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Disruption Isn't New

Disruption in financial services has been a topic for as long as I can remember. I can vividly recall sitting in a Boardroom at New Jersey National Bank in 1986 listening to one of our senior executives discuss how ATMs will disrupt financial services. Tens of thousands of ATMs later, we’re still talking about disruption in financial services, at the hands of fintech “disruptors”.  I remember in the mid-90s at Summit Bancorp hearing about how online banking will forever change the role of the branch. Yep, 20 years later, we’re still talking about the demise of the branch. In the late 90’s at Affinity FCU we spoke about how “alternative delivery” would level the playing field for credit unions competing against the “big banks”. That’s still a theme, 18 years later.

Technology continually disrupts everything and every industry. Perhaps it’s been slower in the financial services industry but I believe that’s because banking for the vast majority of Americans, is frankly, a chore little care about. Most consumers don’t give banking much thought so there has not been much consumer thirst for new banking technology. Traditionally the industry has not had to respond. However, the appetite is changing, driven by evolving demographics and the advent of mobile technology. Are we entering a new era of banking disruption? Not so fast.

Think about it for a moment; what drives disruption? If we break everything down to its bare essence, we’ll find there is typically one thing that drives disruption in any given industry. It’s information. Information that’s communicated through our shared economy in which we all coexist. These days there is indeed no shortage of information and many of us could argue there is too much. Let’s also consider that pundits make a living leveraging hype and creating a sense of urgency because it’s a great way gain influence. Don’t get me wrong, thought leaders are critical to our space and keep us focused on the future and shifts in demand. But let’s keep some perspective.

Is there a sense of urgency to “drive disruption” at your financial institution (FI)? Should there be one? I’d suggest a measured response. Consumer and business needs are continually evolving and the world we live in is made up of a more diverse, younger and now remarkably mobile society. These can be seen as opportunities or threats, depending on how you look at it. To survive, financial services must keep evolving, lead by bankers that are able to embrace change and develop a clear plan for the future. They also must have a way to put the FI on the road toward delivering that vision organizationally. Innovation can’t be siloed. Innovative thinking must be brought into every process in the organization.

We are told to fear the neo bank challengers. I'm not saying they are not a threat; they are. But the real "challengers" need to come from within your FI or those partners that can support your FI. Even venture capitalists are now looking at fintech players that work with banks, not against them. Bankers slowly have begun to disrupt the disruptors. So while your real threat may not be a fintech startup, it will be the bank or credit union down the street, or across the country, that is continually innovating and making innovation and fintech, part of its strategic DNA.

In my banking experience, disruption never changes, only the disruptors do. Keep an eye on the future, invest in ways of making banking easier, more relevant and relentlessly look to differentiate. But always remember, a high-tech, high-touch environment, is an advantage that is truly within reach if you are always disrupting. 



Comments: (1)

A Finextra member
A Finextra member 25 April, 2018, 10:26Be the first to give this comment the thumbs up 0 likes

Simple yet profoundly insightful, well-written Bryan!

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