Winning is the name of the game, or is it?
As a society, we’re conditioned to believe that being first is best but, in the innovations race, it’s fair to say that the winner doesn’t necessarily take all.
Sometimes, being a fast follower instead of a first mover can be a better strategy, particularly in industries where regulations and technologies are continually evolving.
While the rewards for successful product innovation pioneers may be substantial, there’s many a technology company that has reaped the benefits of coming in from behind. After all, the iMac wasn’t the first personal computer, nor the iPhone the first smartphone (Blackberry anyone?) but Apple is certainly doing alright and is now the leading brand in many areas.
Now, we’re not saying being a fast follower is always the best strategy – after all, you could end up following the wrong thing entirely and end up selling an expensive, second-rate version of something that fails. But, if you follow the right trends and let someone else prove the concept, you can observe their mistakes while leapfrogging over their solution.
Why it pays to be a fast follower – The Apple Pay example
Disruptive technologies and digital innovations are transforming financial services, as they are in every other industry. Gone are the days of businesses relying on a physical high street presence in order to interact with their customers. Widespread digitisation and the adoption of smartphones, tablets and other devices has made new customer interactions possible and allowed for more innovative ways of delivering financial services.
This convergence of physical and digital touchpoints in the personal banking and payments journey was something that Google foresaw back in 2011 when it launched the original mobile wallet. The Google wallet made mobile payments technology available for Android phone users, albeit only on one phone model. Arguably ahead of its time, the initiative never really took off but, fast forward eleven years and Apple Pay (launched in 2014) now accounts for nearly half of all in-store digital wallet purchases (45.5%) and has 43.9 million users versus Google Pay’s 25 million.
There’s been many an innovative idea that has failed because the market wasn’t ready or the infrastructure wasn’t there to realise it, as Google found out. It’s all about jumping the s-curve - the innovation adoption cycle of new products and technology – at the right point. Arguably, Google jumped too soon the first time around. Whereas Apple waited and jumped when the curve was on its way up and was able to deliver more value to more customers as a result.
Luckily, things have moved on, the infrastructure is now in place to facilitate the kind of payments innovation that Google envisaged back in 2011 and, perhaps more importantly, the appetite is now there for its adoption.
Nowadays, it’s never been easier for businesses to follow fast and iterate on the successes of innovators past, thanks to the API ecosystem. APIs have proven to be catalysts for innovation, providing the real-time infrastructure on which businesses can cost effectively build out innovative new services or reimagine old services in new ways.
How to enable fast followership
It’s API infrastructure that enables payments to be embedded into a brand’s online experience. They’re what turn non-financial platforms, like Apple and Google, into payments businesses. And they’re the digital enabler of those who follow in their innovation wake.
Through APIs, companies can access payment systems and build and operate business money flows from within their own digital platforms, from a single point of integration. Normally, this also requires regulation as a payments provider but that’s onerous, costly, and not core to most businesses’ strategy. After all, digital innovators want to be focussing on their product, not consumed with gaining the necessary regulatory status or the complexities of managing payment scheme access directly.
Luckily, a new breed of regulated and directly connected digital payment providers has emerged, like Modulr, that provide both the APIs and the regulatory umbrella. Once onboarded, businesses can embed payments into their brand experiences. They can easily and cost effectively create accounts, issue physical or virtual cards, make payments, auto-reconcile received payments, access Open Banking features and anti-fraud initiatives such as Confirmation of Payee. This allows businesses to innovate with embedded payments and open up new revenue opportunities, while materially improving efficiency and raising end customer satisfaction.
So, while there’s a lot to be said for being a first mover, it’s the fast followers that often have the real advantage. Yes, there may be some innovation kudos to be had from being the first to market in a new product category but first movers rarely get the most value returned. Being first is expensive and educating the market is challenging, plus there’ll be many that follow, ready to learn from your mistakes.
The fast follower’s time to market is often quicker and their R&D and development costs are usually lower. So, rather than pitch yourselves at the bleeding edge of innovation, take advantage instead of opportunities that fit your core skillset, and experiment with them. And leverage those payment APIs and partnerships so that you can easily integrate embedded payments into your existing infrastructure and product offerings, because that’s where innovation really pays!
Read more about being a fast follower and other key focus areas for future-facing businesses by downloading our Future Strategies eBook today.