Time to disrupt the telecom industry to avoid a Kodak moment.
Sara Rasmussen strikes a blow for Teltech.
A "Kodak moment" is associated with a memory worth saving.
It has now become synonymous with a company's inability to anticipate trends and major changes in its industry. Sara Rasmussen strikes a blow for Teltech.
There are several examples of startups that are disrupting and putting pressure on established companies so they start reviewing their product offerings for fear of becoming the next Kodak.
The financial industry is an excellent example of how upstarts such as Swish, Klarna and Avanza have challenged everything from real-time payments and invoice payments to stock trading. The progress of Fintech players over the past 20 years has put traditional banks at risk of becoming redundant.
The telecom industry, however, has been surprisingly resistant to customer-centric innovation. Traditional telecom companies have relied on price pressure to remain competitive — rather than investing in growth and better experiences for their end-users.
There are many similarities.
The telecom and finance industry has several similarities, such as outdated infrastructure, standardized product offerings and traditionally loyal customers. They also operate in regulated industries and offer products that no one can do without. But what is it that has made the financial industry start to adapt to new customer needs and behaviours, while telecom is stomping in the same place?
There are for sure those who feel the need to refer to investments in 5g or partial migrations to the cloud. However, these are infrastructural measures that cannot compete with the customer-centric, all-digital offerings that have turned the financial sector upside down. Transferwise (now Wise) and Revolut are all-digital companies that have revolutionized the fintech industry with user-friendly offerings to their customers.
Like the N26 bank disruptor, which was recently valued at $9 billion, Revolut has recently obtained banking licenses and is now the biggest threat to traditional banks globally. We have also seen several examples of large players that have acquired smaller players to kick-start their innovation, where the latest in the series is Visa's acquisition of the Swedish fintech company Tink.
It is not just the financial market that is ahead of the telecom industry. According to an analysis made by the consulting firm McKinsey & Company, the telecom sector has developed significantly less than the market as a whole. In Europe, revenues for the telecom sector decreased by 24 percent between 2007 and 2018, compared with general market growth of 18 percent during the same period.
Vipps came a new competitor.
It is not only traditional start-ups that disrupt the telecom industry. At the end of last year, bank-owned Vipps in Norway (the equivalent of Swish) announced the launch of Vipps Mobil. A digital operator with an unlimited rollover of data from month to month. The subscription can be purchased directly in the Vipps app and the invoice is, of course, paid directly with the Vipps app.
The solution is, in many ways, just like Swish, one optimized payment infrastructure. Above all, however, it is a simple interface for the end-user to not only handle their payments but also their mobile subscription.
Obviously, telecommunications companies should act fairly soon so as not to be marginalized by direct competitors in the industry, digital startups, or even similar players in other industries. It is time for telecom companies to decide whether they want to take a strategic position only as a network owner, or whether they also want to create engaging customer experiences under a well-known brand.
Regardless of what you choose, the first and crucial step is to implement infrastructure that enables these ambitions or enter into partnerships with companies that are already technically equipped. Cloud-based services give organizations increased flexibility and scalability, which creates the conditions for developing customer-centric products with profitability in focus.
Just as fintech companies are revolutionizing financial services, enabling one new type of “teltech company” for companies in the telecom industry to reduce the complexity of existing infrastructure and create engaging customer experiences. It is now up to the players in the industry if they want to take advantage of the opportunities that these future partners offer - or submit to the history books together with Kodak.
Sara Rasmussen CCO Telness Tech
Sara is CCO in Telness Tech, and responsible for the company's commercial activities, and writes chronicles in Telekom today. She has a background in fintech where she was a global sales manager in Settle Group (formerly Auka), one of the first mobile payment solutions in Europe based in Norway. Sara is an experienced speaker and moderator on the European fintech scene.