In the 19th Century, European explorers and fortune-seekers travelled en masse to Africa and discovered a garden of Eden, with wildlife as far as the eye could see. Armed with rifles and elephant guns, they began hunting the most impressive and dangerous of these, which they called the Big Five.
Around the same time, the Eastern triocrees Province Bank opened its doors in Grahamstown. It was soon followed by the Standard Bank of South Africa in Port Elizabeth and the Nederlandsche Bank voor Zuid-Afrika.
Over the next century-and-a-half, the fortunes of Africa's Big Five and the early banks took vastly different trajectories.
The Big Five were decimated as the veld became a free-for-all for trophy hunters looking to bring back their own tusk, horn or pelt.
Meanwhile, the banks grew as the population around them did. They came to be known as FNB, Standard Bank and Nedbank, and were eventually joined by Absa and Capitec. Just as the Big Five faced endangerment and extinction, a new Big Five emerged.
It's an interesting parallel: the monumental growth of our iconic banks compared to our iconic wildlife. After all, conservation and SA's financial fortunes have always been closely linked. We trade in currency emblazoned with leopards and lions, attract millions of tourists each year to gape at our natural beauty, and our wealth management companies all have their own conservation and sustainability projects in place.
The natural world has some important lessons on how to adapt and persevere in the face of sudden change.
However, as the precarious state of the rhino and the rest of the Big Five shows, just because you rule the savannah one day doesn't mean you'll do so forever. We know that banks are facing extinction-level threats to their survival, learning what environmentalists have known for decades: that a significant enough change in the environment, combined with the introduction of a new outside threat, can devastate even the strongest species.
A new species emerges
Just when you thought SA's banks had the fintech threat figured out, a new threat has appeared on the horizon. Call them the Little Five for now, the new banks preparing to launch in SA this year, all promising competitive prices and more tailored services compared to the traditional players.
Naturally, everyone's keeping an eye on Bank Zero, launched by the guys who spearheaded FNB's spectacular digital transformation, and Discovery Bank, threatening to disrupt yet another industry. Meanwhile, the likes of Tyme and Postbank hope to capture lower-income customers, with the former setting up access points at supermarkets and the latter angling to capture the almost 20% market share occupied by Sassa card-holders. Both of these entities have the potential to net the large underbanked population of South Africa.
Thankfully for the incumbent banks, they appear to contain a good amount of iguana DNA, just like the famous lizard dodging threats in BBC's Planet Earth series. The Lafferty Group's 2017 Global Bank Quality Benchmarking study found SA's banks have the highest quality among the 100 banks surveyed across 32 countries. However, plenty of other legacy organisations are facing their own Little Fives, and they're not nearly as resilient as these financial providers.
Winning with Darwin
It's a clich'e at this point to talk about the business world as an "adapt or die" environment, but there's a reason the metaphor is dragged out at every conference or in every white paper. In every industry, organisations are facing changing ecosystems, invasive species, and the destruction of existing habitats; you almost expect David Attenborough to be narrating events in the background.
There's no better symbol of the threat long-standing businesses face than the peppered moth. Once found in both black and white, that all changed when the industrial revolution took place. In just a few decades, pollution from the factories had darkened the trees the moths lived in, and the white moths started dying out as they were no longer able to hide on the bark's surface from predators. With the fourth industrial revolution affecting us all, we're going to see a lot of white moth organisations in the coming years.
Thankfully, the natural world has some important lessons on how to adapt and persevere in the face of such sudden change. And what better place to look to for advice on evolving than the birthplace of evolutionary theory itself: the Galápagos Islands, where Charles Darwin first came up with the idea of natural selection. Due to the diversity and uniqueness of species found there, evolutionary biologists continue to study the islands even today.
Take our marine iguana from earlier: the only lizard in the world that can forage in the sea. These enterprising little guys floated all the way from Central America on bits of vegetation before landing on the shores of the Galápagos. Because the food supply was so different from the jungle, they left the trees for good and evolved to feed on seaweed and algae.
The science of survival
Read any book on evolution, and you'll come across the same strategies for change you'd find in any business playbook: convergence, co-evolution, variation. It's not survival of the fittest at all. It's survival of those most resilient, inventive, cooperative, and likely to match their characteristics to their environment.
It's not just strategies for surviving challenges either, but for taking advantage of environments with plenty of resources, such as a continent with a massive underserved population and huge mobile growth. In the Galápagos, Darwin's finches evolved from one common ancestor into 15 separate species with beaks adapted to the islands' many food sources, such as cactus flowers, insects, seeds and even iguana blood.
Hybridisation is one of the most powerful factors in evolution. The marine iguanas don't just outwit snakes and feed on seaweed. They also mate with the island's land iguanas to create hybrids with the strengths of both. They use the inherited claws of the marine iguana to climb trees, something that their land-dwelling parents can't do. In striving to become the centre of their customers' lives, companies are going to have to embrace hybrid business models and so-called "coopetition," partnering for shared value rather than profit.
As David Attenborough once said: "There are some four million different kinds of animals and plants in the world. Four million different solutions to the problems of staying alive."
Introducing new product offerings or going digital isn't enough; now is the time for legacy businesses to reassess their customer value propositions, faced with challengers that are coming in with much more defined, targeted strategies. Whether they can do so or not remains to be seen, but one thing's for sure: the next few years are going to be as fascinating as any nature documentary.
Do you think the incumbents in your industry can evolve in time to meet new challengers? How do you foresee them adapting in the next few years?
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