Achieving Disruptive Growth in Banking

The availability of new tools redefines the rules that players abide by – this has been true of every market and industry in the world. Whenever there is a paradigm shift in technology, new businesses emerge, and older businesses are either replaced or diminished. The aim of many businesses right now is to achieve disruptive growth by using the latest technology available. Banks are, understandably, not comfortable with disruptions unlike most other businesses. However, there is a way to achieve disruptive growth for banks while maintaining business continuity and overall stability.

What is Disruptive Growth?

The normal way to achieve growth as a business is to be more efficient in doing the same things that other businesses are doing. Think of Pepsi and Coca Cola – both compete with each other and are continuously trying to grow. Both make similar products, use similar marketing mediums, and try to outdo each other.

Disruptive growth, on the other hand, is growth that is achieved by changing the way an industry operates or a service is delivered. Instead of doing the same thing that other businesses are doing, disruptive businesses rework the existing business mechanisms to make them more efficient for customers.

The advantage of disruptive growth is that it is explosive in nature. While businesses using similar strategies define success as being a few percentage points better than the competition, it is possible for disruptive businesses to achieve a dominant position in the market.

Disruptive Growth in Action

Netflix is the best example of disruptive growth. Not because of just how amazingly successful Netflix is, but because they managed to achieve disruptive growth not once but twice. Netflix started as a disruptive business. The founders looked at Blockbuster and realized that they could replicate the same business model over the internet. Instead of having to drive to Blockbuster to rent a DVD, customers would be able to select the DVDs they want and have them mailed to themselves.

Then Netflix disrupted its own business model as an even more efficient model. As Internet’s speed increased across the world, Netflix realized that streaming was becoming a viable way of delivering content. There was no need to send DVDs to customers via post – the television shows and movies people wanted could now be directly streamed from Netflix’s servers. In this way Netflix achieved its 2nd disruptive growth.

Obstacles to Disruptive Growth in Banking

The financial sector must comply with numerous laws and regulations. Simply, it is not possible to do away with all the old processes and rethink every banking rule that exists; it would quite literally be out of box to do. So, how can a bank achieve disruptive growth?

The million-dollar answer lies in the technology. There are technology solutions that reinvent the way banks manage risks, compliance, IT security, and much more. Since these solutions have been designed specifically for use in the financial sector, they achieve all this and much more while ensuring compliance with all the laws and regulations that banks must abide by. These provide banks better solutions to work with, automate many banking processes, and make it easier for banks to understand and mitigate emerging risks. In essence, bank tech enables banks to achieve disruptive growth in risk and compliance domains by exponentially increasing both productivity and the capabilities of the risk and compliance teams.

Why Disruptive Growth is Essential

Disruptive tech solutions that empower banks to operate more efficiently are slowly become a necessity for banks across the world. The biggest threat that banks need to manage over the next decade is to ensure that they are not the business that is replaced by the disruptive growth of a new type of business. Some of the largest businesses in the technology sphere are slowly encroaching on the banking sector. Apple and Google are already offering a payment platform and can easily offer more money services.

These born-digital competitors never plan to act as traditional banks. They instead will be attempting to deliver services that are similar to banking while at the same ensuring that they stay far enough away from banking so that they don’t have to abide by the same laws and regulations. The use of technology in risk and compliance management is a chance for banks to put up defenses against these upcoming threats. If a bank uses the latest technology to achieve operational efficiency, it will be able to deliver services that are efficient enough to keep their customers from going to born-digital competitors.

There are many different types of bank tech solutions available in the market aimed at different types of banks. 360factors delivers solutions that are aimed for mid-sized banks. These solutions enable banks to achieve next-gen functionality without disrupting any existing business processes or running afoul of any regulations. Get in touch with our risk and compliance experts for a demonstration of what our solutions can do.