Published on the 24/08/2016 | Written by Beverley Head
Disruptors come in two flavours – carnivore and herbivore…
Enterprises need to develop separate strategies for how they deal with “carnivore” and “herbivore” disruptors according to Robert Wilson, general manager technology, strategy and architecture at Westpac.
Speaking at the CXO Disrupt event in Sydney this week Wilson said that the bank “collaborated or competed head on with carnivores” which can eat an entire existing business model. However slightly more benign herbivore disruptors were competing with the bank for existing fee pools, and it was easier simply to coexist with them.
He nominated Robinhood as an example of a carnivore disruptor. The US based fintech has developed a mobile app for customers to trade shares without paying a fee, making its money instead through offering margin accounts. It’s a direct assault on the banks’ current business model.
Coinbase meanwhile, is more a herbivore; yes it’s offering a bitcoin based digital wallet – but it’s not really an attack on banks’ current operations. There’s no reason a bank couldn’t setup something similar if it wanted.
While Wilson said that Westpac was keeping a keen eye on the competitive landscape, he made clear that he believes the incumbents’ major advantage is their access to troves of customer data.
He said that the real disruption was coming from technology’s impact on customer experience, and that required a fresh approach to dealing with data.
“It’s why banks like us are investing in start-ups…to transform our systems and the way we service our customers,” he said. Part of that could derive from the trusted position that banks hold in society, and the opportunity to monetise customers’ data.
He said that banks needed to collaborate with the “large platform players” such as Facebook and Google, in order to drive value in terms of what was being served up to customers and prospects. That he said would be one of the most powerful disruptive forces in the next five to ten years.
It will need a radical data rethink though, as Wilson acknowledged that banks were still sending three letters to a customer offering credit cards, rather than serving up true value. That, he said, was not about “selling you a mortgage” but working with the customer to get them into a house by providing insight about what the customer could afford and the best way of structuring their affairs.
He acknowledged, however, that there was a degree of immaturity regarding data application, especially given the absence of “some solid regulation around how data should be treated” and the fact that a lot of the banks’ data was still “Trapped in large and expensive Teradata machines” which he said was great for regulatory inquiries, “But really crap for anything useful around what the customer wants to do next.”
