Markets have adopted innovations which have been useful over the last centuries. For example, paper was once the most important discovery in the world.
It revolutionized the existing communication systems at the time, created new ways of education, and was used as a faster way to handle finances than formerly using bricks and sticks. However, with technology comes to change.
In the world’s market systems, there are some old habits and old ways of doing things that need to be changed entirely and replaced with a newer set of guidelines, rules, and methodologies.
What Is An Example Of Disruptive Innovation
An example of disruptive innovations is the one standard streaming services everyone seems to enjoy.
If you ask someone older, they would tell you with nostalgia how they always patronize video rental stores.
Now that streaming services have surfaced in recent decades, video rental stores have all been wiped out. That is how the Market disruption works.
What Are Disrupted In Disruptive Innovations?
Disruptive Innovation is one of the most critical innovations in the market.
Disruptive Innovation is when a new market and value network is developed and gradually overthrows the existing market. They replace existing market-leading firms, products, and alliances.
American scholar Clayton M. Christensen was the first to give this Innovation a name in 1995, even though it existed long before.
He showed people what it meant and how to analyze change. It has since been called the most influential business idea of the early 21st century.
People who start these innovations are not people who hold power in the current market system, but outsiders who feel a change are due.
Occasionally, business owners in small startups can also usher in this new change with their products.
They are often unique, innovative products that can outperform and old work from a market-leading company.
However, if they have the power to upstage the market’s old powerhouses, it is not always so easy because they are small, and therefore do not have enough funds to take control of the market.
They would need all the resources they have to go into the development of their product and innovations.
If the big companies get wind of the startups and their intention to upstage them, and the startup doesn’t have enough money to fight back, they would run the startup into the ground.
Disruptive Innovation is often planned carefully and is deliberated on a lot, so it is naturally slow; this is because it contains a higher risk than other forms of incremental or evolutionary innovations.
But when it hits the market and done the right way, it is quick to overturn existing markets.
What are the Fintech Innovations?
Financial Technology is often thought to have originated in recent years, but it couldn’t be farther from the truth.
Financial Technology—otherwise called Fintech— has been responsible for bringing in seamless and cashless transactions that people fondly use to buy all sorts of things now, internet banking service during the ushering in the Internet era, and more recently, has brought us contactless payment technology.
How is Fintech Related To Disruptive Technology?
As predicted, Fintech was a disruptive Innovation that came from business owners with startups.
They didn’t come from already established markets. There have been three crucial factors that led to Fintech being successful and taking over banking services.
This has been arguably the most influential factor that led to the takeover. Before technology and Fintech, Financial services only involved physical locations in which transactions took place.
That means that if you were banking with Bank B and were living halfway across the world, you would have to travel each time you wanted to make a transaction.
It also favored those who had fixed assets, giving them chances to expand further by investing; this left newcomers and startups out of the loop.
In contrast to that, Fintech allows you to transact from anywhere at any time. Banks under Fintech have adopted more virtual methods and do not have a physical infrastructure.
It was widely scrutinized, but it proved to be a beneficial way to make banking easier.
Undoubtedly, traditional financial services have been an enormous help to individuals worldwide for a long time.
However, in recent years, it has experienced many falter and crises, the most recent unfortunate event being the Financial Crisis of 2008; because of this, a lot of customers and individuals now have unshakable doubt and skepticism towards traditional financial services.
Newcomers and investors have intensely scrutinized economic benefits. Technology came with a solution, a customer service that can attend to every customer from the comfort of their own homes.
Regulation and rules
Also, because of the financial crisis of 2008 and other incidents, traditional financial services are now being more closely monitored by different regulatory bodies.
Additionally, because of a lack of capital recently, banks have placed restrictions on how much to loan and whom to loan to.
Interest rates have also skyrocketed. Imagine being a startup or an entrepreneur that wants a small loan to be given a chance to progress their business.
You head to a bank branch with high hopes and determination. Then you are told that you absolutely cannot be offered a loan at this time, and when a slim glimmer of hope is given to you, you are slapped with documents and agreements that have high-interest rates…
These restrictions have paved the way for new startups to offer different alternatives at much cheaper rates. Thus, people are beginning to take their business to Fintech services.
This means that unless traditional banking services introduce innovations that can counter the solutions made by Fintech innovations, then patronage will be on a slow decline.
People want opportunities to handle their financial transactions without waking up at 8 am and heading to the bank every day. Banking transactions can happen in seconds with Fintech.