Unintentionally facilitated business model

At the end of the last century, the new generation of core business systems developed by our bank entered the final stage. It was necessary to develop a set of emulation terminal system as soon as possible to ensure that the original network equipment could continue functioning. However, the system failed to show sufficient adaptability to the branch’s technical environment.

It happened that an IT company brought a new solution, which, based on the software it provided, could help us achieve our goals quickly and well. More attractively, it could also support branches to quickly implement local business innovations.

After all, the system at hand was about to be completed, and it was really difficult to convince the team to give up. From the perspective of future promotion, the new scheme did have a big advantage. However, there was still a lot of uncertainty about whether the development could successfully attain the goals, and the branch was unwilling to invest too much.

The boss of the company said that he wanted to prove the value of his product, so as to provide successful case support for future marketing instead of just making money. Therefore, we had more options.

Soon it was decided to continue completing the original development to ensure that there was a set of propagable emulation terminal system in hand. At the same time, we cooperated with the company to develop another system with the help of its products. The two systems compete with each other, leaving the branches to choose by themselves.

The boss of the company was long-sighted and had shown great sincerity. Finally, it was agreed that this cooperation would mainly pay the labor cost of the participating personnel, to ensure that the company would not bear excessive financial pressure, and the personnel be more responsible.

Based on the software provided by the company, the bank arranged a technical team for development. The company provided technical support during this period and perfected its software according to our requirements. The copyright of the emulation terminal system was possessed by our bank and the counterparty could provide services to branches in the promotion.

In the competition for the promotion of the two systems to branches, the cooperative system version won a complete victory and we also hurriedly stopped the loss and terminated the maintenance and promotion support of the original one. In the process, the company has improved its products, trained its team, and made money by providing personalized implementation services to branches.

Based on this successful marketing case, the company copied the business model and provided its products to other banks, quickly gaining wide recognition. The substantial increase of service banks has exposed them to more scenarios and promoted the continuous upgrade of their products.

Our bank tried to develop a system to replace the company’s base product but failed due to the extremely busy work. Two years later, as the terminal application of other banks was already catching up, we quickly cooperated with this company again to upgrade the terminal system.

With the help of our bank’s influential position in the industry, many subsequent products were selected and used in a similar way. Two decades have passed, and the business model of bilateral cooperation has gradually become the mainstream unexpectedly. It seems that the interests of all parties have reached a certain degree of balance based on this.

Love-hate relationship between the supply and demand sides

The responsibility of the IT department in a financial enterprise is to serve the company well and satisfy various needs of the business department. Confronted with overwhelming tasks, it is difficult to have the energy to design solutions that are more in line with the future of the company and can only meetemergencies first.

When financial companies need to expand the field of IT applications, or completely rebuild the original system, they will consider resortingto socialpower and using the products of IT companies. It is the problems of financial companies that these products solve, and IT companies must have a relatively deep understanding of the demand of financial companies.

Participating in the IT service projects of financial companies can allow IT companies to be exposed to the actual business scenarios and get the opportunity to communicate face-to-face with business and technical personnel. This can help them deeply understand the nature of the needs of financial companies, realize the technical environmental conditions they face, and stimulate more creative ideas.

As it can serve various financial companies, IT companies can access different business and technical information of different companies, analyze the overall business overview and development trends of related industries, master the adaptation requirements of different technical environments, and propose the most appropriate solutions.

Technology is the trump of IT companies, and the emergence of any new technology may affect the distribution pattern of the market. Therefore, companies are sensitive to technological development and continuously explore innovative applications of new technologies in order to quickly updateproducts.

Based on the grasp of the overall industry’s business and technical requirements, as well as the understanding and mastery of new technologies, IT companies have more opportunities to form innovative insights, propose comprehensive product solutions for the future and develop products that can be widely used by financial companies.

During the implementation of the service, IT companies can obtain feedback on the actual application effects of their products in time, which can not only verify assumptions, but also reflect the defects in product design and upgrade on this basis. In this way, they have the opportunity to make truly good products.

IT departments of financial companies focus on quick response to the all-round needs of companies while IT companies provide solutions in a specific field for the industry. Both parties have their own advantages, and their cooperation can realize great complementary effects and ultimately improve the IT application level of financial enterprises.

If the two parties can work together toward the above goals and take care of each other’s interests, there will be a chance to achieve a win-win situation. Pitifully, the current cooperation and interaction are developing off the track and to a certain extent, both sides are in a predicament.

When financial companies decide to adopt software developed by IT companies, they will not accept them wholly but choose customized service to a great extent according to their actual situation. A fully autonomous and controllable IT system will be realized in the enterprise, and this process involves much IT service implementation work.

In business negotiations, financial companies take advantage of IT companies’ reliance on application scenarios and require them to charge products for free or only a nominal fee. In bidding, the most important evaluation factor is price. IT companies can only consider gaining benefits from subsequent development, maintenance and implementation.

This has led IT companies to finda business position suitable for their survival. Using the product as a hook, as long as the counterparty adopts it, it will win a long-term follow-up service opportunity. In the process, with the help of expanding the breadth and depth of services, they could earn IT labor service fees.

This evolution has stimulated a strange and closed loop of negative incentives, which will easily lead to a situation where bad money drives out good. Good products requireless maintenance, and the implementation is faster and simpler, thus economizingon manpower. However, early-stage R&'''D demands much investment, so the cost is relatively high, making it face an awkward situation in the bidding quotation.

A relatively crude product is invested less in R&''D. As long as there is no fundamental gap with competitors, even if the product has a problem, it can be solved in subsequent implementation, and the process may even be charged, giving it an advantage in bidding.

After being selected, the IT company will have a high probability of getting the service demand from the counterparty, thus winning the opportunity to profit. Financial companies pay more attention to the achievement of their business goals. To ensure that IT companies work hard, they compensate based on the number of service days and unit prices instead of considering the cost on the whole.

This causes IT companies to be unwilling to invest too much in products. As long as adopting a follow-up strategy, they will not be at a disadvantage in the competition. Therefore, they prefer to invest in implementing services to win the trust of customers and strive for more opportunities. IT companies have gradually become de facto IT human service outsourcing companies.

The revenue status of such an IT company can be seen only through the scale of its staff. The profitability relies on refined management, so its valuation in the capital market is very limited. Financial companies are unable to achieve leapfrog breakthroughs with outstanding IT products on the market, and the improvement of IT applications in these years has been relatively small.

This kind of commercialization is in line with the ideals of all parties. Financial companies spend money to buy products, competing on the ability to integrate IT products while IT companies are responsible for providing good products, competing on the ability to create the hot cake. The workload implemented on-site only accounts for a small percentage.

Under such a social division of labor, the overall financial enterprises save time, effort, worry, and money, while IT companies rely on the reproducibility of products and have more room for future development, ultimately bringing about a substantial reduction in the total cost of society, and the rapid improvement of the overall application level of financial IT field.

This requires all parties to take the initiative to make changes. Financial companies should change the IT construction model and consciously purchase good products in the market. They should figure out the overall investment in IT applications, increase the proportion of investment in software, and reduce the workload of supporting development and implementation.

In the bidding process, it is necessary to realize that good products will bring greater marginal benefits in the future and give them a certain degree of inclination in grading. Good products are worth high prices, which is more cost-effective in terms of overall investment. Allowing the counterparty to make money will attract further investment, so that the product will continue improving, and become a loyal partner for business development.

When choosing a product, you will often find that some issues are different from your own ideas. Please actively understand the rationality of the counterparty’s design and try to adopt a follow-up strategy instead of easily proposing individual needs. The actual effect of many of our thoughts on demand, which we think are smart, is often not satisfactory after innumerable trials and hardships.

It is necessary to establish an open IT architecture system suitable for connecting various internal and external products. When choosing a product, the open connection capability and its scalability should also be considered. In addition, it is also important to make preparations in advance for the future upgrading or even elimination of the product.

IT companies should expand investment in product innovation, relying on good products to quickly obtain benefits in the market, and make products easier to be implemented and installed. It is necessary to focus on one local business area, conduct in-depth research and analysis to form deep insights and cognitions, and develop products with unique user value.

While technologically advancing with the times, considering the status quo of the technological environment of financial companies to guarantee good interconnection and scalability. After the primary products are developed, you can let the first batch of users use them for free, so that problems can be discovered and improved.

After the official product version is finished, the pricing should match its true value. For financial companies first to use it, consideration can be given to granting necessary concessions. It is hoped that IT companies newly participating in market competition can adopt this method to usher in good development.

For IT companies that have adopted the original business model, such changes not only involve their own technology, marketing and operations, but even include culture and organizational mechanisms, so the actual operation difficulty may far exceed expectations. A balanced and stable ecology can only be achieved when all parties obtain a win-win situation. I believe that the expected changes will definitely happen.