Why Your [Financial Services] Company Must Become a Tech Company
Over the years, I have heard and read many Financial Services CEOs say things like “We’re not a technology company.” I always found this a little surprising as Financial Services “products” from CDs, to insurance policies to mutual funds are virtual (i.e., non-physical) products by definition, and have been so for much longer than the products of almost any other industry. Why then the mantra of NOT being a technology company, when perhaps more than any other industry, technology is the fabric and foundation of Financial Services, from Banking to Insurance to Investments?
In a recent blog by Adam Hartung of Forbes.com titled “Why YOUR Company Must Become a Tech Company – Apple, Amazon, Facebook, Instagram Lessons”, Hartung marvels at the recent market cap of Apple – now 50% greater than that of Exxon/Mobil and more than the entire value of the stock exchanges of Spain, Greece and Portugal combined. Hartung also comments on investor concerns that any one company should be so highly valued, and counters that these fears are not necessarily irrational “unless we look at this information in the context of a major, global economic shift.”
“Consider that what the world values has changed dramatically. And that what investors are telling business (and government) leaders is that in a globalized, fast paced world value is based upon what you know, when you know it – in other words information. Not land, buildings or the ability to make things… We’ve moved from an agrarian [economy] through the industrial [economy] to the new information economy.”
If value is now based on information, doesn’t it make more sense than ever to be a tech company in Financial Services? Or if not a tech company per se, at least an information-driven Financial Services company – using, analyzing, creating, packaging, and distributing information and solutions (aka products) that will help consumers and companies create value based on “what they know and when they know it?” I think so, and I further believe that information management will be the new basis of competition in Financial Services, if it isn’t already.
“Successful competition in 2012 (and going forward) requires businesses know about customers, products and have the ability to supply solutions fast with great reach. Winning is about what you know, knowing it early, acting upon the information and then being able to disseminate that solution fast to those who have emerging needs.”
I once (and only once) heard a CEO of a major Financial Services company say “we ARE a technology company, just in the Financial Services space”. That’s the spirit, and the right way to lead any bank, brokerage or insurance company into the information-based future.