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How to leverage disruptive innovation in effective payment transactions

By Tare Youdeowei

In today’s business world, especially in the technology industry, disruption is one of the most over used words. From discussions involving Uber to industry analysis of the rise of Netflix, the term disruption has become a recurring buzzword.

However, as the word has taken on a life of its own, there are bound to be misconceptions, the most common of which is the widespread confusion of the word with innovation. While innovation is closely related to disruption, they are not the same. While it is possible to be innovative without being disruptive, it is very unlikely that one would be disruptive without innovating.

So what then is real disruption? What drives disruptive innovation and how can it be leveraged in different sectors of the economy, especially in facilitating seamless, secure and effective payment transactions?

Disruptive Innovation

To answer these questions, integrated digital payments and commerce company, Interswitch Group, invited Brett King, who advised the Obama administration on the future of banking and is described as the King of Disruption, to speak at the debut edition of Interswitch Connect.

Financial ecosystem

With the theme, The Digital Transformation Imperative: Innovative Evolution or Disruptive Innovation, Interswitch Connect brought together the digital financial ecosystem, including leading innovators and Original Equipment Manufacturers, OEMs, in financial services industry, to evaluate the future of transactions.

King, who is the CEO and Founder of Moven, a $200m mobile bank start-up, with the world’s first smart bank account, gave three key takeaways on disruption; thinking drives disruption, artificial intelligence and robotics will drive disruption, as well as mobile and internet play major roles in innovation and disruption.

On thinking, King said; “Thinking is focused on breaking a situation down into its fundamental pieces and then putting them back together in a more effective way that serves purposes. True disruption occurs when one tackles a challenge from scratch. If we were to do things differently from scratch, what would it look like? I believe that breaking down a complex situation into its simplest and most basic form, and creating new solutions from scratch, is key to disruption.”

For driving disruption with robotics and artificial intelligence, King suggested; “With the advent of smart factories and smart infrastructure, manufacturing will no longer be dominated by human beings. In healthcare, the emergence of real-time diagnosis and gene editing technologies will further disrupt the industry. New technologies like artificial intelligence (AI) and robotic process automation will also turn the banking ecosystem on its head, disrupting the way people bank and the manner in which institutions deliver financial services.

“Hence, banks of the future will largely depend on these technologies to thrive, as they can potentially increase efficiency, decrease costs and enhance customer experience. They will radically disrupt banking as we know it and financial institutions that refuse to adopt AI and robotics on time will be left behind.”

Stating that some of the biggest disruptions across different industries have been tied to the growing internet and mobile penetration, King noted; “Mobile technology has created enormous value for people in Africa enabling them to do things that would have seemed impossible before now. For instance, the smart phone has impacted different industries including media and banking. With mobile penetration across Africa standing at over 90 percent, the reach of financial services has expanded to consumers even in very remote areas. A clear example of the disruptive potential of mobile technology is the M-Pesa mobile payment service in Kenya, which constitutes more than a third of all financial transactions in Kenya.

“Invariably, the growing internet and mobile penetration in Africa will foster greater financial inclusion and coverage of the unbanked, just as it would continue to disrupt other sectors of the economy.”

King whose focus is on how technology disrupts businesses, changes behaviour and influences society, lamented that lack of thinking in banking and financial services industry has left the sector still playing catch-up but stakeholders need to know that the Disruptive Innovation Model has come to stay. “I implore stakeholders to think of banking as an experience and not just a collection of products. To achieve this, banks have to become data companies as you will only be as good as the data you have and can effectively use in creating such customer experiences.

“For real disruption to occur in the financial services sector, bank products and services need to be redesigned. For the automated world and to achieve this, banks need to partner with a fintech company, acquire a fintech company or copy and replicate the technology itself. Of the three options, partnering fintech companies remains the best approach.”


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