Disruptive Innovation

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Disruptive Innovation
AMInstitute Leadership Development Conference
2008 Charis Palmer - Managing Editor
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Discussion topics

• Online Banking Reviews predictions for 2008
  were we right?
• Some useful stats
• Disruptive innovation what does it look like?
• What this means for mutuals

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Foresight Publishing

• www.onlinebankingreview.com.au
• www.retailbankingreview.com.au

bankingreview.blogspot.com
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2008 predictions

• Mobile banking madness
• Web 2.0 applications grow
• Start-ups deliver inspiration
• Customers drive design
• More direct plays
• Payments innovation pain
• SMS under fire

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2008 Predictions

• Mobile banking madness

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Mobile banking madness
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Mobile statistics

• TowerGroup forecasts US users will rise to 40m by
  2012
• Bank of America has 1m users 4 of 25 million
  online banking users
• 2-3 uptake in UK
• SMS more user friendly
• iPhone may be the killer app
• Mobile payments shouldnt be overlooked

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Web 2.0 applications grow
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Open source saving
www.smartypig.com
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Deposit auctions
www.moneyaisle.com
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Peer-to-peer lending
www.fosik.com.au
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P2P Forecasts

• Social lending platforms will grow to control 10
  per cent of the worldwide market for retail
  lending financial planning by 2010 Gartner
• A study by Online Banking Report predicts that by
  2011 person-to-person lending in the US could
  surpass 100,000 loans a year, worth more than
  US1 billion.

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Credit crunch benefits P2P
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Start-ups deliver inspiration
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Start-ups deliver inspiration
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Wesabe mobile
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Consumers drive design
www.bemoneyconfident.com.au www.nab.com.au/life
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Customers drive design
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Consumer feedback
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The good, the bad the ugly
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Blogging

• 44 per cent of Australian Internet users have
  published their thoughts or otherwise created
  content online
• Only 1 of financial institutions have blogs but
  25 of consumers are reading or engaging with
  blogs
• More unique users visit Telstras Now Were
  Talking blog than read the Australian Financial
  Review

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More direct plays
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More direct plays
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Payments innovation pain

• Faster payments
• Easier switching
• Direct charging
• More mobile payments plays

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Payments innovation pain
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SMS on borrowed time
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Innovation that drives change

• Clayton Christensen The Innovators Dilemma
• Sustaining innovation improves performance of
  existing products for mainstream consumers no
  downfall of established companies

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Disruptive innovation

• Disruptive innovation will appear as cheaper,
  simpler and even with inferior quality compared
  to existing products, but some marginal or new
  segment will value it can lead to downfall of
  established companies

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Sustaining innovation

• What is disruptive and what is sustaining?
• Sustaining
• Online banking
• iPhone
• Consumer driven design
• Mobile banking

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Whats disruptive?

• Disruptive innovation
• iPod
• Peer to peer lending
• Direct channel brands
• Deposit auctions, but not in their current form
• Blogging
• Social networking

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Future disruption
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Reviews and recommendations
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Extinction timeline
www.nowandnext.com
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Will mutuals become extinct?

• Can you identify with and meet the needs of a
  dedicated community?
• Can you sell something other than the lowest
  price?
• Can you stand up to consumer scrutiny?
• Can you build useful tools and services that
  customers value and will tell their friends
  about?

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Thank you!

• Questions?
• Charis Palmer
• cpalmer_at_onlinebankingreview.com.au
• [phone]
• bankingreview.blogspot.com
• www.onlinebankingreview.com.au
• www.retailbankingreview.com.au