When bankers really let their hair down, a universal comment emerges: “We don’t know how to make money from small depositors.” Complicated fee structures and high-margin products designed for big-ticket consumers have floated the financial services industry for a long time.
Success Comes from Including Small Depositors
What if the telecommunication companies had limited themselves to consumers above a certain income bracket? Then we would have 1.5 billion phones in the world today rather than 7 billion. Or, perhaps, they might have built a whole new system for emerging market mobile communications. Instead, they said, “We really want the same voice and data services to be available everywhere, and we need to figure out how to make it work globally, and not create a crippled version or different network.”
Now, our entire world functions primarily on mobile technology.
Looking for Innovation in Unexpected Places
In 2002, when co-author Carol Realini first visited Central Africa, she witnessed a mobile phone network far better than what she had experienced a few days earlier in New York.
Game-changing concepts can be found anywhere. They needn’t come from a think-tank in Silicon Valley. One of the best places for the birth of innovation is at the bottom of the pyramid. Disruptive solutions that can be scaled to fit the entire pyramid are those that will move the needle for our most daunting global issues. For example, looking at successful rural banking solutions as a benchmark and asking how they might be scaled and applied in more developed countries can be a great starting place. An inclusive, bottom-up (vs. top-down) mentality can work wonders.
Economic success in different places like rural India shows both extreme scale and frugal innovation—mass innovation. If a banking service thrives there, it will have to be a very low cost, scalable business model that serves diverse needs.
If the old-school bankers embrace this, they could begin to see the opportunity to invent banking from a different place. The assumption that they can’t make money from small depositors is blinding them from seeing how they can.
It’s all about value
Instead of being an all-inclusive solution where all the value comes from what you deliver, Apple and Google deliver value in the form of a platform that encourages others to join in to delight the customers.
When asked by the big banks, “Why do you care what we charge those small companies?” Apple answered, “Because we want them to be very successful. That way, developers will write great software for iPhones, and have profits to invest in improving the applications while writing new ones.”
Companies that choose to function under a Darwinian model will be cut off from the exciting mass innovation happening worldwide by those adding value from collaboration.
Banking for all
Financial services or otherwise, when targeting 7 billion people, primarily people at the bottom of the pyramid, low cost, universal access, simplicity, and security should be front-of-mind.
But disruptive change will only be possible if multiple forces converge to make big shifts happen. At the top of the list of major change is banking for all. Next is banking that embraces the individuality of people or businesses—services that empower life and work. The last, scary but essential: Let’s build whole new business models.
Let’s think like Steve Jobs when he asked the bank to provide great services at a low cost to the iPhone app developers. Let’s think beyond what we think is possible.