By Scott Ronalds

Remember the days of trotting down to the video store to rent a movie? You’d hope the flick you wanted to see was still available, then grab a copy of the box, wait in line at the counter, whip out your membership card, grab a bag of Twizzlers and fork over your cash. Seems like eons ago.

The movie rental industry has been completely disrupted in the last decade. Video-on-demand, Netflix, Apple (iTunes) and other companies/services have changed the way we rent movies. It was an industry ‘ripe for disruption’, and disrupted it was.

There are many examples of industries that have been transformed by the powerful combination of innovative thinking and technology, and there are countless examples of those waiting to be disrupted.

I recently read a story in the New York Times about two Americans who are hoping to disrupt the shaving industry through their online start-up, Harry’s. Their goal is to change the way you buy razors & cream – by sending superior products (manufactured with customer input) directly to your door, and at a price much cheaper than the leading competitors. You’ll never have to wait in line at the drugstore or shave with a dull blade again. Harry’s has you covered.

Video rentals and shaving are one thing, but the biggest changes are poised to come in financial services. A recent article in Fast Company Magazine highlights a three-year study that identifies the industries most likely to be transformed by Millennials (loosely defined as people in their teens to thirtysomethings). Banking is at the top of the list.

Apparently, Millennials hate their banks. The study indicates that “all four of the leading [American] banks are among the ten least loved brands by Millennials”. It also suggests that today’s youth don’t see the difference between their bank and all the others, and are counting on innovation and new players to shake up the industry.

Perhaps the ‘pending disruption’ will spill over into investment management. While there has been a steady flow of new and re-packaged products over the years, there have been few changes to the customer experience and the way products and services are delivered, particularly in Canada.

Consider mutual funds, in which Canadians have $1 trillion invested:

  • The overwhelming majority of funds are sold through either a financial advisor or bank, and at a relatively high cost. This ‘traditional’ distribution channel has been left largely unchallenged for decades.
  • Many investors don’t know how they’re doing or what they’re paying in costs, as this information is rarely shown in a clear, transparent way. The standard of reporting is awful and has not progressed in 30 years.
  • Then there’s the issue of improving investor behaviour – which, studies have shown, is one of the most important elements of investing. Again, little innovation to speak of.

Seems like an industry ripe for disruption. Investors, after all, are surely getting tired of trotting down to the video store.