Product Managers At Tech Giants Try To Not Anger Banks With New Products [The Accidental Product Manager]

Product managers have to practice being frenemies with banks
Image Credit: 401(K) 2012

Just imagine if you were a product manager at one of the big technology firms out there (Microsoft, Amazon, Google, Oracle, etc.). You would always be under pressure to change your product development definition and come up with new and different ways for the company to make money. You’d probably look at all of the different markets that your company’s resources could be applied to looking for one where you could generate the most money. In the end, you’d probably always come back to the world of finance – that’s where your company’s big computers could do a lot of good. However, what would you do if your biggest customers were already there?

The Problem With Banks

The giants of technology are always looking for new markets to expand into. The world of personal finance is huge and very tempting to them. However, there is a problem here: these markets are already being served by banks. The result of this is that the big technology companies and banks have started to circle each other with a great deal of care. One of the first areas where conflict may occur is in the payments area. At this time banks and big technology companies are more frenemies than rivals for this business.

So why is there a problem here? The answer is actually very simple: banks are potentially very large customers for the products that the big technology firms sell. Amazon, Microsoft, and Alphabet all offer cloud services that banks need. The result of this is that the technology company product managers are having to think twice before they move into offering new products in the finance industry. The result of this is that the technology companies are looking for ways to empower banks in these areas rather than to directly compete with them. When a bank sees one cloud provider investing in payment technologies, they may start to believe that all cloud providers are going to be doing this.

The future is changing. A number of the larger banks, such as JPMorgan Chase and UBS Group are currently in the process of making major investments in new technology to run their businesses. Part of this change is that they have started to use the public cloud to host their banking platforms. This means that they have started to purchase their storage and computing power from the major technology vendors. For the longest time banks had resisted moving to the cloud because of security concerns related to allowing data to move outside of their walls. They had also already invested a great deal into their own data centers. However, when the agencies that regulate banks started to move to the cloud for data storage, the banks were soon willing to follow them.

What The Future Holds

Product managers at Banks have a number of different reasons for wanting to move their operations into the cloud. Once the banks data and processing has been moved to the cloud, it will be possible for the banks to make use of new technologies such as artificial intelligence which all require massive amounts of computing power. The end result of being able to to tap into these new technologies will be that the bank will be to roll out brand new tools to support trading and consumer facing mobile applications. Banks have been struggling to find a way to move away from their legacy applications and it appears as though the cloud may provide them with exactly what they need.

Evidence of just how important the cloud is becoming to banks is the amount of money they are spending on it. Spending on cloud services by banks is expected to increase dramatically. It is forecasted that by 2021 banks will globally be spending US$12B on public cloud infrastructure and data services. This is a marked increase from the $4B that was spend on such items last year. From a tech firm point-of-view, entering into the cloud business is a better business proposition than entering into other markets such as retail banking. The cloud business is growing at a rate of 60% year over year. Being involved in that would look good on anyone’s product manager resume. The retail banking industry (e.g. checking accounts and cards) is growing at a fraction of that rate. Additionally, if the product managers at the tech firms decided to get into the retail banking business they would have to start to deal with both regulatory issues and additional expenses.

What the product managers at the tech firms are starting to realize is that they will get more consistent revenue that are also repeatable if they operate as cloud infrastructure providers instead of trying to enter into the banking field. Although some product managers at big tech firms are playing around with entering into the retail banking space, most are simply offering new services such as digital wallets though their banking partners. Tech firms are competing with each other to attempt to offer banks the best performance, security, and functionality. A key part of what the tech firms are doing is allowing the banks to hold on to their customer’s cloud data – a customer’s data belongs to the bank.

What All Of This Means For You

Product managers at any firm are always under the gun to look at their product manager job description and come up with new ways for the firm to make money. Product managers at the large tech firms are under a great deal of pressure because of the rapid growth of these firms. As they take a look at available markets for them to enter, retail banking always seems to show up as a good match for the company’s products and services. However, banks are also good customers. What is a tech company product manager to do?

The challenge that product managers at the tech companies are facing is that the market that they are interested in entering is already being served by banks. One area which is ripe for conflict is the processing of payments. The reason that this is such an issue is because the banks that tech firms might be competing with in the retail banking sector are the same ones who are some of their largest customers for cloud services. Banks had initially been wary of entering into the cloud. However, as regulators started to use the cloud, they then went ahead and plunged in. Banks have decided that they want to move into the cloud because it will provide them with access to new technologies such as artificial intelligence and will allow them to develop improved mobile applications. When considering if they want to enter into retail banking, product managers need to realize that the cloud computing infrastructure market is growing much faster. If they want to offer retail banking products, they can do it through their banking customers. Tech firms need to focus on offering the best cloud infrastructure possible.

Product managers will always be under pressure to create and deliver new products. This need is especially being felt at the large tech firms that need to continue to drive their explosive growth. The attraction of entering into the banking segment has got to be powerful. However, this appears as though it is one situation that by entering this market the product managers would be shooting themselves in their foot since banks are some of their largest customers. Perhaps this is one time that product managers should just let an opportunity pass them by.

– Dr. Jim Anderson
Blue Elephant Consulting –
Your Source For Real World Product Management Skills

Question For You: Do you think that there is any way for tech product managers to segment their market so that they would not be competing directly with their banking customers?

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What We’ll Be Talking About Next Time

Being a product manager for a high-end jewelry company would be a pretty good job to have. You really would not have to sell all that much of your product in order to have a good year. However, these product managers have started to run into a problem. It turns out that the next generation of jewelry buyers, the millennials, just don’t seem to be into the pretty, sparkly, things that you wear every once-in-a-while. These are the things that their parents and grandparents used to buy. What’s a product manager to do?

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