Mention the phrase “a Kodak moment” to a Baby Boomer, and you’ll likely to be greeted with a knowing smile. Say the same thing to a Millennial, and you’ll likely see a blank stare. Used for decades to refer to photo-worthy moments, this once popular phrase signals how thoroughly Kodak once dominated the photography space.
Kodak first introduced cameras to the masses in 1888, and built its business into a near monopoly in the ensuing decades. Over a century later, following decades of dwindling sales that culminated in a 2012 bankruptcy, Kodak’s cultural cachet has all but disappeared. Today, Kodak doesn’t even make cameras, instead restructuring itself as a much smaller commercial printing company.
In fact, a “Kodak moment” might better refer to the failure of a once-dominant business to respond to a disruptive new technology–in Kodak’s case: digital photography. Ironically, this technology was first invented by a Kodak engineer back in 1975, and was diligently developed by the company in the years to come. But rather than marketing its own digital cameras, Kodak licensed the technology to other companies, to avoid cannibalizing the lucrative traditional and film business it conducted through its international system of distributors. In the meantime, cheaper mass-market alternatives proliferated, reaching consumers through electronics retailers, big box stores and later, online. Essentially, Kodak’s competitors sidestepped the sales infrastructure that made Kodak so formidable. And by the time Kodak finally made a decisive move into digital photography, it was too late.
Yet the lessons from Kodak’s demise might not be so clear-cut. It’s true that the company might have been able to transition to digital photography had it acted faster. But disruption would have likely surfaced anyway. Today, the point-and-shoot digital camera market has been decimated by smartphones and tablets with built-in cameras, forcing even the nimblest of companies to retool their business models around higher-end devices. If anything, this makes Kodak’s example even more poignant for established brands. Simply put: in the modern tech-driven marketplace, disruption can strike any company, in any sector, at any time.
This reality has chilling implications for another industry dominated by century-old mega-corporations, namely: banks. The parallels between Kodak and today’s biggest financial services players are ominous. Like the camera company, banks are gradually losing the long-time advantage of their distribution networks, and are consequently closing branches as customers increasingly turn to online and mobile banking platforms. And like Kodak, many banks have been slow to react to the emergence of new technology and shifting consumer preferences, making them fat targets for competitors ranging from startups to tech giants. A 2013 Accenture report suggested that these competitors could claim up to 35% of full-service retail banks’ market share by 2020, and a quarter of U.S. banks could disappear altogether.
What’s more, big banks have a unique disadvantage, in that the public is actively rooting against them. A recent poll showed that over half of Americans are still angry at big banks for their role in the 2008 financial crisis, and three out of four people believe banks place shareholder interests above that of their customers. This distrust is even more pronounced among millennials – the largest generation in U.S. history, which is downright eager to leave their banks. In a recent survey, over 70% of millennials said they’d be more excited about a new financial product from a tech company than from their own nationwide bank. Similar percentages of millennials envision accessing their money in totally different ways in five years. So while most iconic companies that fall prey to disruptive forces do inspire some degree of pity, the disruption of big banks would likely be greeted with widespread satisfaction.
Yet all is not lost for banks. In fact, there’s heated debate about whether technological disruption actually threatens finance as much as other industries. Some argue that the financial industry is protected by strict regulations, high barriers to entry and strong capital requirements – unlike photography, music, or other industries that have been transformed by digital disruptors. Ironically, for all the historical antagonism between banks and government regulators, regulation alone might prove to be the industry’s firewall against new tech-driven competitors. Though disruptive technologies and business models like cryptocurrencies and peer-to-peer lending will continue to emerge, governments’ interest in financial stability could ensure that banks keep their status as transactors and stores of value. This can buy them ample time to either adapt their models to compete with new competitors, or to co-opt them or simply buy them outright.
Even the disadvantage of public antagonism can be overcome. According to some polls, time and an improving economic outlook seem to be healing the wounds the 2008 crash inflicted on the financial industry’s reputation. And big banks could greatly accelerate this process by adopting a more socially-conscious approach, from promoting transparency and avoiding abusive lending practices, to making a concerted effort to avail financial services to communities in need. It remains to be seen whether the major players will take these steps, and whether they’ll successfully adapt to the disruptive forces that will reshape the industry in coming years. If they don’t, improbable as it may sound, some of today’s biggest financial brands might suffer a “Kodak moment” of their own.