fbpx
HomeNEWSDigital disruption – are Kiwi banks being challenged?

Digital disruption – are Kiwi banks being challenged?

It happened with music, it happened with video and it happened somewhat with books – digital disruption is upon us and gobbling everything in its path. We look at how New Zealand banks are surviving in the digital age.

For those who aren’t sure, digital disruption is the change that happens when new digital technologies and businesses affect the value or importance of existing goods and services.

rnrn

rnrn

It’s happened in the retail industry time and time again – think CDs and digitally downloaded songs, video tapes and Netflix and paperback books and e-books.

rnrn

rnrn

Banking hasn’t yet had a turn at being disrupted – but many say it’s happening right now.
rn
rnAccording to the Millennial Disruption Index, those dreaded, tech-savvy 18 to 34-year-olds are the ones causing the banking disruption.

rnrn

rnrn

Over half (53 percent) don’t think their bank offers them anything different than other rival companies.

rnrn

rnrn

As well as this, 71 percent of millennials would rather go to the dentist than listen to what banks are saying.

rnrn

rnrn

The four leading banks in the US are all featured among the top 10 least loved brands by millennials.

rnrn

rnrn

Most believe that the way they access their money (68 percent) and pay for things (70 percent) in the future will be totally different.

rnrn

rnrn

Not all are convinced banks will become completely irrelevant, though.
rn
rnJust a third (33 percent) believe they won’t need a bank at all.

rnrn

rnrn

Nearly half are depending on tech start-ups to overhaul the way banks operate.

rnrn

rnrn

They reckon that innovation will come from outside the industry instead of from one of the banks themselves.
rn
rnMost (73 percent) would be more excited about a company like Google or Apple bringing out a financial service than a bank.

rnrn

rnrn

Apple has taken this useful morsel of information and run with it, launching Apple pay last year in the US and most recently, the UK.

rnrn

Google has also launched a Google Wallet, allowing customers to send people money over email.
rn
rn

rnrn

rnrn

Another sign of the changing times is the rise in financial tech, or “fintech” companies – and a lot of the pioneers in this category are coming straight out of New Zealand.

rnrn

rnrn

There are the market dominators, Vend and Xero, but there are also many up-and-comers.
rn
rnA recent top 100 report by the Technology Investment Network showed innovative Kiwi tech companies had the top revenue growth.

rnrn

rnrn

Pushpay, a payment service, topped the list of hot emerging companies.

rnrn

rnrn

It allows users to pay anyone through a phone app that has their debit or credit card details loaded, eliminating the need to have a banking app.

rnrn

rnrn

Serko, another Kiwi company mentioned on the list, helps organise employees’ cash claims, mileage, allowance and corporate credit card expenses on its cloud-based system.

rnrn

rnrn

Other companies that­­ were listed as ones to watch included Transaction Services Group and Invenco.

rnrn

rnrn

There’s also peer-to-peer lending, where people can borrow from strangers at lower interest rate than a bank.
rn
rnHarmoney is one of the first to delve into this in New Zealand, and another digital disruptor saw the value in it.

rnrn

rnrn

Trade Me acquired a 15 percent stake in the company for $7.7 million earlier this year in January.
rn
rnSurvival of the fittest

rnrn

New Zealand banks are making genuine efforts to keep up with the times and offer digital solutions, so all hope is not yet lost.
rn
rnMany banks are appealing to younger customers and demonstrating their ability to engage with social media channels – ASB is on Snapchat, while Kiwibank recently employed 19-year-old YouTube star Jamie Curry for its ad campaign.
rn
rnWestpac launched an augmented-reality banking app last year.

rnrn

rnrn

rnrn

rnWith the app, customers can hold their debit or credit card in front of the phone’s camera and see their account details pop up in 3D.
rn
rnWestpac said the app will enable customers to do 90 percent of what requires a visit to a bank online via their phone.
rn
rnASB recently gave its traditional piggybank, Kashin, a virtual makeover by introducing a new moneybox called Clever Kash.

rnrn

rnrn

rnrn

Clever Kash aims to teach kids the concept of money in an increasingly cashless society.

rnrn

rnrn

Parents use an app to visualise putting notes and coins into their child’s cashless moneybox, when it’s really just going into the kid’s bank account.
rn
rnANZ took steps earlier this year to make its popular banking app goMoney available as a mobile wallet through Semble.

rnrn

rnrn

rnrn

The contactless payments can be made through the customer’s Android phone.

rnrn

rnrn

It hasn’t launched yet, but ANZ started building hype for it in March this year.

rnrn

rnrn

With New Zealand banks competing with one another to be the most innovative and digitally savvy, none have felt the brunt of digital disruption – yet.
rn
rnMost banks are aware of it, but not running scared.

rnrn

rnrn

After launching contactless payments in June, ANZ chief Mike Smith told The Australian he wasn’t worried about disruption in banking, as it helps keep complacency at bay.

rnrn

rnrn

“Am I worried about it? No. Are we very aware of it? Yes,” Smith said.

rn

Rate This Article: