Ever since Clayton Christensen wrote The Innovator’s Dilemma almost 20 years ago, institutions have been wrestling with the concept of sustaining technologies and disruptive technologies. Sustaining technologies enable existing companies to improve existing businesses. Disruptive technologies usually destroy existing businesses. For taxis, GPS was a sustaining technology and Uber is a disruptive technology.
All those who wore red t-shirts to the party are targets for disruption. A KPMG report on the Australian financial services industry released last year said that disruption threatens 25 to 30 per cent of existing banking revenue and, further ahead, it will endanger 50 per cent of bank revenue.
Rachel Botsman, who identified the new economy earlier than most, says finance is the sector that has the highest risk of disruption because it has so many retail outlets and middlemen, trust in the system is low, there are many restrictions on access to money and there are complex fees and processes around it.
Yet, she says, “banks still see this as fringe and they think many of their core businesses will remain intact. They’re not asking, what is going to be the role of the bank in five years time? They don’t see that they’re losing control of the distribution of value. They see it as digital or techie but not as a system change.”