5 Tips to Being Successful in the Banking Industry - Based on Amazon's Jeff Bezos new Shareholde
In his latest annual shareholder letter, Bezos outlined several key business tips, that can also be applied to the banking and financial industries, and can offer good insight from someone who knows how to move ahead, and to stand out in the competitive business environment.
As we are well aware, the banking and financial industries are going through a fast-paced technological disruption, where FinTech startups are creating advanced technologies, while in the background, the technological giants, GAFA are offering more and more services that were traditionally offered by banks. Jeff Bezos's advice in his letter, could offer some business tips that could also help the banking and financial industries :
1. Truly put your customers' needs in the center. Bezos stressed this point when saying "There are many ways to center a business. You can be competitor focused, you can be product focused, you can be technology focused, you can be business model focused, and there are more. But in my view, obsessive customer focus is by far the most protective of Day 1 vitality. Why? There are many advantages to a customer-centric approach, but here's the big one: customers are always beautifully, wonderfully dissatisfied, even when they report being happy and business is great. Even when they don't yet know it, customers want something better, and your desire to delight customers will drive you to invent on their behalf. No customer ever asked Amazon to create the Prime membership program, but it sure turns out they wanted it, and I could give you many such examples."
Banks can be better at focusing on their customer, according to Bezos's tips, by creating truly delightful services, that could for instance, eliminate needing to physically reach a bank, or waiting for services while sitting in a bank branch, and creating shorter procedures for opening bank accounts, while creating more advanced payment and transfer services. But that's just the basics. To understand the effort required by banks to truly create customer focus, just compare the customer experience you have when using Amazon, and when receiving service from your bank. Ideally, your bank service should be at least as comfortable as the service you get from Amazon.
2. Be more like an inventor, and understand you have not yet figured it all out. "Good inventors and designers deeply understand their customer. They spend tremendous energy developing that intuition. They study and understand many anecdotes rather than only the averages you'll find on surveys. They live with the design."
Banks and financial institutions cannot afford to believe they have it figured out, because the traditional business models they have been using for the last hundred years, are becoming no longer relevant. Commissions are a thing of the past. So are long waiting lines in the branch (for instance because a "check bounced" due to not signing properly on its back). The present and the future are about technology, mobile, innovation that gives value to customers, and delightful customer experiences.
3. Don't let the Process become "the thing". Bezos warns about relying too much on processes, that are mostly created when a business thinks it has "figured out" how things should be done, instead of staying curious, as suggests Bezos. "As companies get larger and more complex, there's a tendency to manage proxies. This comes in many shapes and sizes, and it's dangerous, subtle, and very Day 2. A common example is process as proxy. Good process serves you so you can serve customers. But if you're not watchful, the process can become the thing. This can happen very easily in large organizations. The process becomes the proxy for the result you want. You stop looking at outcomes and just make sure you're doing the process right. Gulp. It's not that rare to hear a junior leader defend a bad outcome with something like, "Well, we followed the process." A more experienced leader will use it as an opportunity to investigate and improve the process. The process is not the thing. It's always worth asking, do we own the process or does the process own us? In a Day 2 company, you might find it's the second."
4. Advance with the powerful Trends in your field and beyond, so you don't stay behind. Financial technology is constantly evolving, with advanced payment solutions, p2p loans, Robo-Trading, and Robo-Advising. In addition, AI, Machine Learning & Big Data, are trends that are spreading in many other sectors.
Bezos suggests businesses should embrace these trends, because if they dont, they could be left behind: "The outside world can push you into Day 2 if you won't or can't embrace powerful trends quickly. If you fight them, you're probably fighting the future. Embrace them and you have a tailwind."
5. Make high quality decisions fast. Big organizations, Bezos says, have a tendency to take a long time making decisions, which then puts their hungrier competitors at an advantage: "Day 2 companies make high- quality decisions, but they make high-quality decisions slowly. To keep the energy and dynamism of Day 1, you have to somehow make high-quality, high-velocity decisions. Easy for start-ups and very challenging for large organizations. The senior team at Amazon is determined to keep our decision-making velocity high. Speed matters in business - plus a high-velocity decision making environment is more fun too.
First, never use a one-size-fits-all decision-making process. Many decisions are reversible, two-way doors. Those decisions can use a light-weight process. For those, so what if you're wrong? I wrote about this in more detail in last year's letter.
Second, most decisions should probably be made with somewhere around 70% of the information you wish you had. If you wait for 90%, in most cases, you're probably being slow. Plus, either way, you need to be good at quickly recognizing and correcting bad decisions. If you're good at course correcting, being wrong may be less costly than you think, whereas being slow is going to be expensive for sure.
Third, use the phrase "disagree and commit." This phrase will save a lot of time. If you have conviction on a particular direction even though there's no consensus, it's helpful to say, "Look, I know we disagree on this but will you gamble with me on it? Disagree and commit?" By the time you're at this point, no one can know the answer for sure, and you'll probably get a quick yes.
Fourth, recognize true misalignment issues early and escalate them immediately . Sometimes teams have different objectives and fundamentally different views. They are not aligned. No amount of discussion, no number of meetings will resolve that deep misalignment. Without escalation, the default dispute resolution mechanism for this scenario is exhaustion. Whoever has more stamina carries the decision."
Hopefully banks and financial institutions will be able to learn from these tips, and readjust their business models, customer focus, long processes, product offerings and technological systems, in time, so that they can continue being the backbone of economic systems worldwide.