You’ve probably heard the old joke: A husband noticed that his wife always cut the end off of a ham before baking it. After years of watching her do this, he finally asked her what the purpose was. “Oh, it’s to make the ham bake more evenly and help the juices flow,” his wife replied. “I learned to do it by watching my mother.” But this questioning made the wife curious, and the next time she spoke to her mother, she asked her exactly what was the benefit of de-ending the ham. Her mother laughed. “It’s because my baking pan was too small to fit a full-sized ham!” she replied.
So, imagine my joy when my friend suggested that we transfer the money using Facebook Messenger’s new payment facility. I wasn’t aware that Facebook had added this feature, but for payments within the US, they have, and it’s wonderful. I added my debit card to my FB Messenger account, and was immediately able to transfer money to my friend (who had also added her debit card to her account). The whole thing took five minutes to learn, set up and execute on my mobile phone.
So why am I looking to Facebook for a simple banking transaction here in the US, rather than to my bank? Because Facebook recognized how archaic the whole complicated approach to making person-to-person transfers was based on old banking requirements and assumptions (probably linked to overnight batch processing and regulations) – and it just doesn’t need to be that way anymore. They found that debit card to debit card, rather than account to account, is an acceptable money transfer alternative, and built a new process around that, giving me, the end user, a simple solution to my problem. Could my bank have built this same facility? Yes. Did they? No. Will they be getting any of my person-to-person transfer business in the future? No. Opportunity lost, and touchpoint ceded to an unexpected competitor. Now Facebook is going to be the entity that knows who else is in my informal financial network, not my bank.
As we move into a world of increased digitization of all kinds of processes, especially in the IoT world, this point is something we should all keep in mind. It’s not good enough to simply digitize the existing process, as my bank did when they built their online services (“Well, you can see the transfer online, but you still need to intiate it in person at the bank because that’s the way it has always been done”).
The real value of digitization comes when you ask, “What’s the purpose of cutting the end off the ham?” When you separate essential processes from the ones that have just become routine over time – then find ways to digitize only what is absolutely essential. Because if you don’t, someone else will. And it might not be the competitor you expect.
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