Be Modular

Twenty years ago, new low-cost carriers attacked the newly deregulated airline industry, using techniques that ranged from quick plane turnaround to dynamic seat pricing. The established airlines that survived were those that adopted a “modular” approach and outsourced processes such as maintenance, ground handling, and catering.

Other industries are going the same way at different speeds, as digital technology makes it easier to split off different stages of the value chain into modules. Hotels are already highly modular in their handling of demand, letting traffic arrive through a variety of customer interfaces. By contrast, many oil and gas operations are still fully integrated.

Financial services are now on this path. The industry traditionally functioned as a collection of vertically integrated one-stop shops. Monoline investment banks and securities firms have long taken a more modular tack in the US.  Now their approach is spreading globally amid declining customer loyalty, new products, processes, and customer platforms that compete in performing many of the industry’s traditional tasks.

This article is adapted from an article that first appeared on BRINK.

$1 trillion of revenues and costs are up for grabs in an industry with revenues of $5.7 trillion.

Be Modular