Published on the 05/02/2015 | Written by Clare Coulson

New technology and globalisation are testing many industries. We explore what digital disruption means, and find an early responder who offers advice on keeping your digitised customers close…

The concept of digital disruption has been bandied about for several years. In 2012, Deloitte released its ‘Digital disruption: Short fuse, big bang?’ paper in which it posited that two thirds of the Australian economy would see significant disruption over the coming five years as digital technologies render traditional business models outmoded and inefficient. Eighteen months later it revisited its report to confirm its predictions and comment that in the industries that were most affected by digital disruption, the gap between digital front runners and laggards continued to grow.

IBM’s 2013 global survey of more than 4000 C-suite executives reinforced the conclusions showing that CEOs now think that technology will be the most important external force shaping the future of their enterprises. Just 10 years ago it was ranked in sixth place. CIOs in the same survey said that they expect the IT function to play a bigger part in enabling the enterprise vision, with mobility solutions, business analytics, cloud computing, collaboration software (both internal and external) and business process management featuring as the key areas of investment over the next few years.

In 2015 the rattling of cages is getting louder on the streets, most notably with Uber redefining the what was once known as the taxi industry (now the personal driver industry), but it is only one example of many chipping away at industry fortresses.

The proliferation of the ‘internet of things’ last year both broadened and deepened technology’s disruptive abilities. With sensors and gadgets that do all manner of things, technology has been re-writing the business model book and organisations that have adopted a forward-thinking technology stance have become a tangible threat to more traditional businesses.

Many organisations, large and small, both public and private, understand the opportunities of digital, but find the process of integrating platforms, people, and planning a continual challenge. The topic is such that research organisation IQPC has dedicated an event to the topic called Digital Disruption X. The event hits Sydney in March aiming to help attendees recognise and respond to the disruptive influences in their industry. One participant at the event who is actively responding is Simon Pomeroy, chief digital officer, Westpac New Zealand. He had this to say about how the bank is countering digital disruption by putting the customer at the heart of innovation.

“We hear this word disruption a lot. Most people think disruption is about technology. Well it’s not about technology. Disruption is all about customer experience. It’s about thinking about how a customer starts the journey, the journey itself and then how the customer finishes the journey and integrating digital throughout. The evolution of our bank’s digital strategy has continually revolved around creating a personalised and relevant experience for our customers.

“Digitalisation can remove a lot of friction for customers. Banking is and always will be about relationships. So you need to think about the digital process as part of the entire experience. With customer behaviour being driven by the adoption of mobile, tablets and smart technology, we’ve begun to move towards creating a seamless multi-channel experience. We’re thinking about how innovation is going to play a part in the customer experience via these channels.

“Mobile is one channel where we’re seeing major growth. We’ve had an online banking solution for about 14 years. But we’ve had a mobile banking solution for less than two (years), and we’ve got half of our online customers now using mobile to bank. That’s a staggering uptake in such a short space of time.

“As mobile continues to be the channel of customer choice, we’ve responded by releasing a new online banking platform that’s mobile led and offers a consistent user experience across all devices – smartphone, tablet and desktop. This gives Westpac New Zealand customers full online banking capability through their phone.

“It really comes down to making it easy for people to go about their everyday banking. At Westpac, we’re re-thinking the whole experience to make sure we can offer customers a seamless world-class experience with everything they do.

“A big part of our digital strategy is using data to understand what customers expect from a bank and to drive that experience through new solutions. It’s not all about the technology, it’s about the customer outputs we’re trying to innovate around. We’re using data in a far more meaningful way to assist customers in their everyday banking.
“We’ve been working on a strategy around communication and engagement, which involves delivering solutions in a meaningful and visual way to drive ‘next best conversations.’ These conversations enable our customers to be more financially successful and it is helping us to solve their friction points. The integration of the next best conversation strategy within banking is critical, because it means we can have personalised conversations with our customers which is very unique for a bank.

“We’re also finding customer feedback is vital to understanding how to roll-out the right products that are customised to meet the changing needs of the digital customer. When building our new internet banking platform over the last 18 months, we’ve used continuous customer and staff feedback throughout the development phase. We built the new platform incrementally and we’ve had 50,000 customers using it in beta phase for the last 12 months, getting feedback at all times. This has allowed us to refine and optimise the experience.

“The new platform will provide faster and easier ways for our customers to do their everyday banking – including the ability to live chat or speak to a Westpac person through the app if they need assistance. The new platform is a great example of how we’ve tied innovation and customer experience together and it’s really driving the experience for customers as we enter into a world where customers are doing far more for themselves.

“Partnerships with other businesses are critical to driving customer experience and remaining progressive and innovative in a rapidly evolving sector. As part of the development of our new internet banking platform, we’ve partnered with US start-up Moven. Through the Moven money management tools, we’ll be able to offer customers the ability to manage money more effectively – if customers spend less money this month than they did last month, they will save more. Moven offers customers better insights into their spending across different categories and can compare current spend to previous time periods. This partnership will help us to differentiate around insight and customer engagement.

“By partnering with a start-up we get the value of a different type of thinking, because they are a business of 15 people sitting in a room thinking purely about how to drive better ways for people to manage their money. For us, it’s been a key part of how we see our future and we are really looking at these kinds of partnerships and integrating different business strategies across our organisation.

“Earlier this year we also signed a strategic collaboration agreement to develop digital banking innovations with major electronics provider Samsung New Zealand. As part of the collaboration, Samsung will give Westpac early access to its smart devices. This means we can work with Samsung to develop financial applications and services that will be ready when the device is ready for purchase. The collaboration reflects the importance of creating new solutions which are meeting the changing needs and demands of customers. With the likes of Google, Apple and Samsung developing wearable technology, it’s not going to take long before we’re all walking around with a device, whether it’s a watch or a pair of glasses that we’re going to be consuming on.

“That’s changing the way we have to behave. Success will really be understanding the changes in customer behaviour and delivering services meet them.”