When top technology executives from J.P. Morgan Chase, FleetBoston and Mellon Bank convened recently at the UBS Warburg Financial Services Conference in New York, they allowed themselves some gloat time, because having customers, domain expertise and capital suddenly counts again in the online world. The decline of the dot-coms has brought the revenge of the incumbents.
"Last year, I was embarrassed to come to a meeting like this wearing a tie, in that I would have been thought to be a dinosaur," said Brian Moynihan, executive vice president of eCatalyst at FleetBoston.
This year, there's not much talk about displacing the dinosaurs.
Although technology will continue to revolutionize the industry, the transformation "will not come as a big bang...the core work of the pragmatists continues," said Denis O'Leary, co-director of LabMorgan at J.P. Morgan Chase. "The transformation was never tied to a quick IPO. The market's Nurse Betty has switched her tech valuation from adrenaline to morphine."
And three trends have pushed this conversion, he said. Business-to-business connections have grown, bandwidth pipes have become fatter-allowing greater functionality-and digitization prevails. "Those three convergent locomotives are setting up a platform that can't be denied," he said.
And, O'Leary continued, the traditional companies can best tap the potential of the new technologies. "These firms like our own will work more often through brick and click or consortia models than pure dot-com approaches." LabMorgan has linked with J.P. Morgan Chase's lines of business to help "e-transform" them, using "the same recipe to connect to new platforms and capabilities...when we invest in third parties."
After completing more than 60 transactions through LabMorgan, "we've learned a lot," O'Leary said. "The historic degree of difficulty in starting a new business has not changed materially because of the Net. The cost is high, not low. The time is not immediate. The technologies are a long way away...in reliability and manageability. And who you do business with is as important as it ever was."
Moynihan called it "a time to focus, to consolidate your resources," adding that the threats to Fleet no longer come from the dot-coms but more from "Denis O'Leary and his company." The key to competing is knowing where the customer stands vis-a-vis the technologies deployed by the bank's various businesses, not jumping too far ahead of the customer but still keeping up with innovation.
"The Internet is about one thing-the customers," he said. "Many smart people built business plans assuming penetration and absorption rates for technologies that just weren't there."
Janey Place, executive vice president of e-commerce at Mellon Bank, said her institution has always looked at e-commerce not as something separate but as a means to deliver on its business strategies.
Two years ago, when Place began working at Mellon, "that was an unpopular view. The Internet was really in the beginning a way to keep our businesses competitive...to drive the benefits of Internet technology through our existing businesses."