Over the last couple of decades, the financial services industry has been slowly digitising every aspect of how they operate, from document management to customer engagement and complex content creation. The focus for many has been around efficiency, asking the question, “How can we take our manual processes and analogue data and digitise them in order to save ourselves time and money?”
This is great and necessary, however, it falls far short of the real opportunity presented to us in this fast-changing, digital world. The opportunity for disruptive innovation through digital transformation.
I have been lucky enough to work in several different software and services organisations over the years, from large financial institutions like NAB, ANZ and AIA through to fast-moving software organisations like Xero, CarSales, PEXA and now myprosperity. A similar approach I see time and time again across these organisations is technology playing the part of digitising the current manual process by automating steps, removing error-prone processes, and making data more readily accessible. Whether it be Xero or PEXA playing the part of digitiser or NAB and ANZ being the recipients or requestors of that automation.
Digitisation is a huge efficiency gain and tends to create a better customer and employee experience – everybody wins. However, digitisation only gets us 25% of the way to where we should be. This is where digital transformation comes in. If digitisation is an evolution, transformation is the revolution.
Digital transformation is the process of reimagining how you engage with and provide value to your customers, transforming your complex combination of people, process and tools to create a completely new approach to achieving yours and your customers’ objectives. We see digital transformation occurring in every industry. Every one of us should look to those examples of success and failure and think, “How can I ensure I’m the example of success and avoid becoming a cautionary tale of failure?”
We can’t talk about transformation without mentioning Blockbuster, Netflix, and Disney.
The revolution was streaming, initiated by Netflix. Blockbuster was the clear casualty for failing to evolve while Disney and other similar providers capitalised on the opportunity and now represent clear complementary players to Netflix’s original dominance over the space. For Netflix, the ability to revolutionise made them a multibillion-dollar company. For Disney, their ability to recognise and apply digital transformation secured their continued dominance into the digital age. For Blockbuster, the failure to evolve was catastrophic.
Another great example of digital transformation is Uber. When Uber launched their app the taxi industry didn’t take it lying down, they eventually launched their own competitor apps – the problem was that their model didn’t scale, different taxi suppliers had different apps creating unnecessary friction to adoption, and most of all they didn’t tackle one of the core components of the Uber platform – the ability to rate drivers and customers. Uber created trust and promoted quality while the taxi industry relied on the fact that they were the incumbent – a terrible strategy for anyone paying attention to our recent history in disruptive innovation.
The last example I want to mention is my favourite cautionary tale. Kodak. Kodak deserves a special mention because they knew what was coming and had actually developed a prototype digital camera in the 70s. Through a combination of short-sighted thinking and greed, Kodak decided to fight back against the digital revolution in favour of their cash cow, selling film and printing photos. This led to Kodak filing for bankruptcy in 2012 – a spectacular fall from grace for one of the largest companies in the world.
So what about the financial services sector?
What has not occurred is any true disruptive innovation in how households, businesses and financial service providers engage and interact in order to achieve their objectives.
As an Australian, I want this transformation to start from our home and be our export to the rest of the world. We have the knowledge, the capability and most of all the culture and mindset to make it happen. Our retail industry is already being ravaged by overseas disruptors like eBay and Amazon and, while we are beneficiaries of this new and amazing experience, I would much rather we were also the founders, shareholders and employees of those companies.
We cannot let our financial services industry suffer the same fate as the retail sector – the opportunity is clear and it is our responsibility to take it.
How can we make this happen? Every institution and financial services provider needs to ask themselves today, “What investments am I making in disruptive innovation?” It doesn’t need to be big, just enough, think of it like paying insurance against the potential of being disrupted.
For larger institutions: Are you experimenting with new ways of achieving the core objectives of your customers? Smaller service providers and sole practitioners: Are you taking advantage of the new technologies available to you and attempting to reimagine how you, your customers and your partner service providers can be working together?
At myprosperity, our newest experiment is Rooms. This represents a start to our own disruption – how we (the myprosperity team) work with our users to not just digitise how they currently work, but to work with them to transform the way they operate. This will lead to significant benefits for our users and their clients – achieving their objectives easier, faster and with a customer experience that they can be proud of.
Don’t let yourself become another cautionary tale of the ongoing digital revolution! Digitisation is the enabler of transformation and it is time we all start taking this opportunity seriously and look to uncover the innovative opportunities available to us to transform how we operate within our organisations and with our customers. Real transformation in how you, your team and your customers operate and communicate will lead to revolutionary benefits to all people involved within the systems we all operate.
Chief Product Officer at myprosperity
With a background in product innovation and agile management consulting for organisations such as IOOF, NAB, ANZ, PageUp and Xero, Josh brings over 13 years of knowledge in product innovation to the myprosperity team.