Disruptive technologies are changing the banking landscape
Merchant companies such as Google and Facebook are rapidly changing the market structure and displacing the traditional roles of banks. Are banks ready to adapt? June 07, 2012 | Baron LaudermilkBanks are bending over backwards to change the way consumers, corporates and banks communicate. Social media, smartphones, and third party merchants are changing the role of traditional banks, and how they operate and deal with customers. This is a time when “disruptive technologies” are creating a new market and dislocating the banking industry. For banks to maintain a close relationship with their clients, they must learn how to tap into that person’s life via their smartphones, and social media outlets. Banking is not just about people conducting their businesses in a branch anymore, it is also about leveraging on various channels used by customers on a daily basis. Disruptive technology is a term coined by Harvard professor Clayton Christensen, Harvard, starting with an article he wrote in 1995 with Joseph Bower called “Disruptive Technologies: Catching the Wave”. Christensen described the process by which a product or service takes root initially in applications at the bottom rung of a market and rapidly moves up, resulting in the displacement of earlier competitors. Figure 1. Disruptive innovations
There are countless examples throughout history that depict this concept. The key is that a new technology does not replace the status quo; it is when the new technology becomes prevalent and makes the competitor obsolete. Once the new technology begins challenging the dominant technology, it then becomes a “disruptive technology.” Here is an example that clarifies “disruptive technology.” The introduction of the automobile was a revolutionary technological innovation, but it was not a disruptive innovation, because earlier car models were expensive and did not disrupt the market for horse-drawn vehicles. It was only when Ford introduced its Model T in 1908 at a lower price that the masses could aff... Please login to read the complete article. If you already have an account, you can login now or subscribe/register.
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