Digital transformation is a hot topic for banks and credit unions today. And for good reason – the financial services industry is at the highest risk for digital disruption according to the Digital Pulse report. Banking isn’t the only business model that needs to adapt to modern technology to survive. Other industries are also at risk for going out of business and are finding ways to partner and innovate to remain relevant. To inspire your bank or credit union’s digital transformation, we took a look at a few industries that are facing digital disruption and what they are doing to find their next sustainable business model.
A Kodak Moment
The photography industry has seen its fair share of disruption. Taking photographs prior to the digital age meant buying film and printing photos. Today, nearly everyone has access to a digital camera right from their smartphone and shares their digital photos on social media.
One company that got disrupted to the core was Kodak. Founded in 1888, the former king of photography filed for Chapter 11 bankruptcy protection in 2012 and was forced to figure out a way to reinvent themselves. In 1975, they invented the first digital camera but failed to invest in it. They also acquired a photo sharing site but sold it to Shutterfly the same month Facebook bought Instagram. Today, they are entering the world of cryptocurrency, launching KodakCOIN and a new platform aimed at helping photographers with licensing, and are finally profitable again.
Kodak may be the oldest player in the photography industry to stay relevant, but relative newcomer Chatbooks came on the scene as a new photo album company and quickly pivoted to offer subscription books of one’s Instagram and Facebook picture feeds. By offering automatically printed products of the images people were already taking, they solved a problem that technology created, and developed a recurrent, sustainable revenue stream in the process.
Facing the Music
The music industry has also faced major change over the decades. Record stores and radio stations got disrupted by the rise of digital music by new challengers like Apple, YouTube, Spotify, and Pandora, who made discovering and listening to music faster, cheaper and easier for its end customers. Companies like Tower Records that failed to recognize the digital shift happening within their industry eventually paid the ultimate price of becoming obsolete and going out of business.
However, this industry isn’t afraid to innovate. Some companies are now working with blockchain technology to create new services to help music producers, distributors and consumers tackle the issues of piracy and payments. Musicians are also discovering ways to earn revenue through paid streaming services like Pandora and Spotify while tapping into brand partnerships on social media where they can harness the power of their fans.
The Writing on the Wall
The print industry’s business model is changing, whether they like it or not too. With the rise of digital, this industry has faced significant challenges to stay afloat. Newspaper readership has declined significantly now that we can read and write from the comfort of our digital device.
To stay afloat, the printing industry is looking to find new opportunities in areas like the Cloud, mobile, 3D printing, managed services, and partnerships. Print vendors are finding ways to develop new workflows and services to help manage the digital transition.
Even book publishing has changed their workflow to how they find new writers. Instead of soliciting finished manuscripts to read and possibly publish, most new best-selling authors hone their skills by building out a robust blog and following, keeping up with the latest blogging technology while staying true to the age-old skills needed to write well, and get paid for doing it.
Banking on FinTech
It’s no secret that the financial services industry has been facing disruption for quite some time. The days of people flocking to the bank branch to cash their checks on their lunch break is over as mobile banking apps and online banking has changed the way banking gets done. The areas of banking that are facing the highest risk of disruption from external players include payments, banking, insurance and asset or wealth management according to the PwC’s Global Fintech Report.
To avoid allowing Amazon or Apple to take over this industry, many banks and credit unions are looking to partner with fintech companies. In fact, PwC found that partnering with fintech is up 32% from 2016 to 45% in 2017. They also reported that:
- 82% of incumbents are expected to increase fintech partnerships by 2022
- 77% are expecting to adopt blockchain by 2020
- 20% is the expected annual ROI from FinTech related projects
Some financial services companies are launching digital-only banks to find a quick and easy way to increase revenue while reducing operating expenses. Others are looking to replace their core banking system to eliminate bolt-on integrations and enable more APIs, while others are looking to partner with fintech companies to develop and launch new products.
Whatever your bank or credit union is looking to do, it’s clear that now is the time for digital transformation and innovation. If you’d like to speak with us about how we can help your financial institution avoid digital disruption and embrace digital-first banking, contact us.