Here’s why banks can be disruptors

Disruption is the buzzword of today and this is nowhere more prevalent than in banking.

But there can be a misconception in the fintech community that disruption is just about technology, platforms, gizmos or revolutionary start-ups.

" There is no inherent reason why established players can’t themselves be disruptors."
Matt Boss,Managing director of products and marketing, ANZ

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For me working at ANZ, disruption is about reimagining what companies already do today. It's about making an experience significantly easier or fixing a problem. If you believe this, there is no inherent reason why established players like banks can't themselves be disruptors. It's just about how we tackle the problem and adjust our mindset.

Look, for example, at the well-known success of Uber and AirBnB. It is now widely known that these groups are the world's largest taxi and accommodation providers, respectively, neither of which own cars or hotels.

Then there are 'established' companies like Google and Apple, built on shaping experiences for customers. These groups are now starting to leverage their size, cash and brands to invade new domains, sometimes in cooperation with traditional and established players.

That's where banks come in.


Disruption happens simply because there is a better solution for customers. It is almost never about price but more often it is about convenience, superior service or removing friction. This is sometimes missed in an environment that assumes a new paradigm must mean a new company.

Banks could benefit from moving from a defensive to an offensive mindset. There's no doubt the sector has been a little slow here in the past.

Rather than focussing on defending core businesses, processes or profits, they should simply look at what business they're in and what more they could be doing for customers. Innovation for banks can't just be about doing what we do today but better. Protecting what's “ours" won't work for much longer.

Look at Apple, which Steve Jobs himself described as “the largest entrepreneurial company in the world". Rather than focus on protecting the iPod, Apple has continued to innovate and disrupt itself.

What if banks thought the same way?

Can incumbents like banks really be disruptors? We'd love to hear your thoughts. Share with us by commenting on this story at the bottom of the page or by tweeting @ANZ_BlueNotes or @Matt_e_boss.


Matt asked his followers on Twitter if they thought incumbents like banks could be disruptors. Below are some of the best replies.

Brett King ‏(@brettking) - they can only defend their 'beachhead' to a limited extend. Historically disruption brings new leads

Pam Rebecca ‏(@rebeccapam) - Absolutely. Banks have both resources and talent and can and have changed many times before. #culture is key.

Stephen Huppert (‏@stephenhuppert ) - Unlikely. Think Kodak/Digital Photography, Fairfax/Digital Classifieds etc. Legacy systems + legacy thinking

tennielle press ‏(@gus_pip) - Why not? need to #disrupt our culture & protect / nurture start-up mindset - willing to do a no ROI investment?

Perphy Woo ‏(@perphywoo) - banks are more likely fintech #fastfollower


Banks have the customer base, people, skills and the resources to pursue innovation.

In the 'traditional' lifecycle of disruption, truly innovative people (or companies) start small. New players and start-ups, are on the margin of markets. Some of the hottest areas of disruption in banking are in payments and personal lending.

Kabbage, which uses data generated through regular business activity such as shipping, payments and social media, is able to assess small-business loan applications and provide funding within seven minutes.

Founded in 2009, it's now the largest online provider of working capital to small businesses in the US and UK. Its challenge will be balancing the need to scale with the need to grow profitably.

The Lending Club, established in 2006 and now the world's largest peer-to-peer lender, says it can offer lower interest rates and better returns than traditional banks. Interestingly, banks form a significant part of the group's lending base as they can outsource unsecured lending while holding onto their customers.

However, we don't know yet whether investors will be protected in a downturn. This highlights the fact that, while start-ups add value by disrupting, they still remain untested to some degree.

Banks on the other hand have a proven track record of supporting customers through the economic lifecycle. But we can learn from disruption.

The mortgage sector in Australia was a major market which underwent seismic disruption in the 90s due to new technologies, platforms and business models. Today, mortgage brokers play a key role in financial services.


The lesson is that banks need to find out what customers want and improve their experience. It's not about reducing a process from four clicks to two. That's not disruption, that's hygiene.

We need to be solving real problems, delivering to a gap in the system to provide a better customer experience and using our information to be much smarter.

Today we provide a customer with a mortgage so they can purchase a house. Tomorrow, how do we engage customers from when they're first thinking about buying a home right through to the day they move in? People need more than just the money they don't have. Currently banks do almost nothing to help.

It's about creating eco-systems that currently don't exist. Digital and analytics allows us to do that, to play a more important role in our customers' lives and help them with what really matters.  

That is what Uber and AirBnB and Amazon have done so well. But it's also what Google, through its use of digital and analytics, has done.

In arguing banks like ANZ can be disruptors, I am not claiming incumbents in any industry can avoid disruption. New technology, faster communication speeds, richer data and smarter analytics are all tools that allow someone, somewhere to come up with a better way to service customers or fill a gap that existed in the market.

Smart companies and talented entrepreneurs will do that. But there's no reason why banks can't be among them.

To me it’s about a mindset and thinking about what business we’re really in.

Matt Boss is managing director of products and marketing at ANZ.

The views and opinions expressed in this communication are those of the author and may not necessarily state or reflect those of ANZ.

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