- Exchange-traded funds versus managed mutual funds
- Easy, convenient, low-cost. “Worse” for not being professionally managed. Diversity of choices gives an customer freedom to play desired sectors at low cost. Incumbents (managed funds) are motivated to ignore.
- Online discount brokerages versus stock brokers
- Easy, low cost, “good enough” for low-end users and former non-users, again offering an asymmetric advantage over the services of professional brokers.
- PayPal versus traditional payment systems
- Simplifies transactions, allows people to make purchases more conveniently and securely. Incumbents are motivated to cooperate or ignore.
- Peer-to-Peer lending systems (e.g., Zopa.com)
- Lower cost, more convenient for many. Early stages: disruptive?
Tuesday, July 15, 2008
Disruptive Innovations in Financial Services
I was asked today for some examples of disruptive innovations in the financial services industry. Here are a few quick examples to consider: