Disruptive technology is a service or product intended for a new set of customers. It is the advent of a new technology, created in such a way that it makes the incumbent outdated over the years.
There are many business models that have operated for a long period of time in the traditional sense of business. The advent of a new technology can be either a curse or a blessing, depending on your perception and whether your company is negatively affected by that technology. Though technology is making life easier and enjoyable for customers, it is taking away profits from the more traditional business.
There are several examples of how disruptive technology is disrupting business models. For instance, Netflix brought revolution on how people watch videos. First, they made it possible for people to pick their preferred movies without having to wait. Then Redbox emerged and provided cheaper way to get movies, offering them at only $1. Consequently, businesses like Blockbuster were put in serious trouble. Afterwards, Netlifix began providing streaming services for movies, a move that ultimately made traditional business models of video stores obsolete.
Looking at the financial sector over the past few years, technology has generated many benefits for different shareholders. Innovation such as online payment systems (Authorize.Net, Google Checkout, Amazon Payments, WePay e.g.) and the trade digitalization have changed the business and the interface between the financial services firms and their customers.
Technology is changing processes and workflow in the financial industry. Work that was once handled with bulky computers, human interactions and paper money is now done on digital interfaces. Fintech is the main player in disrupting traditional banks. Almost every kind of financial activity— from wealth management to banking to payments and more — are being carried out by startups. Meanwhile, the traditional banks are trying to solve a problem presented by fintech: How can they avoid going obsolete and benefit from digitalization?
Disruptive technology is cheaper and convenient than the traditional business models. Things like Uber, eBooks, Dating Apps and YouTube are changing how we do things in our daily lives. Time has come for traditional businesses to decide whether or not they will keep up with the technology or succumb to this technology. Look at how Barnes & Noble responded when eBooks took off. Quickly, they changed their business model and included their own e-reader. This way, Barnes & Noble provided an example of how a company can use disruptive technology to make sure it remains competitive.
Now the question you should ask yourself is: Is my business ready for disruptive technology? With the current advancement in technology, almost all businesses are at risk of becoming obsolete. Look at how Online University is taking over the higher education system. Today, self-driving cars are almost hitting the roads and Apple pay is eliminating credit cards. Therefore, the future of your company or business depends on what you are doing today. Understanding technology is so important that you cannot afford to ignore it. You either adopt or get ruined by the disruptive technology.