Biz Stone, a co-founder of Twitter, recently spoke at one of our conferences. According to Biz, he and his team first knew they had something at the SXSW conference in Austin, TX. His friends were using an early version of the micro-blogging service to let one another know what bars they were moving to — usually hopping from a an over-crowded bar to one with more space. However, as they moved from bar to bar the tweeting crowd would continually follow them. Their coordinating tweets were also broadcasting to the larger group where the party was, word would digitally and physically spread, and … Eureka!
While listening I couldn’t help but shake my head a bit in awe. Twitter didn’t exist five short years ago and this simple service is now top-of-mind for many business and technology executives — for good reason, too. Twitter is one in a series of social networking innovations over the last decade that are rapidly redefining the customer experience.
The social networking supernova has changed the way each and every one of us shop, research, and share.
Social networking is not the only force driving change in today’s marketplace. The mobile is global, and the emergence of computing power on-demand is gradually shifting the way the business world approaches information technology. Technology and the consumer preferences tied to technology are rapidly evolving and those who fail to master this digital dance with consumers will find themselves in a nose dive toward liquidation (a la Blockbuster).
What follows is a look at the three trends that will come to a head in 2011, as well as New Year’s Resolutions to kick-start your organization’s technology strategy for the new decade.
Learn from the retailer/banker/mobile carrier across the street; they’ll soon be your competitors – Industry lines are becoming increasingly blurred. Walmart has moved aggressively into the financial services space by opening 1000 money centers and acquiring a stake in Green Dot. In the UK, Tesco has opened six bank branches and has launched Tesco Mobile, a mobile virtual network that runs on O2’s infrastructure. A consortium of telecom companies in Canada has banded together to launch Zoompass, a mobile payments venture. With the Kindle, Amazon has aggressively staked its claim as a personal technology player.
In general, such moves are made to gain further control of the customer experience. Walmart and Tesco see an opportunity to attain end-to-end control of the customer profile and wallet. The Zoompass consortium sees an opportunity to take control of the future of payments. For incumbent CIOs, the challenge is matching up with a competitor that brings an entirely different technology footprint to the table. Consider the movement of retailers into banking:
- Retailers know their customer relatively well, having invested significantly in analytics capabilities.
- Retailers lack a legacy core banking system, and will have the advantage of starting from scratch.
- Retailers have the opportunity to cross-sell banking services at the point-of-sale.
- Retailers will be moving into a heavily regulated industry and must develop the compliance processes and systems necessary to comply with regulatory requirements.
As a bank CIO, it now becomes critical to ask, “How do I shore up my perceived weaknesses?” A retailer moving into banking has the technological advantage of starting from scratch. It also knows its customers well and has unique cross-selling capabilities. There are moves a bank CIO can make. For example, by investing in advanced analytics capabilities, a bank can better understand its customers’ needs and wants; improving cross-selling capabilities and enhancing the overall customer experience.
Entrench your organization into the mobile commerce ecosystem – ABI Research recently estimated that the mobile commerce market reached $4.9 billion in 2010 — big, but still a small slice of the $150 billion-plus e-commerce pie. The year 2011 will see a massive surge forward in “m-commerce” (mobile commerce) adoption by consumers. For traditional industry players this is both an opportunity and a threat.
Consider Square, a start-up launched by another Twitter co-founder Jack Dorsey. Square is an electronic payment service which allows users to accept credit card payments through their mobile phones. For merchants, Square is a blessing. Card processing is expensive and often not an option for many merchants (for example, street vendors or those selling produce in a farmer’s market). Square provides card processing “on-the-go” with no initiation fees or monthly minimums.
While currently only a niche offering, Square’s technology has legs. Larger merchants may be attracted to Square in certain situations — allowing the start-up to gain a significant foothold in the $40 billion credit card processing industry. That sound you hear? … Warning bells going off in the heads of credit card processing executives across the U.S. Larger, big-box retailers should be concerned, as well. Square potentially provides a new level of freedom and interaction for smaller merchants.
Mobility is at the forefront of innovation. Many non-traditional competitors will emerge, as Paypal and Amazon did in the online world, by cleverly exploiting the mobile channel. For CIOs, the key is not to bring a knife to a gunfight. The business case is easy: Invest in mobile or get left behind.
Take “front-end” lessons from the new guys – Consumers are spoiled. The iPad and iPod, Netflix, Google, YouTube, Amazon.com and Facebook all have served to set expectations of digital convenience, simplicity, and user-friendliness. Increasingly, start-ups and other non-traditional competitors are leveraging user-friendly business models coupled with technologically advanced front-ends to grab market share or mindshare.
Mint.com and BankSimple in the financial services space, Skype in the telecommunications industry, and Gilt Groupe in the retail space are all examples of this approach. Many of these (BankSimple, for example) were created to address customer pain points that have plagued traditional industry players for years.
For CIOs this is a fantastic opportunity. Such start-ups represent a chance to look in the mirror and really understand where your technology may be lacking. As consumers increasingly depend on the online and mobile channels, these weaknesses can become company crippling.
This year kicks off a decade that will undoubtedly be driven by new levels of technological evolution. Customers demand digital excellence and innovation. Those who succeed in delivering an unmatched customer experience will also likely succeed in gaining control of the market.
Proactive CIO’s will be to learn from non-traditional competitors and gain a foothold in the mobile marketplace.
Ashok Vemuri is SVP and Global Head, Banking and Capital Markets – Strategic Global Sourcing for Infosys Technologies overseeing all U.S. operations. Ashok is a member of the Executive Council. He is also a member of the Board of Infosys Consulting, Inc. Ashok joined Infosys in 1999 and has performed multiple leadership roles. Earlier, he was the head of Infosys’ Canada and Eastern North America region. Ashok is an astute business leader and is often sought by the media to analyze the state of the banking industry. As a practitioner and observer of global sourcing, he has been widely quoted in leading publications such as The New York Times, International Herald Tribune, American Banker, Wall Street & Technology, Waters, etc.