Author Archives: core

Stories from Yahoo, Lessons for Banks..

Some candid and insightful stories are coming out of the recent changes/implosion/confusion at Yahoo where recently 700 engineers were laid off and many in the industry are citing this as the low point for Yahoo and theorizing on how they got into this position.

Yahoo is a company with an enviable asset — many returning customers that visit it’s online pages to view content — and a big challenge: monetizing those visits and increasing the profitability of the customer base.

Banks have more similarities to Yahoo today than they did ten years ago.  These days banks are very similar:  they hire primarily knowledge workers,  customers predominately visit online channels, products are largely intangible and driven by technology.  These trends are likely increasing rather than on the decline, so watching a company like Yahoo may provide some foresight for banks.

At Yahoo, some of the departing engineers are citing large enterprise hubris as the cause of the decline, and some of this is relevant for banking. Here is a great quote that sums up the problem:

Chad Dickerson, former Yahoo developer evangelist and the current CTO of Etsy comments, “In my experience, entrepreneurs moving into Yahoo! often got stuck doing PowerPoints about “strategy” instead of writing code and shipping products.”

Here are some of the lessons that I think banks can learn from Yahoo’s experience:

  • As the quote above notes, at Yahoo the discussion on strategy and strategic action are disconnected;  I believe that banks need both paper strategy and strategic action, and a strong linkage between these.  The lesson for banks: Banks need to ship products and innovate “on the ground” as well as innovating in strategic direction and there should be a solid connection between the two.
  • Banks have an enviable asset – an existing customer base that visits banking channels on a regular basis.  Developing customer loyalty and achieving favoured status is challenging in a highly competitive market.  New technologies and entrants challenge old models.  The lesson from Yahoo’s experience for the banking industry: Keep innovating and driving more value for those customer visits.
  • One claim is that Yahoo is not managing products strategically and allowing multiple products to compete in the same domain — many banks have this challenge where a clear product strategy has not been developed across the enterprise.  The lesson for banks:  A confused product strategy can be confusing for the customer, and a confused customer is probably not a profitable customer.
  • Fear, Uncertainty and Doubt are powerful forces in both the technology industry and banking – they can decimate trust and when this happens companies can quickly spiral downwards in value.  It is claimed that Yahoo has made this mistake and devalued Delicious by mishandling news about the product.  The lesson for banks:  Beware FUD and manage the message carefully.

It’s sad to see a once great company in decline, hopefully this is an inflection point from which a new more vibrant Yahoo can emerge.

There are some benefits to this misfortune and that’s that some vivid lessons can be learned and some of the same mistakes avoided.

Core transformation is about the customer

Bill Bradway makes an astute observation in a recent Bank Systems Technology article: customer centricity and risk management are different views of the same challenge, knowing the customer. Banks tend to address these two challenges from very different angles, and often they don’t really align.  Many Customer Information File (CIF) initiatives seek to create a… Continue Reading

Core banking transformation targeting new levels of efficiency

When making the case for core banking transformation, most banks have focused either on legacy risk mitigation or the increased flexibility and product driven revenue as the target outcome. Commonwealth Bank of Australia is raising the bar on efficiency, and this might be a game changing approach in the push for banking platform modernization.  If… Continue Reading

Core banking transformation at the tipping point?

This article from ComputerWeekly asks whether a tipping point has been reached where banks will begin to adopt vendor packages for core banking transformation and abandon legacy platforms. I think the concept of adopting vendor packages has been gaining ground and there are a few key reasons for this: Desire for rapid shift change over… Continue Reading

Time for discipline? Core banking modernization as a distinct method.

I had a good laugh when I recently read these “worst practices and scary stories” from core banking modernization projects – but with the laughter was a sad acknowledgement that these projects typically don’t go off seamlessly.  Yes, they are complex and challenging but I think (because of this and other factors) they also fail… Continue Reading

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