We can take lessons from companies in other industries that have ignored these lessons and suffered as a result. A prime example is Kodak, which was the dominant name in the photography market for over a century. At its peak, Kodak’s share of the photographic film market was over 80% in the U.S. and around 50% globally. Kodak was making significant profits from the sale and development of camera films and expected this trend to continue. While the arrival of digital cameras was changing industry dynamics, Kodak didn’t want to risk cannibalizing their own Central Bank of Kuwait - Public ‫ عام‬- ‫بنك الكويت المركزي‬  - 14 -  camera film business and failed to see the potential of new technology and the risk from new competitors. Instead, it chose to stay in its comfort zone, conducting business as usual, failing to understand the evolving needs of their customers. That led to its ultimate demise, as Kodak filed for bankruptcy protection in 2012. Contrast this with Apple’s launch of the iPad. Despite the iPad’s potential to cannibalize its own computer business, Apple went ahead in order to serve the needs of its customers. It was not afraid to embrace change, even at the cost of its traditional business and products, and the iPad proved to be one of Apple’s most successful products. Equally critical is to timely identify and act upon valuable opportunities amid shifting market preferences. Microsoft missed such an opportunity to dominate the mobile operating system.
In short, banks will need to either go digital or risk being sidelined. Failure to meet changing consumer expectations can have serious implications for banks. The recent history of the mobile phone industry is a case in point. In 1997, 60% of the mobile phone market belonged to the specialist mobile phone producers like Nokia, Motorola and Sony Ericsson. Today, that same market share has been captured by Samsung, Apple and Huawei. Not only are the current market leaders three entirely different firms but they are essentially electronics and computer companies, unlike the past firms that specialized in manufacturing mobile phones.12 The incumbent mobile phone companies of the 90s failed to recognize the evolving needs of their customers. Ultimately, their complacency saw them being pushed to the fringes of a market they once dominated. Something similar could happen to the banking industry. Unless it pays attention to and serves the changing needs of its customers, it might be sidelined by telecom companies or technology firms as primary providers of financial services. Take the example of Ant Financial, WeChat Pay and M-pesa, which are firms that were launched by technology and telecom companies. All three have enjoyed tremendous growth to become the largest providers of financial services in their respective markets. By leveraging technology and adopting a customer-centric approach, they have surpassed the largest banks in their markets.