Disruption is an opportunity, not a threat

I have a dual perspective on the battle between innovation and disruption in the banking industry. It's one that leads me to believe banks have more to gain from disruption than to lose from it. I'll explain why.

On one hand, I've worked on some of the first internet banking projects back in 1988 with Prodigy, a dial-up service which went nowhere.

"Banks have a huge customer base, trusted relationships and, and what many people forget - a long history of innovation."
Scott Collary, Chief Information Officer | ANZ

I've done corporate venture and strategic technology work during the dot com heydays where I saw start-ups 'disintermediate' banks and generate market caps overnight, way in excess of some of the largest global banks.

I've lived through many trials that were also way ahead of what customers could absorb. Yet I still see headlines, blogs, newsfeeds published regularly about 'the demise of banking' due to lack of innovation. So in some ways I'm sceptical.

On the other hand I am generally an excited and enthusiastic person – because I lead a tech organisation in the banking industry today.

We are challenged daily. We see innovation in our shops, across the industry and with new potential partners and broad thinkers happening at every turn.

If you like technology and like seeing how it can improve things for your customer and your business then it's a great time to be in this industry.


The big question is 'what is disruption'. Are banks being disrupted if we let someone else move money outside of sovereign regulation? If someone services a market we've chosen to avoid for risk purposes? If Facebook allows a user to register a debit card to transfer money?

Inherently, a debit card is a better vehicle for us for low value payments – better than cheque or cash. Is Facebook even really a competitor in this space? Essentially they are helping us to take cost out of the system. That sounds like something that works for us, not against us.

I don't think we should see all disruption as a threat – often it's an opportunity. Banks have a huge customer base, trusted relationships and, and what many people forget - a long history of innovation. Credit cards, electronic swipe and ATMS to online bill pay and mobile apps all came from the banking industry. Our challenge now is to continue to innovate at the pace our customers demand.

Banks are at a point in where they must shift gear and consider what to do, and do differently, to accelerate their transformation into leading institutions for the digital age. We need to rise further and faster to this challenge to meet the opportunities that lie ahead.

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I joined ANZ's board as they visited Silicon Valley earlier this year to see how companies disrupt, deal with disruption and transform their businesses. What we had confirmed for us – and it's not 'news' – is that the customer is key.

Start-ups have the ability to place the customer experience at the centre of their thinking. We too need to do this – we need to translate this from a long-held positive aspiration into consistent reality. Innovation is not just about creating a digital bank – the real challenge is building a business that understands the customer and can quickly adapt.

Disrupters and start-ups are simply business people who see a need and provide a service. Customers demand convenience, and if history tells us anything it's that service expectations never fall. Banks need to be just as good – or better – than other service organisations and the rising Fintechs.

Unlike the old days the barriers for entry now – thanks to new technologies – are no longer as high. Investment money is plentiful and more and more organisations will start playing in this space unless banks step up and give our customers what they're looking for.

We can't use our incumbency, legacy systems, regulation, and old operating models as excuses. Our customers, investors and the regulators expect us to be good all round.

While we need to be competent at everything, we also need to have a laser-like focus on what makes each of us great. I've seen many examples where large organisations eventually end up producing products or services that are too internally focussed, expensive, or complicated for many customers to adopt.

Every five years or so banks decide they need smarter people and they hire from Silicon Valley – and most often these hires fail because the corporate 'immune system' chews them up and spits them out.

This time in Silicon Valley I met many people who were former bankers – they were there because, as bankers, they know about compliance, processes and how to deliver in a regular repeatable way.

Some people think this is old school, but frankly, it's what works. Blending that discipline and focus on execution with speed, agility, and testing is crucial for success. However, being innovative and agile does not mean quality can suffer.

You can't say to a banking customer “we'll get your statements correct 10 times out of 12”. You can't say to a business “we'll probably process your transaction correctly this week”. Few things are more critical than financial transactions and getting them right.


As banking institutions, the middle ground is where our opportunity lies. We are a trusted provider, to consumers and small businesses through to the largest global companies. Not everyone can be excellent at everything but we have the opportunity to be better than we are.

I think that it's in our hands to determine whether we'll be disrupted or stay relevant over time. Well make that choice by how customer-focussed we are and how driven we are by customer experience.

How do banks stay current? We can start by fostering a diverse work force, innovating from within, and leveraging the value-addition from external partnerships we will stay current.

We will need to flex our organisational and governance models and applying the transformation not just in technology but across the enterprise. By knowing what our customers want, by understanding the data we have and by continually transforming and adopting digital processes.

Given all that, I see more opportunity than threat.

Scott Collary, Chief Information Officer, ANZ

This is an edited version of the speech Scott made at a Trans-Tasman Business Circle event in September.

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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