Prepare for the Future of Payments by Embracing Disruption

Prepare for the Future of Payments by Embracing Disruption

Prepare for the Future of Payments by Embracing Disruption

Jim Marous

Jim Marous

Known for his understanding of the disruption in the banking industry, Marous is the co-publisher of The Financial Brand, and owner and publisher of the Digital Banking Report.

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On Aug. 11, 1976, Randall Park Mall opened its doors to the public on the site of an old horserace track in a suburb of Cleveland. With five anchor stores and more than 200 shops, it was the largest shopping mall in the country at the time.

But beginning in 1992, anchor stores at the mall either closed due to bankruptcy, merged with other chains or couldn't support their massive footprint with adequate sales. It quickly had trouble re-signing tenants, and by 2004, 50 percent of the mall stood vacant.

Just 33 years after opening its doors, Randall Park Mall stood vacant in 2009 – a testament to the changing dynamics of the retail industry.

With the majority of the property razed, the mall stood vacant until 2017, when another retailer demolished the rest of it to make room for an 855,000-square-foot facility, bringing 2,000 full-time jobs to the region. That retailer was Amazon.

What this story illustrates is the risk inherent in complacency. Of not being aware of industry changes, of not taking risks to test new ideas, and of the penalty paid if you are unable to disrupt your own business model before the marketplace does it for you.

And this is happening across industries – payments, fintech, banking and beyond. Now more than ever, it's time to embrace change, take risks and disrupt your business – and yourself.

"Change will never be this slow again"

All components of today's payments ecosystem are changing at a pace we have never seen before. Unfortunately, while change is faster than ever, it will never be this slow again. This creates a problem for both individuals and organizations who find it harder and harder to catch up to the leaders in the marketplace or to respond to rapidly changing consumer expectations.

Ironically, one of the greatest threats facing payments organizations – bankers, financial institution solution providers, processors and even startup firms – is their own success. Whether that is defined in terms of revenue, sales, product deployment, customers, satisfaction or loyalty, success can breed complacency.

To succeed in the future, financial services executives and entire organizations need to take experiences and successes from the past and apply them to future challenges. Because in a world that is innovating and developing new technologies in days as opposed to months and years, you need to either disrupt the paradigms of the past – or be ready to have the marketplace disrupt you.

"Unfortunately, while change is faster than ever, it will never be this slow again."  -Jim Marous

How should a financial services executive or organization in the new financial ecosystem play catch-up in an environment where being a 'fast follower' isn't even fast enough? How do we change ourselves and our organizations when the cultures we have become accustomed to can be a hindrance to digital transformation?

Building for the digital future takes a vastly altered culture, new skills, a customer-centric focus, and an understanding of where the marketplace is heading as opposed to where it has been. Here are three ways to get there.

ONE: Embrace change

The concept of 'embracing change' may be the most difficult for executives and organizations in our industry. From the outside, it doesn't look like anything is broken. After years of steady earnings for both financial institutions and organizations providing services to the industry, why should we upset the apple cart?

Just like the retailers in most malls, while everything may appear to be OK, the foundation upon which we deliver services to businesses or consumers may not be stable. In fact, past success might be an industry's worst enemy.

People and organizations need to first change their mindsets to embrace change as an everyday norm and to become open to, if not comfortable with, change itself. Second, they should stay positive and find the courage of their convictions to overcome the paralysis of inaction. Third, they need to find ways to implement ideas. The challenge may be finding an environment that supports this personal growth, since existing culture and belief systems may be the anchor that holds them in place.

In fact, many larger organizations have decided that the only way to truly disrupt their current model is to build a completely digital organization separate from the legacy company. That is one of several possible solutions, including buying a digital entity, partnering, investing in a digital firm or trying to change the current organization from the ground up.

But change doesn't happen by magic. Entire workforces need to be retrained to serve organizations in the future. According to several studies, as much as 30 percent of jobs will be less relevant because of robotics and automated technologies in as soon as five years. People will need to be retrained or replaced. Because all industries are going to be digitally disrupted, the availability of talent will be in short supply, leading to new partnerships, collaborations and opportunities for those willing to embrace change.

TWO: Take risks

Being risk-averse has always been a mindset of traditional bankers and those who serve the banking industry, like payments and fintech. Studies have proven that executives and complete organizations have a 'banker mentality' – being more conservative than other industries.

It has been found that risk tolerance in banking doesn't come from culture but from structure. The question becomes if there is something about the culture and structure of banks that makes bankers risk-averse. Or is this something that is just becoming evident now?  What is interesting about this period of digital transformation is that taking calculated 'risks' helps to future-proof yourself and your business.

How would you or your company respond if computers and mobile phones were not the devices of the future? Planning for a future where the primary engagement device may be a chip, eyeglass or other medium would probably present risk to your planning process.

It is imperative to understand the benefits and risks associated with digital transformation – including the risks of inaction. People and organizations need to realize that avoiding risks can be just as damaging to a company as undertaking excessive risks.

It will take more than just time and money to win in the future (although these resources are very nice to have). Unless digital transformation efforts are built from within and create sustainable competitive advantages, they will likely put your organization further behind consumer expectations and the competitive norm.

Moving outside the normal comfort zone will be the key to survival. With change happening so quickly, it will be important to try to predict where the industry may be two to five years in the future, as opposed to just playing catch up.

THREE: Disrupt yourself

Because traditional thinking still appears to be succeeding, there is a lack of incentive to identify radically new ways to conduct business. But this inertia also extends to people as well. 

When was the last time you took a course in coding or data analytics? When was the last time your team looked at a current product in the marketplace and reconstructed it from the ground up as a digital solution?

In a recent World Economic Forum report, it noted that, "Organizations that are leveraging digital technologies to reinvent their business models and processes to establish closer customer connection and drive innovation will be the winners. Companies that implement enterprise-wide changes will be positioned to quickly and cost-effectively deliver more useful, meaningful experiences."

This same logic applies to individuals, who stand the chance of being outpaced if they don't acquire new skills. After all, what is a company if not a collective of individuals? On a personal level, don't be afraid to disrupt yourself and your professional skills.

I think we can all agree the future of payments is extremely exciting. That said, the excitement and potential of digital transformation will only be realized by a select group – those who embrace change, take risks and disrupt themselves.

The statements and opinions of the writer do not necessarily reflect those of TSYS.

Other Articles by Jim

Jim Marous

Jim Marous is consistently rated as "one of the top five most influential people in banking" and one of the most sought after keynote speakers for industry and corporate events. Known for his understanding of the disruption in the banking industry, Marous is the co-publisher of The Financial Brand, and owner and publisher of the Digital Banking Report. Jim speaks on innovation, digital transformation, customer experience, marketing strategies, channel distribution, payments and change management.

Jim has been featured on CNBC, CNN, Forbes, The Wall Street Journal, New York Times, The Financial Times, The Economist, The American Banker, Fintech Finance and Accenture and has spoken to audiences worldwide.

Marous has also advised the White House on banking policy and is a contributor for Forbes and the Breaking Banks radio show.

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