Banking on Digital Growth
Banking on Digital Growth

Episode · 1 year 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 growthwith James Robert Lay, a podcast that empowers financial brand marketing, sales andleadership teams to maximize their digital growth potential by generating ten times more loans anddeposits. Today's episode is part of the by the book series where James Roberton locks and shares the secrets of digital marketing and sales strategies for financial brandsfrom his best selling book banking on Digital Growth, the strategic marketing manifesto totransform financial brands, that is now available on Amazon. Let's get into theshow. Greetings in Hello, I am James Arber Leah and welcome to theeighteen episode of the banking on digital growth podcast. Today's episode is part ofthe by the book series where I share insights from my best selling book bankingon 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 Iused to conduct in my past during my senior year in high school. AndNo, I was not dealing drugs, but instead I was let's call itmoving MP threes. But before we get into today's conversation, I want toshout out and thank MARLA fields for her review of banking on digital growth onAmazon. Marla writes this is one of the best books on the topic ofdigitization for financial services out there. If you're in cells, marketing our managementfor a regional bank or crediting in or you do business with them, Marlasays this is a must read and she continues the lessons are clear and relevantin the examples really drive the learnings home. After reading the book, I'm rethinkingeverything we are doing and marketing, starting with creating a purpose statement togo with our mission and vision. MARLA recommends do yourself a favor pick upa copy. It is worth every penny and more, and she ends shecan't wait for the next one. O, Marla, I really appreciate the reviewand the kind words as we continue to dive into the insights I doshare in the book. To educate, to empower and to elevate financial brandmarketing cells and leadership teams what I want you to do right now. SoI'd like for you to close your eyes just for a moment. I wantto take you back to the year two thousand and seven, think to yourselfwhat was life like for you back then? For me personally, I had beenmarried just a little bit over a year. The business was growing,we were advising financial brands and digital look really different, but it was stillwhat I saw is the future, strategically important when I think about digital atthe time. I want you to, just for context purposes, remember intwo 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 exclusivelylimited to college students, and Netflix had just delivered their billionth DVD in twothousand and seven. Well, at the same time, they were introducing thestreaming service that we've all come to know in this post covid world. Sowell, and as big as these three... were, and even bigger eventtook place in two thousand and seven when a man who was known for hisgenes 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 theipod. He now had the music player combined with the phone, and mosttransformative of all was that we have a phone with a music player and anwhat it was called at the time, an internet communication device that included emailand web browsing and so much more. So just think for a moment howmuch our world has transformed since Steve Jobs stepped on that stage, because whatis transformed the most and really forever, is the way that we communicate withone another. And it's communication that is at the heart of a marketing andcells 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 andnow think about where we are as an industry, where you are on amarketing team or cells team or leadership team. Not only is technolog aology evolved atan 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 tokeep up with technology and, more importantly, to keep up with changing consumer demandschanging consumer expectations, expectations that are being set digitally by Amazon, byapple, 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 twothousand and seven, but in retrospect, when Steve Jobs introduced the IPHONE,he put the death knell in the old model of the music industry, becausethe iphone sped up the rate of change enormously at the macro level when itcame to music. And this speed of change can, I'll, be seenacross all industries. The financial market place in particularly, is being transformed anddisrupted by changes in technology, consumer expectations and competition, and even now covid. So when any industry experiences disruption, as Peter diamand has wrote in thebook bold, along with Stephen Colter, there are a series of six eventsthat occur. Both authors go on to explain, quote, the six D'sAre a chain reaction of technological progression, a road map of rapid development thatalways 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 calledme out the other day saying are we post covid yet, because they didn'tget the note. I say that we're post covid because I look at thisas a binary perspective. There's pre covid, or life before, we'll call itFebruary march of two thousand and twenty. There's post Covid, life after FebruaryMarch 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 wasbefore. And when we think about this idea of rapid development, that alwaysleads 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 andeven when we when we go back to the ideas that are write about inthe book, banking on Digital Growth, and I talked about moving into thisfourth industrial revolution. In every previous industrial revolution that we've moved through, wehave seen massive upheaval, but we've also seen the biggest progress and jumps ofinnovation in all different areas, and that's what I want to focus on withtoday'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 focuson 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 thatI want to frame this up is from one of my personal passions, whichis music. I love music of all kinds. Music brings people together,music of folkes emotion. Music can inspire, can lift you up, can alsomel you out. And what a lot of people don't know about meis when I was growing up, I was in the orchestra from my sixthgrade year in junior high through my senior year of high school. I playedthe Viola and I was good. I was so good that I was thefirst 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 beingfirst chair my freshman year. Actually I hated it. I hated playing inthe orchestra for a multitude of reasons and I think you know, if ifI was a kid growing up today and seeing what I see on Youtube withacts like two cellos and Lindsay Sterling and bond, they given me a wholedifferent perspective about what was possible playing the Viola. And it wasn't just aboutclassical music. It was it was about music and you can set music toto rock. There was a band, and this is really what inspired me. When I graduated high school, I started a punk rock band, whichis a story for another day, but there's a band around that time calledyellow card, that on the West Coast, punk rock band who introduced a violinas 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 evolutionthat music has taken, going from the vinyl to the eight track, tothe cassette, to the CD and now to streaming. That same trend isalso 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 tobe aware of is the shift from larger pieces of technology and media to smallerand really eventually to nothing at all, or, to say the least,nothing tangible in the physical world, because with each shift, the new technologyin media becomes a standardized part of the culture, the new operating norm andsociety. And what has happened is d materialization for both music and really filmmedia has become the norm. D Materialization has become the status quo, andin banking we see D materialization playing out on multiple fronts, but primarily upto this point, d materialization is only happened on the transactional side of banking, the service set side of banking, for example. Consumers continue to moveaway 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 thosedeposits digitally through the APP, or to move money around or to pay someoneelse with P top transfers. Technology has transformed our world and digital has changedthe way consumer shop for and buy financial services forever. Now consumers make purchasedecisions long before they walk into a branch, if they walk into a branch atall. But your financial brand still wants to grow loans and deposits.We get it. Digital growth can feel confusing, frustrating and overwhelming for anyfinancial brand marketing and sales leader. But it doesn't have to, because JamesRobert wrote the book that guides you every step of the way along your digitalgrowth journey. Visit www dot digital growthcom to get a preview of his bestselling book banking on digital growth, or order a copy right now for youand your team from Amazon. Inside you'll find a strategic marketing manifesto that waswritten to transform financial brands, and it is packed full of practical and proveninsights 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 physicalcheck is going through the D materialization process as P to p payment APPs growingpopularity 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 canpay your babysitter with Zel or with Vin Mooer with paypal and you don't haveto worry about writing a check or, worse, not having any cash onhand and having to make that extra stop at the a team on the wayhome. Life is so good because of those platforms like Zel and Vinmo andpaypal, to when you can pay your babysitter. I think you know whenyou're at the grocery store and someone is in the checkout line of the ofthe 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'relike, oh my gosh, why? Why? But understandably it's The dmaterialization process that makes those who've built their entire careers around the physical rold ofbranch cells, of broadcast marketing. It's The d materialization that makes them feelconfused, it makes them feel frustrated,... makes them feel overwhelmed about digitaland digital growth, because no longer can they see, touch or feel theworld around them. It can be very scary for people to see their physicalworld taken away from them before their eyes. And I get it. Digital comeswith the perceived good as well as the bad. And that brings usto the second part of digital disruption, which is democratization. So let's goback to the music industry, because we know record labels and production houses usedto 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, comingback to my example, with like youtube and Lindsay Sterling and two cellosto wear. Total nobodies can strike a chord with the mass audience become globalstars, because without Youtube, I guarantee without youtube, there would be noJustin Bieber. Now, whether that particular example resonates with you, and he'snot my musical taste, for sure, but he's just one great example ofmany who have gained the capability to create, and here's this word again, communicatedirectly 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 filmworld by offering diverse options to many different niche audiences. And what's important tonote is that these brands, Netflix and Amazon and Hulu are not traditional productionstudios, but they are now making their very own content and they're using thepower of digital to serve a much wider market than the old school Hollywood entertainmentgiants. Finally, as it relates to banking, we see the democratization inthe rise of financial brands, those brands that are digital first, that aremobile first with their business model, the fintext, the NEO banks that arepopping up left and right, really by the thousands, who are communicating directlyas 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 powerto communicate at scale. But again, and that everyone thinks these changes aregreat, and where a lot of that disconnect is felt is among legacybrands who used to hold all the power are now being stripped of that powerand control. In particularly, they are losing the power to control the pricingmodels, to make money, to control the profits in the same way thatthey always have. That's where a lot of this, this upheavil, thisunrest comes from that bubbles up really to the macro scale, because demonetization isthe third part of digital disruption. Record labels felt this pain in a bigway and the heyday of recorded music and for contexts in the modern are I'mtalking about the peak cell of CDs in the mid s before the bottom fellout, record labels were raking it in.

I mean think, think back ifyou can to those days and if you didn't grow up in that timeperiod, the world was very different when you had to pay fifteen to twentydollars per CD and the production cost to produce those CDs was was really pennieson the dollar. But here's the thing, and if you grew up doing thattime period, you know exactly what I'm talking about, when you wantedto buy maybe one or two songs that you that you heard, but youhad to buy the entire CD for fifteen to twenty dollars. The record companiescontrolled the pricing model. I could do whatever they want and we use theconsumers 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 labelslost their ability to set prices, and no longer could they, because listenershad to control of how they received and paid for music. The disruption fromdigital technology swept away a lot of the money, the profits, the revenuethat had previously been taken for granted. There's one brand in particular who spenta 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 goingto pay for recorded music again, and this is where I can tell astory about my my shady business dealings. I was a senior in high schooland let's just say I was allergic to pay for music. I remember howI would download music non stop, and I'm talking seven back and then myparents would be outside of my bedroom late at night's telling me to go tosleep or getting on to me for always sucking the the broad band. Weare one of the very first Simons to have broadband in our community and ahigh school, and I would always get in trouble for bringing the Internet toa crawl. But I wasn't just downloading music for me, because I sawan 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 ofthe first kids with DSL, and at the time it was only a hundredand twenty eight killabytes per second, which was just twice the speed of dialup, which was k combine that DSL connection with a CD burner and I'moff and ready for business, because what I would do is I would Iwould doubtle it, all this music and burn fully customized disc from all thosesongs I was grabbing off of Napster and then sell them to students for tendollars for the for the entire disc of customized music. Kids at school lovedit and instead of having to, you know, Plop Down Fifteen to twentybucks at, say, best buy or target to buy a CD with onlytwo to three songs that they actually like, now they were paying half price andcould get twenty of the oddest jams from like one thousand nine hundred andninety nine, and it was it was an amazing business model, but youthfuland discretions aside, I bring the story up because it shows how I tookadvantage as an individual in these three crucial elements of digital disruption, the dmaterialization, the democratization and the demonetization of the music industry. Of course,today, there would it be the same appetite for those customized CDs. Norwould, I argue, is there the...

...same consumer frustration that we used tosee back in the late S, because for the most part we don't feellike we're being gouged anymore by the record labels. We have much more sayin control as individuals, as consumers, for our personal entertainment dollars, becausewith streaming services we can now pay eight to fifteen dollars a month and unlockthe entire library of music, or the entire library of music, way morethan we could ever consume. So that creates opportunities, that creates new businessmodels, and these are the things that I'd like for you to think aboutas we wrap up today's conversation. I want you to to ask yourself aquestion 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 covidto take it vantage of the d materialization, the democratization and the demonetization of banking. What are the opportunities? But, on the flip side, identify whatare the road blocks and what are the challenges that threatened to hold youback. Just like there is a interview of the CEO of tower records onYoutube that I highly recommend you look up, as he lamented the disruption that tookplace in the banking industry, it's important to identify the road blocks andthe 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 inthe banking space, even more so because of covid. And just like withthose under other industries, the entire banking model up to this point has beenbuilt around the physical world of brick and mortar, just like the tower recordsstores were. And thanks to Covid, everything is changing. Consumers competition ata 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 andcapture that have the courage to lean into do those fears, the same fearsthat threatened to hold them back. But I am greatly concerned as a majorityin our industry still remains trapped and what I call digital denial and digital denialas 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 denialescape and get on a path of digital growth. Until next time, bewell, do good and wash your hands. Thank you for listening to another episodeof 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 evenmore practical, improven insights, visit www dot digital growthcom to grab a previewof James Roberts best selling book banking on digital growth, or order a copyright now for you and your team from Amazon. Inside you'll find a strategicmarketing and sales blueprint framed around twelve key areas of focus that empower you toconfidently generate ten times more loans and deposits. Until next time, be well anddo good.

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