I love what Reid Hastings, Netflix’s co-founder and CEO, said…
“My greatest fear at Netflix has been that we wouldn’t make the leap from success in DVDs to success in streaming. Most companies that are great at something — like AOL (AOL) dialup or Borders bookstores – do not become great at new things people want (streaming for us) because they are afraid to hurt their initial business. Eventually these companies realize their error of not focusing enough on the new thing, and then the company fights desperately and hopelessly to recover. Companies rarely die from moving too fast, and they frequently die from moving too slowly.”
And I think we can all agree, the corporate banking industry has been progressing too slow for too long!
As Netflix gained subscribers, it took Blockbuster six years to launch a similar service (Blockbuster Online). As we clearly see now, they pivoted too late.
The tipping point for digital transformation within corporate banking is long overdue, so you better believe it’s near.
Whether it’s how we watch movies or deal with money, looking forward to the next new thing, not shrinking back from the potential of technology, doing something seemingly drastic today… it’s what’s vital for companies to survive and thrive tomorrow.
Adapt or die, corporate banks. Adapt or die.