FICO’s CEO Will Lansing opened his FICO World 2016 keynote today by thanking the disruptors for keeping us on our toes. But in banking, like many other industries, the incumbents have the upper hand. Why, Lansing argues, because incumbents have customers, and it is always better to have customers.
While disruptors are after pieces of the incumbents businesses, and are going to be successful in some domains, Lansing explains that incumbents enjoy competitive advantages and need to be diligent in protecting those advantages:
- In banking, incumbents enjoy lower cost of funds than everyone else. Of course there is a price tag for the lower cost of funds, banks have to meet numerous compliance requirements, and that can be expensive.
- Incumbents have brand and trust. Universally everyone wants to do business with brands that they trust, that can offer stability, continuity and safety. But, this can be lost in a blink through a cybersecurity breech. That is why it is a CEOs greatest concern, considering most breaches are only discovered six months after the fact, once the damage is done.
- Lots of data. But, the data is only an advantage if they actually do something with it.