What do bank customers have in common with two NASA astronauts who were recently stuck in space for 8 months instead of 8 days? At first glance, not much. But if we dig deeper, the issue goes beyond a malfunction in Boeing’s Starliner capsule.
NASA made a tough call on August 24, 2024: it was too risky to bring two astronauts, Butch Wilmore and Suni Williams, back from the International Space Station (ISS) in Boeing’s troubled new capsule. Instead, the astronauts will have to wait until February 2025 to return with SpaceX. What was supposed to be an eight-day test flight has now stretched into eight months.
Boeing’s Starliner capsule, which transported astronauts Suni Williams and Butch Wilmore to the ISS in June, has faced significant issues. Boeing claims to bring the astronauts home, but NASA doesn’t trust them. Helium leaks and failed thrusters marred its first crewed test flight, revealing deeper problems within the company’s operations.
Despite years of development and a $4.2 billion contract from NASA’s Commercial Crew Program, Boeing still hasn’t completed a successful crewed mission. In contrast, SpaceX, with a $2.6 billion contract, achieved this milestone faster, more cost-effectively and with greater success.
As we see, Boeing, a long-standing leader in aerospace, finds itself increasingly outpaced by SpaceX, a newer, more agile competitor. Despite its deep expertise, Boeing is hindered by legacy systems and bureaucratic processes that slow down innovation. SpaceX, starting from scratch, embraced a culture of innovation and risk-taking, allowing it to achieve significant milestones, such as the development of reusable rockets, more quickly than Boeing.
This struggle between Boeing and SpaceX serves as a powerful analogy for what’s happening in the banking sector today. Traditional banks — like Boeing in space — could face challenges in the new, digital environment that is rapidly redefining the financial industry.
Traditional banks, with their deep-rooted brand histories, cultures and legacy systems, have long dominated the financial landscape. But these very advantages have become their Achilles’ heel. Laden with bureaucracy and the weight of outdated operating models, these banks are often slow to innovate and adapt. They are like Boeing, which, despite its expertise and decades of leadership in aerospace, finds itself burdened by older, rigid systems and approaches that stifle agility.
On the other hand, digital-first neobanks, like SpaceX, have a distinct advantage — they started with a clean slate. Unlike traditional banks, which are burdened by legacy systems, neobanks were built from the ground up with a modern core, focusing on customer experience, agility and rapid adaptation to market needs. These Fintechs, unburdened by legacy systems, have been able to quickly iterate on their offerings, providing seamless, tech-driven solutions.
Nubank, Revolut and Cash App, for example, have quickly gained popularity by offering a user-friendly experience that resonates with today’s digital-native consumers. They have capitalized on the growing demand for mobile banking, low fees and innovative financial products. Their platforms are designed to be intuitive, fast and accessible — qualities that are increasingly important to consumers who expect the same level of service from their banks as they do from tech giants like Apple, Amazon, Facebook or Google.
The numbers tell a compelling story. In just ten years, these neobanks have onboarded 220 millions of clients, as many as the top three U.S. banks in a century: Bank of America, Chase and Wells Fargo. This rapid growth underscores the shift in consumer preferences and highlights the effectiveness of the neobank model in meeting those needs. Emphasis on user-friendly digital platforms, lower fees and innovative services rewrites the rules of the industry, just as reusable rockets from Space X are revolutionizing space travel.
Traditional banks are not blind to these shifts. Some, like ING, have aggressively pursued digital transformation. In Ralph Hammer’s legendary interview with The Banker in 2017, he stated: “The way we want to portray ourselves is as a tech company with a banking license. We built a bank around the internet rather than the internet around our bank.” This strategy of creating a global digital platform and developing a financial ecosystem reminiscent of Amazon or Facebook demonstrates the understanding that the future of banking is undoubtedly digital.
Another example, Mashreq Bank, has adopted a “cloud-native” strategy and has partnered with Fintechs to enhance agility and customer experience. The Mashreq Bank share price increased by 300% in 3 years.
Yet, the question remains: can traditional banks truly innovate in time, or will they be eclipsed by the nimble Fintechs that are not just changing the game but rewriting the entire playbook?
Like Boeing, traditional banks are encumbered by outdated systems and bureaucratic inertia. Their legacy technology, often developed decades ago, is not easily adaptable to the demands of the modern digital economy. Moreover, the regulatory environment in which they operate adds another layer of complexity, making it difficult for them to pivot quickly or experiment with new business models.
These banks also face the challenge of shifting customer expectations. Today’s consumers are not just comparing banks to other banks — they are comparing their banking experience to their experience with leading tech companies. When a customer can open an account in minutes with a neobank, receive personalized financial advice via an app and pay virtually no fees, traditional banks seem slow and cumbersome in comparison.
An outdated approach from traditional banks could be perilous for consumers, particularly as more advanced innovations are introduced into the financial ecosystem. Just as space can be unforgiving for astronauts, the digital environment can be equally dangerous for banking customers, if not managed properly. According to the FBI’s annual Internet Crime Report, losses connected to cybercrime reached a staggering $12.5 billion in 2023. This figure is likely to escalate as technologies like artificial intelligence (AI) become more prevalent.
The danger lies in the complexity and interconnectedness of modern technology. As banks and consumers increasingly rely on AI, blockchain and other cutting-edge technologies, the potential points of failure multiply. An outdated approach to technology and cybersecurity in traditional banks can lead to significant vulnerabilities. These include outdated cybersecurity protocols, insufficient encryption standards and a lack of real-time monitoring capabilities.
As technologies become more complex, the risks associated with them also grow. If traditional banks fail to modernize their systems and adopt robust cybersecurity measures, they could leave their customers exposed to a wide range of threats — from data breaches to sophisticated phishing attacks. The consequences of such breaches are not just financial; they can erode customer trust, damage reputations and lead to long-term business losses.
Moreover, as AI continues to evolve, it could be used to both enhance security and exploit weaknesses in outdated systems. Criminals may use AI to launch more targeted and effective attacks, making it even more critical for banks to stay ahead of the curve. If traditional banks do not adapt quickly, they risk not only their own survival but also the safety and security of their customers in the industry with zero tolerance for failure.
In essence, the more we depend on advanced technologies, the more vulnerable we become. Especially if those technologies are not adequately safeguarded. An outdated approach is not just a business risk; it’s a direct threat to the financial well-being of millions of consumers.
To shift from a “Boeing” approach to a “SpaceX” innovative approach, traditional banks and financial companies need to undergo a fundamental transformation in both their mindset and operations. Based on UXDA’s experience collaborating on the design of over 150 financial products in 37 countries, we have identified 10 key differences in “SpaceX” approach and specific actions to take:
Traditional banks should ask themselves: Are we truly prepared to safeguard our customers in this new digital “space”? Just as NASA had to make the tough decision to delay the return of two astronauts due to concerns over Boeing’s troubled spacecraft, banks must critically evaluate their readiness to protect their customers in an increasingly complex and interconnected financial environment.
The analogy between Boeing and SpaceX is striking. Despite its experience and resources, Boeing’s legacy systems and bureaucratic inertia have hindered its ability to innovate quickly, much like traditional banks today. In contrast, SpaceX’s agile, first-principles approach has allowed it to outpace Boeing, much like how neobanks are rapidly gaining ground on traditional financial institutions.
Shift to digital “space” is not just a theoretical concern — it’s a direct threat to the safety and security of bank customers. Cybercrime losses reached $12.5 billion, a figure that will likely escalate with the widespread adoption of AI and other advanced technologies. The more we rely on these technologies, the more vulnerable we become if they are not properly managed and secured.
To avoid the trap of self-deception, in which confidence in traditional banks’ existing approach blinds us to emerging risks, we need to embrace a digital-first culture, invest in a modern technology infrastructure and adopt a customer-centric approach to innovation. By doing so, financial companies can transition from a “Boeing” mindset to a “SpaceX” approach, ensuring that they not only survive in this new era but also protect their customers from the very real dangers of digital “space.”
The future of banking hinges on the ability to adapt, innovate and safeguard customer experiences. If traditional banks fail to make this shift, they risk leaving their customers stranded — just like astronauts stuck in space. The time to act is now, before the next wave of technological advancement leaves you behind. Don’t let your customers down; they trust you.
