Digital Denial.

It might be the single biggest mistake your financial brand can make. In fact, it may even be deadly. 

The idea of digital denial is actually closely tied to the three future growth pitfalls that I unpacked in a previous Banking on Digital Growth episode.

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We get trapped in digital denial when we're shortsighted, and we don't see the enormous digital growth potential ahead. A lot of times banks and credit unions will dabble but give up when it doesn't yield results quickly enough. 

Big mistake. 

When any industry is transformed by disruption, inevitably the digital growth potential will always appear limited at first. And deceptively so.

Value creation out of the gate is most likely going to lag for some period of time. Especially if there's a tremendous amount of cost upfront to establish new foundational systems, processes, and habits. It could feel like an enormous weight that just drags us all down. 

But don't be fooled, this is one of the deadliest, yet most common blind spots. When digital denial is permeating within the leadership team at a financial brand, the leadership team mistakenly makes their most important decisions based on past performance and success.

This is understandable as these folks have built their entire career on past performance. But these past experiences are no longer relevant or even useful anymore, specifically in this post-COVID world. 

What are the results of their decisions? 

Sure, they may not be disastrous. They may continue down a path of incremental linear growth. And they may get that 2X performance versus the 10X growth that I've spoken about previously. 

The challenge here is that leaders are not taking advantage of the exponential growth curve that digital makes possible. 

The Doubling Effect

In digital value creation, there's a deceptive doubling effect, where digital-first appears to bring a loss. But then the value and the growth generated by digital becomes twice as great, which becomes four times as great, then eight, then 16. The doubling pattern will continue until you reach a point where digital becomes the primary driver of growth and eventually crushes the old legacy growth model built around the physical world.


Let's look at Amazon, for example. According to the, without Amazon Web Services (AWS) the Prime membership program, Amazon lost around $2 billion in Q1 of 2018. Now, this loss is really rooted in the retail side of their business, which interestingly, makes up about 60% of their entire revenue model. 

Put this another way, 60% of Amazon's total business operated at a loss. However, they have offset these losses with multiple diverse revenue streams like AWS, Amazon Prime. 

Amazon has been playing the long game. 

This is the opposite of what we see in risk-averse financial brand leaders that are looking at the situation from the present moment. They’re playing the short game.

Financial brands operating this way risk getting crushed, run over, and never even making it into the future. It's a heads down versus a heads up way of operating. 

According to a report from Duke University, 97% of business leaders believe strategy is important. 

But 96% don't feel like they have the time to think strategically. 

I cannot stress enough the importance of breaking free from the doing, and creating space and time to review, learn, and think, so that we can do better going forward.

I understand that bankers, by default, are going to be more risk-averse. They're dealing with people's money. But at some point, the limiting of risk becomes a liability. And that is what will take so many financial brands down in the coming years. 

Please do not let your greatest strength become a fatal flaw.

We’ve had the luxury of avoiding much of the pain the music industry went through and  learning from the failures of brands that have been down this journey before -  Blockbuster, Toys “R” Us, and Borders. J

When it comes down to it, banks and credit unions have essentially been retail or retail-like institutions that have been built for the physical world. And as many already know, the retail sector is in trouble these days, specifically post-COVID. 

Banking on Leadership

We're going through a retail apocalypse right now. And what these legacy retail brands lacked was leadership. 

That is why there's a direct distinction between financial brand leadership and management. We need managers to operate in the present moment to avoid risk and loss. And on the other hand, we need those in leadership positions to look ahead to create a future that does not yet exist. 

Great leaders need great managers to apply their strategic thinking and to ensure it becomes a reality, while great managers need great leaders to ensure that they don't get stuck in the present moment and make decisions informed by the past.

This isn't happening nearly enough, and it's one of my biggest concerns for financial brands in today's post-COVID, digital economy. 

So how have financial brands not been decimated by digital disruption yet? 

Banking is a very different kind of consumer experience when compared to ordering food or book. The level of risk when it comes to banking from the perspective of the consumer is obviously much higher because they're trusting you, the financial brand, with their life savings.

But a lot of that risk is also just perception. And that perception of risk is rapidly changing. 

Remember when people used to be scared to use their credit cards online? And now  e-commerce is across almost every industry. 

Still, perception is perception, and perception shapes reality. And consumer research, at least pre-COVID, showed that when it came to banking, people, including millennials, wanted to have a physical branch location. 

It's going to be interesting to see how this plays out post-COVID as new behaviors and habits are formed. 

The fact of the matter is financial brands can no longer stave off this coming demise much longer. Either we're going to have to make some courageous decisions and lead, or we're going to get left behind. 

Like it or not, when it comes to digital growth, it is the survival of the fittest out there.