Article Summary: The finance industry is facing large disruption, and it isn't coming from within. The industry needs to consider the reasons they will be disrupted, be prepared for radical new business models, and look to outsiders who aren't afraid to break the status quo in order to understand why the real disruption is not the incremental tech innovation that they are so enamored with.
Most of the time, one of the primary reasons that disruption happens to an industry is that those on the inside can't see beyond their self-imposed boundaries for what the industry looks like and should be doing. Few industries fit this profile better than finance and banking, who are eminently disruptable, yet have their communal heads stuck firmly up their behinds.
Collectively, they certainly realize disruption is coming, have conferences to talk about it, and proclaim how their own advanced fintech is disrupting everything. Yet ironically, what they view as advanced is simply incremental innovation that automates more and more of what they are already doing, and in truth it is simply more affirmation that real disruption is just around the corner, and that they have no idea how big the train in the tunnel that's headed for them is.
Whether introducing new apps, or slightly better ways to pay with a credit card or apply for loans online -- literally almost none of what the industry thinks is disruptive actually is. It is all sustaining innovations, slightly improving the way things are done currently. On the whole, financial institutions still live in business models created in the 19th century, charge outrageous fees for services that should cost almost nothing, view their customers as chattel, and have no clue what jobs the marketplace would like to hire them to do and the outcomes customers expect for their money. Want to disrupt this cozy world? -- that's what you need to fix.
Think about it: how often do you hear a bank customer say how delighted they are with its services, how easy they are to deal with, how much money they are saving or better yet earning by being a customer? Do we even want to deal with banks, brokerages, insurers, etc., or are they simply a necessary evil that we haven't yet figured out how to work around?
This morning, I read one of the best and most insightful articles about disruption that I have seen in a good while, and it is written by someone who actually works in the finance industry and gets it. So today, rather than posting my own article, I am posting a link to his, with much kudos. In particular, note that Dawid accurately sees that disruption is unlikely to come from within, and that the companies the industry should fear most have names like Facebook, Apple, Twitter, Amazon, Google, or worse, a name no one has yet heard of dreamed up by some kids in a dorm room, and not Barclays, State Farm, Chase, Aon, Halifax, or Deutsche Bank.....
To a Worm in Horseradish, the World is Horseradish, by Dawid Konotey-Ahulu.