Banking on Digital Growth
Banking on Digital Growth

Episode · 2 years ago

18) #ByTheBook: Lessons from a Digitally-Disrupted Music Industry


Some of you are old enough to remember CDs, right?

You know, those $15 frisbees we used to get music on?

Well, your financial brand can learn a lot from their decline. 

In today’s By the Book episode, I take a look at the 3 Ds of digital disruption and how to find opportunities in the chaos of the digital revolution.

In this episode, I explain:

-What we can learn from the disruption in the music and film industries.

-How my youthful indiscretions prove there are always opportunities in times of technological upheaval

-How to position your financial brand to take advantage of these opportunities

You can find this interview, and many more, by subscribing to Banking on Digital Growth on Apple Podcasts, on Spotify, or here.

You're listening to banking on digital growth with James Robert Lay, a podcast that empowers financial brand marketing, sales and leadership teams to maximize their digital growth potential by generating ten times more loans and deposits. Today's episode is part of the by the book series where James Robert on locks and shares the secrets of digital marketing and sales strategies for financial brands from his best selling book banking on Digital Growth, the strategic marketing manifesto to transform financial brands, that is now available on Amazon. Let's get into the show. Greetings in Hello, I am James Arber Leah and welcome to the eighteen episode of the banking on digital growth podcast. Today's episode is part of the by the book series where I share insights from my best selling book banking on digital growth, which is the strategic marketing manifesto to transform financial brands. Today's episode we get a bit personal with you and share my passion around music, along with some of the, shall I say, shady business that I used to conduct in my past during my senior year in high school. And No, I was not dealing drugs, but instead I was let's call it moving MP threes. But before we get into today's conversation, I want to shout out and thank MARLA fields for her review of banking on digital growth on Amazon. Marla writes this is one of the best books on the topic of digitization for financial services out there. If you're in cells, marketing our management for a regional bank or crediting in or you do business with them, Marla says this is a must read and she continues the lessons are clear and relevant in the examples really drive the learnings home. After reading the book, I'm rethinking everything we are doing and marketing, starting with creating a purpose statement to go with our mission and vision. MARLA recommends do yourself a favor pick up a copy. It is worth every penny and more, and she ends she can't wait for the next one. O, Marla, I really appreciate the review and the kind words as we continue to dive into the insights I do share in the book. To educate, to empower and to elevate financial brand marketing cells and leadership teams what I want you to do right now. So I'd like for you to close your eyes just for a moment. I want to take you back to the year two thousand and seven, think to yourself what was life like for you back then? For me personally, I had been married just a little bit over a year. The business was growing, we were advising financial brands and digital look really different, but it was still what I saw is the future, strategically important when I think about digital at the time. I want you to, just for context purposes, remember in two thousand and seven, youtube was just a little over two years old. FACEBOOK had just opened up to the public after being a platform that was exclusively limited to college students, and Netflix had just delivered their billionth DVD in two thousand and seven. Well, at the same time, they were introducing the streaming service that we've all come to know in this post covid world. So well, and as big as these three... were, and even bigger event took place in two thousand and seven when a man who was known for his genes and block turtlenecks stepped onto the stage and introduced his company's new product, the IPHONE. Now, this revolutionary piece of technology combined at the time, what was three different tools all into one. Yes, there was a cellular phone, but just like his earlier breakthrough product, Steve Jobs brought us the ipod. He now had the music player combined with the phone, and most transformative of all was that we have a phone with a music player and an what it was called at the time, an internet communication device that included email and web browsing and so much more. So just think for a moment how much our world has transformed since Steve Jobs stepped on that stage, because what is transformed the most and really forever, is the way that we communicate with one another. And it's communication that is at the heart of a marketing and cells it is communication that is the key for future growth for any financial brand. So go ahead and open up your eyes and Flash for to today and now think about where we are as an industry, where you are on a marketing team or cells team or leadership team. Not only is technolog aology evolved at an exponential rate since two thousand and seven since the introduction of the IPHONE, but so to his consumer expectations. On the opposite end of the spectrum, competition has also change as well, and it's competition that is changed to keep up with technology and, more importantly, to keep up with changing consumer demands changing consumer expectations, expectations that are being set digitally by Amazon, by apple, by Google. I want to look inside, or really look outside, at another industry where consumer expectations and demands have changed over the last, we'll just call them twenty years. Let's look at the music industry. Now, there were certainly changes already happening in the in the music industry before two thousand and seven, but in retrospect, when Steve Jobs introduced the IPHONE, he put the death knell in the old model of the music industry, because the iphone sped up the rate of change enormously at the macro level when it came to music. And this speed of change can, I'll, be seen across all industries. The financial market place in particularly, is being transformed and disrupted by changes in technology, consumer expectations and competition, and even now covid. So when any industry experiences disruption, as Peter diamand has wrote in the book bold, along with Stephen Colter, there are a series of six events that occur. Both authors go on to explain, quote, the six D's Are a chain reaction of technological progression, a road map of rapid development that always leads to enormous upheaval and opportunity.

Think about that for a moment. Of where we are today's we are continuing to navigate through this post covid world, and it's funny. I always reference post covid and someone on Linkedin called me out the other day saying are we post covid yet, because they didn't get the note. I say that we're post covid because I look at this as a binary perspective. There's pre covid, or life before, we'll call it February march of two thousand and twenty. There's post Covid, life after February March two thousand and twenty, because post Covid is what we're moving through, but pre covid, we will never go back to what the world was before. And when we think about this idea of rapid development, that always leads to enormous both upheavil and opportunity. That's what we're moving through right now. Yes, we're seeing UPHEAVIL, we're seeing frustration, we're seeing friction and even when we when we go back to the ideas that are write about in the book, banking on Digital Growth, and I talked about moving into this fourth industrial revolution. In every previous industrial revolution that we've moved through, we have seen massive upheaval, but we've also seen the biggest progress and jumps of innovation in all different areas, and that's what I want to focus on with today's conversation, coming back to this idea that digital growth really is about communication, specifically around marketing and cells, and I'd like to zoom in and focus on three of the six D's that Peter and Stephen Right about in their book, bold that being de Materialization, democratization and demodetization. And the way that I want to frame this up is from one of my personal passions, which is music. I love music of all kinds. Music brings people together, music of folkes emotion. Music can inspire, can lift you up, can also mel you out. And what a lot of people don't know about me is when I was growing up, I was in the orchestra from my sixth grade year in junior high through my senior year of high school. I played the Viola and I was good. I was so good that I was the first chair of the violas and the Varsity Orchestra my freshman year in high school. And the ironic thing about this idea of being good at the Viola being first chair my freshman year. Actually I hated it. I hated playing in the orchestra for a multitude of reasons and I think you know, if if I was a kid growing up today and seeing what I see on Youtube with acts like two cellos and Lindsay Sterling and bond, they given me a whole different perspective about what was possible playing the Viola. And it wasn't just about classical music. It was it was about music and you can set music to to rock. There was a band, and this is really what inspired me. When I graduated high school, I started a punk rock band, which is a story for another day, but there's a band around that time called yellow card, that on the West Coast, punk rock band who introduced a violin as part of their act and it was just so, so different. And but what we're seeing is is music and the music industry, the evolution that music has taken, going from the vinyl to the eight track, to the cassette, to the CD and now to streaming. That same trend is also evident in other industries like film and...

...movies. has followed a similar trajectory, from the big rills to the VHS, to the DVD, to Netflix, Amazon and so on, was streaming media. What I want you to be aware of is the shift from larger pieces of technology and media to smaller and really eventually to nothing at all, or, to say the least, nothing tangible in the physical world, because with each shift, the new technology in media becomes a standardized part of the culture, the new operating norm and society. And what has happened is d materialization for both music and really film media has become the norm. D Materialization has become the status quo, and in banking we see D materialization playing out on multiple fronts, but primarily up to this point, d materialization is only happened on the transactional side of banking, the service set side of banking, for example. Consumers continue to move away from going into the physical branch, even more so now post Covid, to take care of the transactional pieces of banking, for example depositing a check, moving money around, and instead they're using their mobile device to make those deposits digitally through the APP, or to move money around or to pay someone else with P top transfers. Technology has transformed our world and digital has changed the way consumer shop for and buy financial services forever. Now consumers make purchase decisions long before they walk into a branch, if they walk into a branch at all. But your financial brand still wants to grow loans and deposits. We get it. Digital growth can feel confusing, frustrating and overwhelming for any financial brand marketing and sales leader. But it doesn't have to, because James Robert wrote the book that guides you every step of the way along your digital growth journey. Visit www dot digital growthcom to get a preview of his best selling book banking on digital growth, or order a copy right now for you and your team from Amazon. Inside you'll find a strategic marketing manifesto that was written to transform financial brands, and it is packed full of practical and proven insights you can start using today to confidently generate ten times more loans and deposits. Now back to the show. Even the very concept of the traditional physical check is going through the D materialization process as P to p payment APPs growing popularity to replace physical payment systems. And if you have young kids like me, you think it is the most amazing thing in the world when you can pay your babysitter with Zel or with Vin Mooer with paypal and you don't have to worry about writing a check or, worse, not having any cash on hand and having to make that extra stop at the a team on the way home. Life is so good because of those platforms like Zel and Vinmo and paypal, to when you can pay your babysitter. I think you know when you're at the grocery store and someone is in the checkout line of the of the fifteen items or less. It's supposed to be the speedy check outline, and and then someone pulls out that check that dreaded check book, and you're like, oh my gosh, why? Why? But understandably it's The d materialization process that makes those who've built their entire careers around the physical rold of branch cells, of broadcast marketing. It's The d materialization that makes them feel confused, it makes them feel frustrated,... makes them feel overwhelmed about digital and digital growth, because no longer can they see, touch or feel the world around them. It can be very scary for people to see their physical world taken away from them before their eyes. And I get it. Digital comes with the perceived good as well as the bad. And that brings us to the second part of digital disruption, which is democratization. So let's go back to the music industry, because we know record labels and production houses used to control the process of production from front to back. Back in the day. They were the hit makers, they were the gatekeepers who pulled the strings, they controlled everything. But in contrast, we now have digital platforms, coming back to my example, with like youtube and Lindsay Sterling and two cellos to wear. Total nobodies can strike a chord with the mass audience become global stars, because without Youtube, I guarantee without youtube, there would be no Justin Bieber. Now, whether that particular example resonates with you, and he's not my musical taste, for sure, but he's just one great example of many who have gained the capability to create, and here's this word again, communicate directly with audiences through new technologies and distribution channel US coming back to movies, we're seeing the platforms like Netflix, Hulu, Amazon prime democratizing the film world by offering diverse options to many different niche audiences. And what's important to note is that these brands, Netflix and Amazon and Hulu are not traditional production studios, but they are now making their very own content and they're using the power of digital to serve a much wider market than the old school Hollywood entertainment giants. Finally, as it relates to banking, we see the democratization in the rise of financial brands, those brands that are digital first, that are mobile first with their business model, the fintext, the NEO banks that are popping up left and right, really by the thousands, who are communicating directly as well as creating value directly for niche market segments through digital and mobile technologies. Whether it be banking, whether it be entertainment, whether it be music, digital has given power to the people, the power to connect, the power to communicate at scale. But again, and that everyone thinks these changes are great, and where a lot of that disconnect is felt is among legacy brands who used to hold all the power are now being stripped of that power and control. In particularly, they are losing the power to control the pricing models, to make money, to control the profits in the same way that they always have. That's where a lot of this, this upheavil, this unrest comes from that bubbles up really to the macro scale, because demonetization is the third part of digital disruption. Record labels felt this pain in a big way and the heyday of recorded music and for contexts in the modern are I'm talking about the peak cell of CDs in the mid s before the bottom fell out, record labels were raking it in.

I mean think, think back if you can to those days and if you didn't grow up in that time period, the world was very different when you had to pay fifteen to twenty dollars per CD and the production cost to produce those CDs was was really pennies on the dollar. But here's the thing, and if you grew up doing that time period, you know exactly what I'm talking about, when you wanted to buy maybe one or two songs that you that you heard, but you had to buy the entire CD for fifteen to twenty dollars. The record companies controlled the pricing model. I could do whatever they want and we use the consumers got screwed and this whole model, and we all know what happened next. The rise of digital and broad brand brought about the democratization of music, and this led to a huge shift in the industry's power balance. Record labels lost their ability to set prices, and no longer could they, because listeners had to control of how they received and paid for music. The disruption from digital technology swept away a lot of the money, the profits, the revenue that had previously been taken for granted. There's one brand in particular who spent a lot of this along, and that's when napster came on the scene. Some had predicted this demonetization would virtually become absolute, that listeners were never going to pay for recorded music again, and this is where I can tell a story about my my shady business dealings. I was a senior in high school and let's just say I was allergic to pay for music. I remember how I would download music non stop, and I'm talking seven back and then my parents would be outside of my bedroom late at night's telling me to go to sleep or getting on to me for always sucking the the broad band. We are one of the very first Simons to have broadband in our community and a high school, and I would always get in trouble for bringing the Internet to a crawl. But I wasn't just downloading music for me, because I saw an opportunity as a young entrepreneur or criminal, depending upon your point of view. I saw the possibilities that this new technology would bring because being one of the first kids with DSL, and at the time it was only a hundred and twenty eight killabytes per second, which was just twice the speed of dial up, which was k combine that DSL connection with a CD burner and I'm off and ready for business, because what I would do is I would I would doubtle it, all this music and burn fully customized disc from all those songs I was grabbing off of Napster and then sell them to students for ten dollars for the for the entire disc of customized music. Kids at school loved it and instead of having to, you know, Plop Down Fifteen to twenty bucks at, say, best buy or target to buy a CD with only two to three songs that they actually like, now they were paying half price and could get twenty of the oddest jams from like one thousand nine hundred and ninety nine, and it was it was an amazing business model, but youthful and discretions aside, I bring the story up because it shows how I took advantage as an individual in these three crucial elements of digital disruption, the d materialization, the democratization and the demonetization of the music industry. Of course, today, there would it be the same appetite for those customized CDs. Nor would, I argue, is there the...

...same consumer frustration that we used to see back in the late S, because for the most part we don't feel like we're being gouged anymore by the record labels. We have much more say in control as individuals, as consumers, for our personal entertainment dollars, because with streaming services we can now pay eight to fifteen dollars a month and unlock the entire library of music, or the entire library of music, way more than we could ever consume. So that creates opportunities, that creates new business models, and these are the things that I'd like for you to think about as we wrap up today's conversation. I want you to to ask yourself a question and to think about and have some deep strategic conversations internally with your team, as you wonder, allowed, what are you doing right now post covid to take it vantage of the d materialization, the democratization and the demonetization of banking. What are the opportunities? But, on the flip side, identify what are the road blocks and what are the challenges that threatened to hold you back. Just like there is a interview of the CEO of tower records on Youtube that I highly recommend you look up, as he lamented the disruption that took place in the banking industry, it's important to identify the road blocks and the challenges that threatened to hold you back, because what happened in music and film, those exact patterns, are very much what is happening right now in the banking space, even more so because of covid. And just like with those under other industries, the entire banking model up to this point has been built around the physical world of brick and mortar, just like the tower records stores were. And thanks to Covid, everything is changing. Consumers competition at a faster pace. I get it. This change can be scary for some, but I do see tremendous amounts of opportunities for financial brands to create and capture that have the courage to lean into do those fears, the same fears that threatened to hold them back. But I am greatly concerned as a majority in our industry still remains trapped and what I call digital denial and digital denial as a topic that will discuss on the next episode of by the book, so that you can help those you know that might be trapped in digital denial escape and get on a path of digital growth. Until next time, be well, do good and wash your hands. Thank you for listening to another episode of banking on Digital Growth with James Robert Laigh. Like what you hear, tell a friend about the podcast and leave us a review on apple podcast, Google podcasts or spotify, and subscribe while you're there. To get even more practical, improven insights, visit www dot digital growthcom to grab a preview of James Roberts best selling book banking on digital growth, or order a copy right now for you and your team from Amazon. Inside you'll find a strategic marketing and sales blueprint framed around twelve key areas of focus that empower you to confidently generate ten times more loans and deposits. Until next time, be well and do good.

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