Spanx and the Core Issues with Digitization - Part 1
I wish I could write as well as Leda Glyptis. I wish I had her command of the English language which I’m sure is one of several she speaks. I wish I could articulate her banking experiences in prose such as she does. But I can’t…
So today I’m gonna talk about Spanx. I’m going to discuss what this incredible product has in common with the digitization of financial services. Leda, please don’t judge me.
I love Spanx.I have to credit my wife Mendi for introducing me to the product when I was recovering from blowing out my Achilles playing soccer a few years back. Nothing will quite put on weight like being laid up for six months, especially when you’re pushing fifty years old. I noticed my t-shirts were getting tight after a few months of doing basically no physical activity. Mendi jokingly mentioned I should just buy a Spanx undershirt instead of investing in a whole new wardrobe and voila, my love affair with Spanx began. Now, if you aren’t familiar with this wardrobe saving and self esteem boosting product, let me give you a little bit of background. Sarah Blakely, the founder of the company and a gifted salesperson, came up with the idea back around 2000. Sarah loved the slimming features control top pantyhose provided but hated the look of the seamed toes that came along with the product. She experimented with several prototypes and eventually came up with the idea of compression undergarments that provide near invisible slimming features. Her path to success; however, wasn’t all that easy. She went through the typical startup cycle many of us are familiar with. People telling her she was nuts or if it was such a great idea someone would already be doing it, piling up debt on credit cards to get the concept up and running, etc. Sarah stuck it out and grew her innovative product line of compression undergarments for women and, eventually men (thank God). Fast forward to today and Sarah is a billionaire running a company with a net worth of over $1 billion. So what does this have to do with financial services, other than the obvious startup success story Sarah brings to the table? I see at least three common themes between the Spanx product and the digitization of services banks provide. Let’s discuss the first of these in this post.
Overcoming the Status QuoThere’s a saying I’m incredibly fond of that goes like this: “In a gold rush don’t mine for gold when you can sell shovels.” And in my opinion that’s the brilliance of the Spanx product. Sarah Blakely realized most people today, especially as they age, are finding it harder and harder to stay fit. What’s the most common New Year’s resolution: to lose weight. What’s the one New Year’s resolution most people fail at: keeping the weight off. Let’s face it; it takes dedication and will power to stay fit in modern times. The Spanx product doesn’t address the weight loss issue. Instead, if focuses on a temporary fix, an image placebo that does, from personal experience, raise an individual’s self image. The first step in overcoming any issue is to admit you are facing a problem and need to address it. For me that was the hardest part of ordering my first pair of Spanx. I had to admit I need the support (see what I did there?). This miracle product allows someone like myself who has an ageing infrastructure to cheat Father Time at least from an outward appearance. The same concept is so true for banking. The vast majority of banks are faced with a bloated and ageing tech infrastructure. This isn’t really a disputed fact. Ask any bank CTO or CIO what portion of their annual IT budget is allocated to keeping the ship from sinking and patching up issues. And the vast majority of these systems are legacy mainframe systems dependent on the 60+ year old programming COBOL code. Let these facts drive home this point:
- Reuters noted 95% of ATMs are dependent on COBOL
- 80% of in-person payment transactions are COBOL based.
- Reuters estimates there exists over 220 billion lines of production code
- Over $3 trillion of commerce is handled every day by COBOL based systems.