Disruption is to cause (something) to be unable to continue in the normal way: to interrupt the normal progress or activity of (something).
As a parent of four, my life is in a constant state of disruption. It seems my kids teach me something new almost daily. One of my greatest challenges is to understand that their experiences and interactions are rarely the same as the ones I had as a child. It’s unfair to assume that they will ever see the world the same way I do. I have to work to understand, adapt to and embrace their changing environment so I can relate with them.
A similar experience is playing out in business. As of 2015, Millennials have become the largest generation in a rapidly evolving workforce. We’re in the midst of a significant shift from a long history dominated by the Baby Boomer generation to a new era marked by digital everything. What does this disruption mean to the banking industry and your growth strategy?
According to the Millennial Disruption Index, a three-year study of the changes happening at the hands of people ranging from teen to thirty-something in age, the risk posed by disruption is highest for the banking industry.
53% don’t think their bank offers anything different than other banks
1 in 3 are open to switching banks in the next 90 days
All 4 of the leading banks are among the 10 least loved brands by Millennials
33% believe they won’t need a bank at all in 5 years
Millennials believe banking innovation will come from outside the industry
The reality is, these comments are evidence that legacy models need to change, or they risk obsolescence. For banks in particular, facing this reality might be particularly hard because they must adapt to disruption from so many other directions, including regulations, technology, security and customer behavior.
The question is, how do you move from a position of reacting to change to one where you are preactive? How can you seize the opportunity to rewrite your history before it happens to you? In his book, Flash Foresight, Daniel Burrus examines opportunities that can be found when we take the initiative to go opposite from the competition.
“In searching for the real problem we want to address, it’s not always easy to know where to look. One way to help tease that insight to the surface is to note where everyone else is looking and then look in the opposite direction.”
The banking industry is known for being risk-averse. It’s a natural byproduct of dealing with ever-changing regulations. Historically, banks have focused on developing products and services that it wants to provide to its customers. Those offerings have been pretty standard from bank to bank. But what if you took the opportunity to go opposite? What if you focused on creating ways to pull customers in so you could provide solutions to what they truly want and need?
The Millennial demographic is almost universally equipped with the ability to research, find and engage the solutions they want online. It makes perfect sense to involve them in designing your offerings. But before you flip the traditional approach on its head, you have to figure out the best way to start.
Scott Bales, Managing Director of Innovation Labs Asia, proposes four C’s for bridging the digital gap that is so critical to Millennials and how to embrace the needs and changes of consumers:
- Context – C.S. Lewis once said “Failures are finger posts on the road to achievement.” To truly embrace innovation and transformation, banks must design their organization to be able to accept failure and capitalize on the success that comes from its lessons.
- Culture – Embrace an environment of curiosity where employees are empowered to interact and engage with others whether it is colleagues, customers, vendors, partners and competitors.
- Capabilities – Provide training and skills development so your employees become sources of knowledge and solutions, and not task specialists.
- Collaboration – Realize that the best opportunities may come from those with whom you haven’t yet collaborated. It is a fundamental shift in understanding that customers do not buy loans. They buy homes, businesses, real estate, equipment and goods. Collaborating and partnering with others who provide value to the decision process can exponentially enhance the value of your services and your brand.
As the Millennial generation is making so clear, context is changing – with or without our involvement. They are hungry for collaboration. Is your bank ready to turn disruption into opportunity by engaging them to help you take a fresh look at your culture, knowledge base and services?
This is the fifth installment in a series about using foresight to create winning business strategies.
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