In July, 1609 a mixed group of Huron and Montagnais Native Americans canoed to what is today the New York side of Lake Champlain, where they confronted a force of Iroquois Mohawk Natives—their enemies. A battle erupted, but as the Huron-Montagnais force advanced bravely towards the much larger Mohawk force, they did something astonishing: they suddenly split in two, revealing four strangely-attired men standing alone in the middle of the battlefield.
Three of these men held elongated sticks with open, yawning mouths at the end. Suddenly, thunder and fire erupted from these sticks, and eight Mohawks—including two chiefs—collapsed to the ground with gory wounds. The Mohawks bolted in panicked flight.
One of the four strangers was Samuel de Champlain, a Frenchman and seminal figure in North American history. His soldiers were firing arquebuses, the latest European firearms. Word of Europeans had reached the Mohawks and they were vaguely aware of firearms, but this was their first real encounter with them—and it happened at a place they never expected, not down towards the coast where European traders frequented but deep in their own territory, on their own turf.
Champlain's shocking encounter with the Mohawk holds a lesson for modern banks and insurance companies as they struggle with fin-tech. Innovation in financial services largely comes from outside the industry today as banks and insurers are bogged down by regulations and antiquated, legacy technology systems and business models. Surveys show that financial services executives are aware of the fintech threat, but how do you prepare for the unknown?
The answer does not lay in products. It lays in a trait financial services companies infamously lack: nimbleness. Consulting firms need to focus on helping banks and insurers adopt a more dynamic, change-based culture more amenable to the flexibility so alien to most modern banks and insurers.
This is the crux of the fintech challenge, and consultants need to foster innovative thinking in financial services clients such as partnerships across industries, linking for instance a mortgage or homeowners insurance with home maintenance, security and energy efficiency services. Banks and insurers need to redefine their customer experience.
Financial services companies are not equipped for a technology arms race with fintechs. The solution is to build an unbeatable service experience, which will always be a moving target. That will take an aggressive dynamism—but you never know what scary things may show up on your home turf one day.
Tomek Jankowski is Lead Senior Analyst for Financial Services Consulting Research, KCRA.
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