"Your legacy system was built before the digital revolution and the major problem is not that the system is ill-fitted for your traditional business. The bigger issue is that your traditional business is being digitally transformed at a higher speed than you can make changes in your backend processes. Take a step backwards and look at your business. What do you see?"

Maarten Ectors 11th May, 2021

What you see is that your core market is no longer the same now as was a decade ago. Your products often haven’t changed that much but customers are expecting dramatic changes. They do not want to be in a call centre queue for minutes. They do not want to send or receive papers. They want changes to happen in seconds and on a 24/7 basis. New technologies like Cloud, mobile apps, AI and IoT are bringing new levels of customer engagement and automation. 

On the horizon, Blockchain/Web3, a genetic healthcare revolution, autonomous vehicles,… All this is happening while you are still fighting COBOL systems. Doesn’t it feel like you are trying to modernise your infantry while the enemy is launching drone strikes?

It is time to think digitally about your business:

  1. Free, freemium and unlimited — If due to automation something has gone from expensive to cheap, isn’t it time to put the price to zero before somebody else does it? Investment apps like Robinhood are offering free retail stock trading in order to sell retail trades data to high-frequency traders who can outrun the market. Facebook Messenger allows individuals to call and message for free but offers premium accounts for businesses. Netflix moved from paying per movie rental to all-you-can-watch subscription models. Free, freemium and unlimited business models allow to quickly capture a digital market. As long as one digital platform can offer global service, exchanging that £3/movie rental for £5.99 for unlimited can make sense when you go from one brick-and-mortar shop per 100,000 inhabitants to one digital platform for 200,000,000 families.
  2. Pipeline vs platform and on-demand/personalised — Most brick-and-mortar businesses follow the pipeline model in which the producer sells a product to a wholesaler, who sells to a retailer, who sells to a customer, often with a logistics network in the middle. A customer pays £20 and a producer ends up with £3. A platform business links many producers to many customers. Amazon, Google, Facebook, AirBnB, Uber, … are all examples of platform businesses. That £20 paperback can be substituted by a £5 Kindle book which results in £3.25 for the author and 4x price reduction for the reader and millions of authors and readers all being drawn to Amazon in a positive network effect which eats most of the market. A similar model is on-demand. Instead of making standardised products for the majority, why not make on-demand personalised products for each customer. In insurance this means that a pink pony farm insurance gets automatically split into a building insurance with flood, storm, burglary and other risks being reinsured to specialised re-insurers, a business continuity insurance and a horse insurance being parametrised so the pony and pink aspect can be added. Basically where insurance used to make big all-encompassing products, through digital solutions you can easily combine many smaller products into a personalised and fully customised insurance. Pensions, investment management, corporate banking, telecom,… can all offer on-demand and fully customised solutions.
  3. Automated, Uberized and innovative solutions — At the edges of finance a new hyper-growth is happening with more than 8000% growth in less than a year. The DeFi market or decentralised finance market is an extension of the Web3 market. Via new technologies like crypto tokens, smart contracts,… on the blockchain, DeFi start-ups are automating the complete financial system in a new way. Although many are likely not going to make it, remember the dotcom burst. Amazon, Google and Facebook redefined industries the two decades following it. Lots of tasks are either being automated or Uberized in which employees are substituted by short-term contract work, which will over time become better paid and more interesting than working for large companies. At the same time new innovative models are possible. 


Think about the mind-blowing digital opportunities that are out there if you are able to correctly apply free/freemium/unlimited, platform/on-demand/personalised or other innovative business models. Now think about the automation, platforms and new technologies you must use. The new business processes, operations, support, risk management and other solutions you need. 

The conclusion is very simple, no digital transformation in which your legacy system is integrated with, lifted, rewritten,… will solve any of this. You need to think about setting up separate teams that build these new businesses from the ground up and use the best in mobile, cloud, AI, IoT, blockchain,… from best-in-class providers. 

Your digital future is about reimagining your business and building it like you are the VC overseeing many small start-ups. Your legacy business and mindset is holding you back, not your legacy systems. Free your mind and the rest will follow.