Korva is a scroll of the internet’s best ideas.
Blockbuster's blind spot
Picture everyone who walked into a Blockbuster, looked at a VHS tape or a DVD, and either rented it or didn't. None of that behavior was captured. Blockbuster had no systems to record it and no data culture for making decisions from data or models.
A technology company
The same argument answers a question Nubank, a Brazilian digital bank, heard in its early days: how can a startup compete with banks that have a hundred-year history and a hundred million customers? Scale and data matter, and systems and culture matter just as much. Nubank saw itself from the start as a technology company that happens to be in financial services, so data and analytics shape every decision.
Legacy bank systems
Incumbent banks carry the opposite legacy. Many still run 15 different systems left over from years of acquisitions. They are working on moving off the mainframe and off COBOL, and they are 10 to 15 years into putting systems on the cloud.
How did Netflix use its data to build recommendations?
Netflix recorded what members rated and watched, and it used those records to predict which titles each person would enjoy. In 2006, it launched the Netflix Prize, offering one million dollars to any team that improved its recommendation accuracy by 10 percent. The team BellKor's Pragmatic Chaos won in 2009. Netflix later said the winning solution was too complex to put into production as it stood.
Why do big banks still run COBOL?
COBOL was created in 1959, and banks built their core ledgers on it because it handles decimal arithmetic and high transaction volumes reliably. Replacing a core system means moving live accounts without errors, which carries large risk. A 2017 Reuters report estimated that 43 percent of banking systems were still built on COBOL. Banks often add newer layers around the old core instead of removing it.
Why do bank mergers leave so many systems?
When one bank buys another, the acquired bank usually keeps running on its own core system, because migrating millions of accounts at once is risky. Over a series of acquisitions, the result is a stack of separate platforms with data that does not line up. Each new system needs connections to every older one. The 2008 financial crisis triggered a wave of bank mergers in the United States, which added to this pile.
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