Digital disruption is defined by Gartner as an effect that changes the fundamental expectations and behaviors in a culture, market, industry, or process that is caused by, or expressed through, digital capabilities, channels, or assets. Digital disruption, then, generally signals a shifting consumer landscape. It is important to note that cutting-edge technology is being developed every day, however, the true disruptors in a given industry are technologies that meet an evolving or perceived need. Changing demographic needs are often the catalyst for digital disruption, such as the Millennial preference for electronic shopping and banking.
Companies need to embrace digital disruption to gain or maintain a competitive position in their industry. Disruptors come in many forms. Today's most significant disruptors didn't change the actual product but innovated the delivery of them. The world's largest taxi companies are now Uber and Lyft, completely different from long-standing taxi service model. Through the use of the Uber app, a rider can call, pay for, and watch their transportation status all in one place. One of the largest retailers is Amazon. Their fulfillment and delivery speed disrupted both the retail/business shopping model and the package delivery industry.
Most disruptors are largely ignored in their nascent stages because they infiltrate a mature industry whose dominant players dismiss the new model. For example, Netflix began as a home delivery DVD subscription service and later created the leading video streaming service. But they did not stop there. Today Netflix produces its own television series and movies, which have won numerous Academy Awards. Stephen Spielberg, who headed the Academy Awards Director's Branch in 2019, campaigned to disqualify streaming services from the awards. That same year, the Netflix film Roma won three awards.
Today, traditional financial institutions are warily watching the rise of neobanks. Take Chime for example, the largest US neobank. Chime's user base is projected to grow from 7.4 million account holders in 2019 to 19.8 million account holders in 2024. Perhaps the most significant indicator of the neobank disruption to the financial industry was the creation of a new bank charter category designed explicitly for neobanks. Both the financial services industry and the federal government recognize the disruptive power of the neobank model.
Today, traditional financial institutions are warily watching the rise of neobanks. Take Chime for example, the largest US neobank. Chime's user base is projected to grow from 7.4 million account holders in 2019 to 19.8 million account holders in 2024. Perhaps the most significant indicator of the neobank disruption to the financial industry was the creation of a new bank charter category designed explicitly for neobanks. Both the financial services industry and the federal government recognize the disruptive power of the neobank model.
Your Digital Partner
Connect is always here for you to inject a fresh perspective or reframe ideas into workable digital strategies to help your credit union remain competitive in this changing landscape. A digital partnership with Connect will help your credit union deliver value and a more personalized member experience through your customized digital platform.
We monitor financial and consumer trends to create products and services that align with disruptions in the financial services market. With over 150 third-party partnerships and interfaces, Connect provides the opportunity to tailor digital services to your credit union's strategic needs. Differentiation is at the core of disruption. Cookie-cutter models are a thing of the past (look at the empty shopping malls, for example). At Connect, we know your digital banking platform needs to be unique to your current and future members' needs. Remember the earlier statement regarding mature industry players disregarding the smaller disruptive companies? Let's go disrupt together.
