If you had visited China about 15 years ago, you would have been frustrated at how you could not do or buy much with a credit card.
Many of the biggest brands did not have a big presence in China back then. As a result, few believed China would be able to make any headway into e-commerce which relied on credit cards to transact online.
Today, China is one of the biggest e-commerce markets in the world. Last year, Chinese e-commerce platform Alibaba recorded US$17.8 billion of sales in one day on Single’s Day, which falls on November 11. To put things into perspective, only the top 155 companies on the Forbes 500 recorded more than US$17.8 billion in annual revenues last year.
The secret to its success is what some technologists call leapfrogging. This is the idea that countries which have underdeveloped technology can also move forward rapidly through the adoption of modern systems with new design thinking, without going through hurdles of changes in legacy systems and intermediary steps.
In this case, the credit card conundrum turned out to be a boon for China. It forced consumers and companies like Alibaba to use and develop innovative methods of online payments, such as Alipay and Wechat. Now, individuals can pay for virtually anything with their phone and holding cash is no longer a necessity in parts of China.
This is a prime example of why it is not necessary to always be the pioneer when it comes to investing in technology.
Instead, taking a smart, focused and deliberate approach to leapfrog technology investments is a better way to go.
The five stages of technology adoption
Let me explain our strategy at Bank of Singapore with the chart below.
There are five main stages of technology adoption. Leading the pack are the innovators. These are the companies and people who are the first to acquire the new technology – they are proud of being first and wear it as a badge of honour.
The second group are the early adopters, or the pioneers. They are ahead of the curve, picking up the technology soon after the first users.
The next two groups are what I would call the mainstream group. After the technology has been adopted by the early movers, the rest of society or industry moves to acquire the tech.
Finally, the laggards are the ones who adopt the technology last.
Our strategy is straightforward: We want to be in the mainstream group for the bulk of the technology we work with and be an early adopter in areas where technology can enable a unique business differentiation.
A deliberate strategy
Some may ask why we don’t want to be right at the front of the pack. Others may question if this means that technology is not important for us.
To answer simply: Technology is critical to our operations and we invest heavily in our platforms. But we also do it in a way that provides the best solutions for our clients.
Often, however, the latest technology does not equate to the best technology.
Those familiar with software programming will know that a piece of software often needs multiple, even dozens, of rounds of testing before it is released to the public.
Even then, there will be bugs that need to be ironed out and the developer will introduce patches to correct the bugs. After some time, a new version of the software will appear, with additional features to entice more users to buy or use them.
It is thus clear that early adopters face several challenges. First, early adopters will have to deal with and manage the bugs, problems or other issues that come with the first release of the software, which can cause major inconvenience.
Secondly, most companies such as banks buy and customise vendor software packages to suit their needs. A big problem arises when the system gets an upgrade – because the bank had to heavily customise the earlier version, it becomes very difficult to upgrade to the new version.
As such, a prudent and deliberate strategy to stay in the mainstream is the most cost-efficient way of adopting new technology. Mainstream users can avoid the problems early adopters face and yet enjoy the advantage of using the technology that is mature.
And as the technology improves, it is also being refined, tested and improved on. This means that we can use the best version available, leapfrogging those who were using the early and less efficient platforms.
Another excellent example is Apple. Apple is not the first innovator for technology like digital music, smart phone nor tablet computers. But take a look at Apple’s vision statement as set out by current CEO Tim Cook: "We believe that we are on the face of the earth to make great products and that’s not changing."
The company did not aspire to always lead the field in technology nor to be the first adopter at all costs. It wanted to make great products – both in terms of design and user experience - so that its customers had the best technology to use and play with.
We adopt the same attitude when it comes to technology – our goal is to offer the best technological solutions that are fit for our business priority and purpose.
This is not to say we do not want to be early adopters.
There are some areas that we believe there is value in becoming an early adopter. For instance we work with financial technology companies and have just completed a pilot phase of a robotic process automation project which helps in our client onboarding process. Artificial intelligence is another area that we are exploring to see how we can make it easier for our clients to make decision.
So yes, we are not afraid to try and experiment especially in areas where we believe can aid us. But technology for technology’s sake? No, we are not looking to rush out to acquire the latest platforms, or technological solutions.
After all, a wise man once said: "For fools rush in where angels fear to tread."Disclaimer applicable to recommendation
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