It took telephones 75 years to reach 50 million users, but it took Facebook and Angry Birds only 3.5 years and 35 days respectively to reach 50 million users. The pace of adoption (and impact on the incumbents) is clearly a hallmark of the digital disrupters (even if one were to control for the different levels of complexity of services in these examples).

However a more interesting question is - how do the digital disrupters think and act? How are they different from traditional innovators?

• Traditional innovators versus disrupters: Traditional innovators always started by targeting the skilled, more informed and economically well-off segments, and hence grew from the core outwards. Digital disrupters, on the other hand, attack the markets from the periphery, i.e., outside-in. They start with a price level (often set at zero or close to zero) that anyone with a basic internet-enabled device can access and start to use. They keep as far away from complexity as possible. Complex solutions seldom digitise or scale or automate fast. If there is something complex, digital disrupters break it down into simpler service modules that can scale rapidly.
• Do-and-demonstrate culture: Their focus is on doing and demonstrating an idea rather than discussing and analysing it to death, that their much slower moving rivals do. At disrupters analyses and improvements go hand in hand with doing and making. This theme clearly comes out in the book "How Google Works". The story in other "Googley companies" is no different.
• Rapid service-development models for e.g., through the use of developer communities instead of in-house or traditional outsourcing distinguishes digital disrupters from more traditional organisations. The established evaluation metrics in delivery projects based "cost, time, feature, quality" etc. does not appeal to them either as time and usability are the top differentiators and investment mantra. Service features are improved rapidly over time, with end users' feedback (further deepening the relationship).
• Focus on the "new consumers" is much more than traditional players. By new consumers I mean the digital natives (generation born after 2000) and the millennials (born between 1980-2000). When these young and very young consumers says "I hate to sign; I hate to painfully recall my static passwords when authenticating; Please fit your offering into my lifestyle, e.g., e-mail, FB messenger, etc."... then the disrupters not only listen but invest! How rarely do banks invest to address the needs of these segments? Most end user studies they carry out pay a lip service to the "new consumers" and this must change. Now. Are we still surprised that banks have so often failed in the app usability tests?
• Disrupters' attacks on the incumbents are very sharp: Look at Amazon - global leader in e-commerce that diversified so successfully to offer a world-class platform for hosting services through AWS offering. It now emerges how closely Amazon assessed the weaknesses and wastefulness at the traditional managed service providers and data centres when it architected its IaaS (Infra.-as-a-Service) hosting platform. Every single day AWS puts a 5 billion USD company on its infrastructure, spins hundreds of test labs within minutes with customers managing changes in their applications through self-service interfaces (and not paper intensive change request regimes followed elsewhere). Between 2006 (when AWS was launched) and 2013, AWS reduced its prices 26 number of times due to rapidly increasing volumes. According to Gartner, since 2012 AWS has comfortably beaten the traditional providers of IT hosting services (for e.g., IBM, CSC, Fujitsu, Verizon) and remained the undisputed leader.

As disruption fast becomes the new normal, for sustaining competitiveness the incumbents need to pursue one or more of the following options

1. Acquire a niche disrupters with potential (yes it is a gamble but worth trying) especially wit focus on those players with assets within user-experience and time-to-market (rapid service development models).
2. Partner up with digital giants (some mentioned above) who are willing to work with you to access local markets where incumbents' assets typically are strong. In this senario if the disrupter is large/ global player, the incumbent will have to give up bigger share of the pie as a part of any partnership deal.
3. Changing service development and business model. This will challenge revenue flows (typically Capex or license heavy) in short-term but as the partner ecosystems start to scale,so will the growth in revenues.

Finally, let us just admit it - banks and payment providers have traditionally been far from satisfactory when it comes to using alliances, building service ecosystems and delivering user-centric solutions. The incumbent actors must realise that it is much healthier to take a smaller pie in a bigger and growing market than only defending a larger pie in a fundamentally challenged market.