Update on Innovations in Retail Banking and Consumer Lending
Subsequent to my earlier posts, there have been further developments in the areas of consumer payments and consumer lending that I thought I could share with you.
Amazon.com has announced its intentions to jump onto the ‘consumer payments’ bandwagon by offering payment services, like Google and Paypal, to its customers. Many online sources report that Jeff Barr, Amazon’s executive who heads their Web Services Group apparently wrote in a company blog last week, ‘Since we've been processing payments for over 10 years, we have a really good understanding of the cost and fee structures which are associated with each type of payment method.’
I reiterate what I had opined in my earlier post – that companies like Amazon, Paypal and Google will become the primary owners of the retail customer and quite literally, of the customer’s wallet! And my prediction is that Amazon will develop a robust web services platform for processing payments and establish that as a salient infrastructure foundation in the transaction processing arena - like it successfully institutionalized the virtual shopping mall concept for other Retailers to display products, ranging from apparel to electronics! Further, going by the theme of Sandeep Dadlani’s recent post, Amazon is fast evolving from being a B2C play to a true ‘B2X’ play! It will effectively leverage the best practices and its core experience of delighting customers like you and me, to offer cost effective transaction solutions for businesses – and lead the Web 2.0 revolution in the B2B space. Obviously, Amazon’s clout in the Retail consumer market has helped in offering better alternatives in the ‘wholesale’ payments area, currently dominated by MasterCard, Visa and the large Banks.On a related note, there have been a few comments to my earlier posts, decrying the excessive focus on innovation in service delivery as opposed to service creation. While I agree in some part to that point of view, I also believe that in a Flat World, execution excellence is what will differentiate the winners from the also-rans; and execution excellence is about delivering not-so-innovative concepts in a rapidly scalable and cost effective manner to the market. Paying for purchases is not necessarily an innovative area; but bringing in efficiencies to offer superior ‘one-click’ experience at better cost structures is something that has changed the way the world shops! And the capabilities to execute on such initiatives are not necessarily born out of 'legacy' retailing or banking experience, but from a better understanding of how customers behave and the ability to model their adoption of newer technologies.
The other update on innovations in consumer lending (Read my older posts here): Prosper.com announced last week that it will take its peer-to-peer lending model to Japan through a joint venture with a local financial services firm (I could not find the original press release on Prosper’s website, but here is a related report). This follows Zopa.com, another UK based peer-to-peer site, announcing its US foray and UK’s Virgin Group investing in an emerging US peer-to-peer lending site. In the context of the ongoing happenings in the global credit market, it is interesting to see that on the one hand, while Central Banks across countries are challenged to walk the delicate path of restoring order to the financial system, peer-to-peer lending sites are quietly expanding their reach! I am not attempting to strike a comparison, given the magnitude of the larger global crisis, yet, I strongly feel that peer-to-peer sites offer a lesson to those clamoring for safety-nets to irresponsible lending (and borrowing) behavior!
Comments
Balaji makes an excellent point in arguing for “excellence in execution”. Many of the great ideas and innovations fail after the perception or creation phase due to either poor execution skills or poor socialization (also remember about “loneliness at the top”).
I have worked with and known with the companies where CEOs have contemplated creating a position “EVP – Global execution” or “Chief Globalization Officer”. A strategic execution fails due to lack of common vision and goals, change management practices, global PMO processes, mismatch of incentives, organizational and contextual knowledge, mechanism to store and access organizational knowledge. In many organizations PMO is just a reporting team. Some of the organizations do not even understand the need of a knowledge repository. Many organizations have disjointed knowledge management processes and infrastructure. All of the above impede agile execution.
Some organizations dictate IT standards from their offices, which get diluted or heavily customized for local needs without the knowledge of the head office. Lack of proper control and governance or silo-based governance leads to such failures. Many organizations have now installed global collaboration tools, which have been rendered to team collaboration tools rather than being enterprise collaboration tools. The leaders fail to lead by example by collaborating themselves. Organizational culture or competitive environment / incentive structure hamper such collaboration and excellence in execution.
Posted by: Hemant Patel | August 30, 2007 08:51 PM
Everybody is working for customer's delight, that's why they are working on to improve their services for the customer's convenience. I appreciate the effort made by you to provide this knowledge to everyone.
Posted by: Abhishek srivastava | September 7, 2007 08:59 AM
While P2P seems to be a new terminology in the financial world, it is as old as lending itself. Come to think of it, it's glorified barter trade being applied to finance at an individual level.
The updates are thought provoking.
Posted by: Amit Punjabi | October 29, 2007 08:19 AM