In her most recent book, Seeing Around Corners, innovation and strategy expert Rita McGrath teaches leaders to spot inflection points, or major industry shifts, before they happen. “Snow melts from the edges,” she explains. In winter, the first signs of spring appear at the edges of snowcaps. In business, radical innovation typically begins on the outskirts—from industry outsiders and newcomers addressing customer pain points that have long been ignored by incumbents.
In the financial services industry, where established frontrunners have typically been slow to innovate, fintech startups have moved in at the “edges”. Consumers want digital and mobile ways to interact with their finances, and today, nearly every banking institution has found its way to integrate fintech into their offerings.
But in the future, your bank may not look like a bank at all. Two surprising entrants are taking advantage of fintech offerings to better satisfy their markets. Walgreens and Walmart are capitalizing on their greatest assets, loyal consumer relationships, and seeking to make their services more holistic to their customers by offering banking options.
Walgreens partners with InComm Payments
Walgreens has announced that, through a partnership with fintech company InComm Payments, it plans to incorporate retail banking into its growing number of services to customers. A statement from Walgreens explained, “Walgreens is committed to helping customers with their health and well-being needs, and we’re pleased to expand our financial services offerings to further enrich the experiences and ways we meet customers’ financial needs.” Walgreens aims to provide banking services both online and at roughly 9,000 of its physical locations by the end of 2021.
Almost 80% of Americans already live within five miles of a Walgreens store—a statistic not held by any incumbent banking leader. As physical bank branches continue to close their doors, this could give Walgreens an edge of proximity, being able to meet their customers through the most convenient channel for them, whether in-person or online.
Walmart creates its own fintech startup
According to research, the average person interacts with Walmart in-person or digitally about 30 times each year. Walmart, in cooperation with Ribbit Capital, is creating its own fintech startup, Hazel, to support its entrance into financial services.
Lack of trust in the existing financial services industry has left room for non-traditional competitors to step in. John Furner, president and CEO of Walmart U.S., further explained, “For years, millions of customers have put their trust in Walmart to not only save them money when they shop with us but to help them manage their financial needs. And they’ve made it clear they want more from us in the financial services arena.”
Hazel, as reported in trademark filing by Walmart, could be set up to offer financial counsel, credit card processing, lending, financing, and banking, and a host of other services often seen in today’s retail banking corporations. Reports also indicate that Walmart may be working toward developing its own “super app,” similar to WeChat in China. The app could serve as a hub for consumer lifestyle offerings, complete with banking, commerce, communication, and other services.
Observe the edges
Your biggest threats may not come from traditional competitors or even from those inside your industry. In last week’s episode of our Outthinkers Podcast, guest April Rinne, expert “change navigator” and futurist, warned that our human capacity for peripheral vision is becoming increasingly limited.
Like Rita’s advice for seeing around corners, April recommends to “See what’s invisible.” To spot what’s coming next, learn to look beyond what is right in front of you—your existing markets, competitors, industry, and customers. Look to the edges to find the next opportunities and potential threats.
Discover what innovators are doing and how customers are responding at the edges—you’ll be able to spot disruption before it occurs.
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