The disrupters: Banking sector cashes in on technology

Bruce McLachlan, chief executive of The Co-operative Bank.

Technology and the wave of new payment options is the biggest disruption in the banking sector, according to Co-Operative Bank chief executive Bruce McLachlan and BNZ head of digital Stephen Bowe.

Disruption is not something the Co-Operative Bank or BNZ have actively sought, they say, but was rather a by-product of striving for improvement.

McLachlan said the disruption brought by technology was about being useful for the customer.

"It's all about relevance," McLachlan said. "If you are not capturing the imagination of the public and people are only doing business with you because they can't be bothered doing business with anyone else then your risk of being irrelevant overnight is really high."

Technology has played a large part in changes in the banking sector in recent years with online banking previously predicted to remove the need for bank tellers, although McLachlan said there were too many fundamentals for which branches were still needed.

"Everyone believed online banking would disrupt banking, that it would be the end of the bank branch but that hasn't happened," he said. "The incumbents that were there in the old model are still exactly there in the new model, so actually the real disruption is likely to come now in the payment space."

Bowe said the most interesting aspect of the banking sector was how technology use had changed the driver of demand from price to convenience.

However, he said future disruption was likely to come from the use of banking data.

"One of the main [future disrupters] would be using the data associated with those transactions to enable customers to have better insight into what's happening," Bowe said.

"In the future, I think you'll see data will be the source of value and the bank accounts or payment mechanisms will just be 'hygiene factors' that will disappear into the background."

Bowe and McLachlan both cited their apps as being a huge step forward in terms of how customers managed their banking.

What is disruption?

Rapid business change caused by fast technological change or transformation of business models. Cheap access to cloud computing means businesses don't have to invest in infrastructure but typically develop app-based models for customers to access goods and services, mainly through smartphones. This is leading to changes in the patterns of production and consumption.