Disruption? You ain’t seen nothing yet
Three recent articles in TechCrunch, the Frankfurter Allgemeine and El Mundo respectively, mention a reality that is heading toward us like a freight train: the disruption of the financial services industry. I recently took part in a discussion organized by IT giant Atos on the importance of analytics in this sector; the imminent appearance of disruptive ideas from the world of technology was one of the main topics.
It is only a matter of time before Google, Facebook, Apple, or Amazon decide to enter the financial services industry. We are talking here about companies that have made efficient management of their customers’ information their main competitive advantage, and about an industry where being able to do that is paramount. Behind the vague “here comes the big bad wolf” warnings from the financial services industry lies a simple truth: any of the big internet players would do a better job of calculating risk, inspiring confidence, or providing convenience and ease of use, along with superior customer relations that just about any of the main financial services companies.
For some time now, financial products, insurance policies, loans, mortgages, etc, have made up the bulk of online advertising. The appearance of comparison sites and the growing use of both display and performance online advertising makes it clear that the internet is the natural place to go when trying to decide which of these products to buy; at the same time, there are significant margins to be made in the industry, something that has obviously attracted the attention of the giants in that environment.
Meanwhile, the inherent conservatism of the financial services industry means that our perception of banks is changing quickly. Yes, we will still have our salary paid into a bank, we will still ask a bank for a mortgage, and we will still insure our car, our home, and ourselves with traditional insurance companies, but we are increasingly aware of how clumsily they treat us, and that we might be much better off with companies who know us better. Few of us will have failed to notice that the banks and insurers use inefficient, out-of-date processes, mostly based on inflexible legacy systems, and most of us are aware how conservative the majority of their boards are.
The number of users interested in financial services offered by companies born into the digital world and that already manage their data is growing steadily, in the same way that digital players are beginning to dabble with the idea of financial products. If you thought that the disruption that has hit the content or transport industries has been tough, wait until the financial services industries’ turn comes… You ain’t seen nothing yet.
