Walking a tightrope in high winds. The modern financial services business demands many things: speed to differentiate, flexibility, innovation and more — all juxtaposed with the growing demands of customers and regulators’ widening reach on areas such as tackling concentration risk. And yes, do all this without “breaking the bank.” Wow. Being a CTO/CIO in banking is like being an acrobat!

The financial services industry is no stranger to disruption. Just 20 years ago, banking was synonymous with a physical trip to a brick-and-mortar building. Today that practice seems almost archaic. Technology now sits at the heart of the sector, with most transactions taking place in seconds online and across multiple mobile apps and banking platforms. VMware research even shows that 31% of consumers today would trust an app to manage all of their finances if it generated greater monthly returns. And with the rise of open banking, decentralised finance, artificial intelligence (AI) and biometric payments, there’s further disruption on the horizon.

But these digital services didn’t appear overnight; they are the product of consistent, iterative innovation and incremental changes to refine the customer experience. True societal disruption is often the product of a combination of factors over time instead of a revolutionary idea taking instantaneous hold – despite what people might like to believe. With this and the constant need to enhance these digital capabilities, standing still will never be an option.

So where does this leave future disruption? Is it realistic to expect another substantial sea change to occur in banking? The landscape has changed considerably with more complex regulations in play and many organizations facing financial pressure to run cost-effective operations while delivering delightful customer experiences. Put simply, there’s a long road ahead. If disruption were a marathon, we’d barely be five miles in.

Disruption creates complexity

Disruption is getting harder in the sense that it creates challenges by its very nature. As regulations evolve to protect customers’ security and privacy further, the complexity in which technology must innovate is increasing. In tandem, cybersecurity is far more sophisticated. Disruption through online banking has created new ways for criminals to infiltrate payment systems and the risks have never been higher. But there reaches a point where there is too much complexity and the risks become too great. At this stage it is sensible to pause, take stock and simplify – then boldly move forward at pace with reduced risk.

Being first doesn’t always mean being the best; put the customer first instead

Disruption isn’t always about being the first to introduce something. Only one company can be the first to pioneer a new service, feature or product that changes an industry. But that doesn’t automatically make their new offering the best. Businesses that go above and beyond to deliver a more refined and continuously enhanced product that’s more tailored to customers’ needs will see greater long-term benefits from disruption.

Does true disruption require mainstream adoption?

For something to be truly disruptive, it must go beyond the periphery of being an emerging technology – it must create real and lasting change. Any banking revolution must also reflect this, too, rather than being just a passing trend. Realistically, most of what we’re seeing now would be better described as “mainstream adoption of individual disruptive technologies” as opposed to holistic disruption to an end-to-end experience.

For example, when Telenor Microfinance Bank first set out to launch its mobile wallet Easypaisa in the largely cash-first and unbanked nation of Pakistan, they were met with resistance. Only after a long-term educational campaign and coincidental climate change events (including devastating floods throughout 2022) were consumers keener on the transition to making digital payments instead of using cash.

Predicting the next wave of disruption

True disruption in banking might not be possible to define just yet. The rise of digital currencies and debates around a cashless society could deliver the most seismic change of all – inclusivity in financial services, which might be directly ahead of us. Hacking away to give everyone in the world a bank account, for example, would certainly be disruptive. Rather than competing, we no doubt we will see banks integrate with FinTechs to create a platform-based society where they partner with tech companies to deliver inexpensive, customer-focused payment apps into the mainstream. The possibilities are limitless, but we’re only just getting started.

Brian Hayes is senior director, financial services industry solutions at VMware, Inc. Follow him on LinkedIn.