Strategies to counter digital disruption
With the introduction of the computer, the systems for business activities witnessed a shift in paradigm and dynamics. This change brought about the demise of any business enterprises that revolted against the changing situation. However, technological improvement has always been set to benefit those who embrace and utilize the leverage it presents. The modern world is however based on the systems of communication, whose improvements can be likened to the advent of the computer. The current means of communication that seems reliable in presenting real-time connectivity is the internet. This resource has quickly turned from a simple communication tool to a means of reaching clients and addressing their needs, and the fanatical sector is equally feeling its reach (Vashistha, 2015).
In the banking industry, digital disruption is currently the most considered topic. According to (Morel et al., 2015; Robinson 2015; Vashistha, 2015), this concept speaks to the changes in the dynamic of financial business activities caused by the application of technology in the utilization of technologically advanced systems in the presentation of financial solutions. Such systems present to the client the succulence of a cheaper, convenient, and time-saving situation. A good example of such would be the on-line lending practice. While the client is not accorded the personal services of an agent or a broker, they enjoy the provision of cheaper rates, while not having to leave the comfort of their homes for stuffy banking halls and endless queues (Morel et al, 2015).
While such is the level of competition presented to the traditional banking system by digital disruptions, there are certain means that can be utilized in ensuring customer satisfaction, and hence, protection.
The first strategy that can be employed is proper market research and understanding the clientele dynamic. As is the case with every form of good or service, different individuals have an array of varying preferences. Likewise in banking, while there are those who hold a preference to the online concept of comfort, there are those whose preference remains with the traditional system. According to Morel et al. (2015), most of those with a preference for online loan acquisitions have had previous experiences in the process of acquiring a loan or mortgage. Hence, they possess confidence in their decision and only require a simple process. However, there are clients whose interest begins with learning the ropes and are first-time loan seekers. This category would prefer the broker, and is hence to be the target of traditional banks in marketing, as their response rates are almost certain.
As mentioned before, advancements in technology demand one of two things, ship up or ship out. In the banking circles, the most appropriate analogy would be “sink or swim”. These two analogies present the idea that despite the pressure of shifting dynamics, every stakeholder has the capability to choose whether to accept the prevalent changes or not. However, either choice has consequences that will determine the relevance of the individual or business. In which case, it seems wise that any person with the capability to swim should put most if not all of his energy into the activity that will ensure their survival, swim. Every business savvy bank or broker should swiftly come to terms with the relevance of digital disruption and endeavor to grasp its underpinnings to maintain their relevancy in the market as well. This mix in technology and unmatched experience will eventually result in the provision of improved service by the traditional banking system. According to (Morel et al, 2015; Robinson 2015), the adaptation of banks into digital service provision should target:
- The introduction of social media platforms for networking – such platforms will allow the bank to improve their records due to access to the basic client personality, hence, presenting the opportunity for understanding the client. This continual exchange of information will allow the bank to provide the traditional advisory service while utilizing current trends in technology, thus, preventing unnecessary loss in clientele. Besides understanding their consumer, the bank can be able to provide information of their competitive services online. In addition to this, social networking has currently become the hub for information dissemination between like-minded individuals. Thus in providing a platform like eToro, that presents this to their clients, the bank will seal up a major loophole and prevent hemorrhage.
- Leveraging mobile technology – while the mobile banking may be in its weaning stages, if the success of Safaricom Kenya’s M-Pesa initiative is anything to go by, investment in proper, efficient, secure, and effective mobile banking systems will inevitably present a boost for the bank.
- The introduction of new disruptive agenda – by going against popular notions of leaving the development of innovative ideas only to the new entrants, banks can prevent client losses. As mentioned above, the traditional system has ample experience in consumer requirements and the gaps available in the industry. By promptly sealing these gaps the issue of client loss becomes history.
As mentioned in the opening remarks, digital disruptors offer competitively low prices and interest rates as compared to the traditional system. One of the key principles of the Kaizen philosophy is the eradication of redundancy and wastes (Zhang, 2008). Reducing the costs for the bank will ensure their maintenance of clients over time. Despite the possible claims of running costs, the technology required to ensure efficiency is present. Hence, this concept of cost reduction can and should be explored.
Morel P., Teschner C., Rhode W., Saumya S., Veissid A., Riera A., Ramachandren S., and Bouley G. Global Capital Markets 2015; Adapting to Digital Advances. New York: Boston Concultancing Group, 2015.
Robinson, B. Lessons from banking industry disruptors. 18 October 2015. 18 October 2015 <http://internationalbanker.com/banking/lessons-banking-industry-disruptors/>.
Vashistha, A. “The new rural consumer in a digital world.” Accenture Business Journal for India (2015): 8-12.
Zhang, Kai. Archetype and Allegory in Journey to the West. Masters Thesis. Victoria: University of , 2008.