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.
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.
Banking hasn’t yet had a turn at being disrupted – but many say it’s happening right now.
According to the Millennial Disruption Index, those dreaded, tech-savvy 18 to 34-year-olds are the ones causing the banking disruption.
Over half (53 percent) don’t think their bank offers them anything different than other rival companies.
As well as this, 71 percent of millennials would rather go to the dentist than listen to what banks are saying.
The four leading banks in the US are all featured among the top 10 least loved brands by millennials.
Most believe that the way they access their money (68 percent) and pay for things (70 percent) in the future will be totally different.
Not all are convinced banks will become completely irrelevant, though.
Just a third (33 percent) believe they won’t need a bank at all.
Nearly half are depending on tech start-ups to overhaul the way banks operate.
They reckon that innovation will come from outside the industry instead of from one of the banks themselves.
Most (73 percent) would be more excited about a company like Google or Apple bringing out a financial service than a bank.
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.
Google has also launched a Google Wallet, allowing customers to send people money over email.
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.
There are the market dominators, Vend and Xero, but there are also many up-and-comers.
A recent top 100 report by the Technology Investment Network showed innovative Kiwi tech companies had the top revenue growth.
Pushpay, a payment service, topped the list of hot emerging companies.
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.
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.
Other companies that were listed as ones to watch included Transaction Services Group and Invenco.
There’s also peer-to-peer lending, where people can borrow from strangers at lower interest rate than a bank.
Harmoney is one of the first to delve into this in New Zealand, and another digital disruptor saw the value in it.
Trade Me acquired a 15 percent stake in the company for $7.7 million earlier this year in January.
Survival of the fittest
New Zealand banks are making genuine efforts to keep up with the times and offer digital solutions, so all hope is not yet lost.
Many 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.
Westpac launched an augmented-reality banking app last year.
With 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.
Westpac said the app will enable customers to do 90 percent of what requires a visit to a bank online via their phone.
ASB recently gave its traditional piggybank, Kashin, a virtual makeover by introducing a new moneybox called Clever Kash.
Clever Kash aims to teach kids the concept of money in an increasingly cashless society.
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.
ANZ took steps earlier this year to make its popular banking app goMoney available as a mobile wallet through Semble.
The contactless payments can be made through the customer’s Android phone.
It hasn’t launched yet, but ANZ started building hype for it in March this year.
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.
Most banks are aware of it, but not running scared.
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.
“Am I worried about it? No. Are we very aware of it? Yes,” Smith said.