Age of behaviour-changing innovation

Mobile wallets can bring disruptive transformation in banking industry.

LAHORE: Since the industrial revolutions of the 18th and 19th centuries, humankind has experienced a series of ‘disruptive innovations’ which have upset the status quo and created new markets and value chains.

Such a disruption is inevitably accompanied by behaviour change of the consumer as in the case of how we have moved from buying albums from CD stores towards downloading individual songs from iTunes. In the retail banking industry, we believe that similar disruption of conventional branch banking accounts is afoot with mobile wallets poised to completely change the way consumers make payments.



The introduction of simplicity, convenience, accessibility and affordability are the hallmarks of disruptive innovations; they do not necessarily have to be advanced technologies. The secret lies in disrupting the behaviour of people – getting them excited enough about something to change how they behave.

Amazon, Netflix and Apple are classic examples having disrupted entire value chains and completely changed the behaviour of customers. In a world where businesses always struggle to anticipate and keep up with changing customer behaviour, driving behaviour is a game changer – any company that can successfully accomplish this will take a commanding position in its respective industry and it will take quite a while for competitors to catch up.

Information age

The onset of the information age has led to an exponential rise in the frequency of disruptive innovations; each decade in the last half century has seen an innovation that has driven drastic increases in business productivity.

The graph depicts how lifecycles of technology have driven innovation and productivity. From the mainframe era (approximately 100,000 computers worldwide) through the PC era (approximately 100 million computers worldwide), we are currently in the age of the SMAC Stack (computers approaching approximately 100 billion). The term SMAC refers to the ‘stacking’ of four technologies:

Social technologies allow for the rapid sharing and creation of knowledge over social networks; this enhances collaboration and information distribution across a business.

Mobile technologies are bringing about an era of ubiquitous connectivity. Users are now able to access information anywhere any time with ease.

Analytics allow companies to deconstruct new forms of data in the cloud and generates unprecedented insight scalable to enable smart boardroom decision-making in real time.

Cloud technology lends businesses a newfound agility, breaking down the barriers of geography and cutting the costs associated with physical server maintenance. With limitless scalability, the cloud powers the transformative combination of social, mobile and analytic technologies.

The term ‘SMAC Stack’ was originally coined by US firm Cognizant Technology. This concept is also referred to as ‘Nexus of forces’ or ‘Third Platform’, but SMAC sounds much better to us!

In the age of SMAC Stack, the transfer of value chains from the physical to the digital plane makes it easier to influence customer behaviour which is why most of the commonly cited examples take place within the past 10-15 years. For example, the power of Facebook lies in the fact that it engages millions of users several times a day and is in a position to change behaviour by introducing new features and experiences.

Digital wallets

The conventional bank account in its current form is decades old and the cheque book has had its day. Why fill out loads of paperwork and then wait an entire week for your bank account to open?

We believe that just like anyone can now purchase a movie or a music album online while sitting at home and begin consuming the product right away, a customer should be able to make a phone call, get a wallet activated within hours and start using it right away with the accompanying plastic being delivered to his/her home the next day. This is the kind of disruption the digital wallets are promising.

Nowadays as companies venture into other industries in search of grown, non-banking companies such as Google and Starbucks are trying to disrupt the payments space with their own digital wallets. Unless banks take the bold step of disrupting themselves they will be reduced to a feeder channel performing a warehousing function; others will take centre stage and the resultant ownership of customers.

This sounds straightforward to outsiders, but is actually not so easy given that banks are conservative organisations and very protective of their existing revenue lines. When someone says ‘innovation’, a lot of people in the management hear ‘cannibalisation’. It is important to realise that this ‘cannibalisation’ is actually a preemptive strategy against ‘erosion of market share’.

Should banks choose to go this route, they will find they hold a big advantage in that they have thousands of staff and millions of customers with whom they are already interacting digitally through several channels. The global benchmark for an ‘active’ customer is that he/she comes into contact with the bank between three and six times a month.

If through the digital wallet we can manage to change this to 10-20 times a day for several 100,000 customers, we believe we can bring about a disruptive transformation in the banking industry. We believe this will introduce a new level of convenience for our customers and result in a large amount of savings in terms of time and money. Once our customers recognise these benefits, we will automatically witness the behaviour change that is our Holy Grail!

The writers are members of the digital banking team of a major commercial bank

Published in The Express Tribune, March 17^th, 2014.

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