Inside IT
Prepare Yourself for Digital Disruption

Since the beginning of the 21st century, digital technology has undergone rapid development. The Internet has changed the lives of almost everyone and many companies have emerged due to digital technology. But technological development did not stop there and the advent of mobile devices transformed the dotcom era.

Along with the development of new technologies such as mobile technology, the concept of ‘digital disruption’ has also emerged. The term may be unfamiliar to some, but technologies such as the Internet, big data, artificial intelligence, IoT and cloud computing are all a part of digital disruption.


Today we will take a closer look at the concept of digital disruption and how it is implemented in finance and media.


Digital disruption is the concept of using digital technology to innovate or deconstruct existing industries or business models.

Digital disruption began with the development of digital technology. Amazon is one company that implemented digital disruption during the dotcom era. Amazon shifted the market of selling products at reduced prices to the virtual world. This shift created value to customers that was could not be achieved offline by providing a social channel that used data to offer a product recommendation service with product reviews given directly by customers.

These days there is a diverse range of digital technologies beyond just the Internet and the chances to use digital technology in business have increased. Digital disruption has the potential to neutralize current markets and truly change the game. In the past, completely changing a market took a long time, but digital disruption is unique in that it can cause a powerful and fast moving ripple effect that can change the state of a market overnight.

At the heart of this disruption is innovation. Professor Clayton M. Cristensen of Harvard University claims that disruptive innovation is cheap, convenient and simple technology that expands the customer base and neutralizes current players in the market.


The neutralization of the text market by the development of messenger apps such as Facebook, Whatsapp and KakaoTalk once smartphones emerged on the market is an example of digital disruption. Consumers were able to communicate with other for free while using various functions within the apps for group chatting or expressing themselves to their friends.

This change occurred because it allowed companies to offer a customer driven service. Digital disruption changes an industry to meet the needs of customers that are not being satisfied. Customers receive a more convenient and personalized experience and receive a service at a more inexpensive price.

The change in the market is also plays an important role in the propagation of digital disruption. Millennials, or ‘digital natives’, are the primary consumers for digital disruption. As technological development and market demands meet, the growth of digitally innovative services becomes more flexible.


① Finance and Digital Disruption 

Fintech is a growing topic in the global world of finance. It creates a direct point of contact between businesses and customers, and provides more customer driven financial services.

Fintech implements big data and IoT to create new financial services such as insurance services, artificial intelligence based asset management services, direct payment via mobile devices, P2P lending on platforms without intermediary companies and crowd funding.

The Fintech company Lending Club is a US P2P lending firm that matches investors with borrowers that have specific interests. Lending Club successfully launched in 2014 with market value of USD 9M and has recorded a growth rate of 500% every year since then.

Lending Club offers investment and lending quickly and at low cost to users. Investors can personalize investments according to their own propensity for risk. Also, the complex lending process has been changed into a more interesting experience where users can directly verify their returns.

The algorithm used by Lending Club creates a new and innovative process with more efficient financial service management and additional credit rating and evaluation functions using social media. Lending Club has drawn many new users to use the Fintech platform with digital disruption.


Lending Club (Source:

② Digital Disruption in the Entertainment Industry 

Industries in entertainment such as music, movies and broadcasting have developed and combined digital technologies to create a increase accessibility for customers.

Music is now offered to customers in digital form through streaming and MP3 distribution. Movies are also offered through digital streaming.

In particular, television viewers are now moving towards online services that give them more freedom to choose the content they want. Companies such as Amazon have released online content streaming services and cable companies are working to offer online television channels as well.

Netflix is a driving force in digital disruption and was just recently released in Korea. Netflix now accounts for approximately 40% of internet traffic and has achieved market capitalization to the tune of approximately USD 4.2B. Netflix started as an online DVD rental service and is now the world’s leading online content streaming company.

Netflix introduced the first service that provides customers unlimited access to a wide array of movies and original content for a monthly fee. They also implement an algorithm that assesses their customers taste in content and makes recommendations on content their customers might be interested in watching.


Netflix (Source:

③ Digital Disruption in Retail Sales 

Many people are able to experience digital disruption in the retail sales industry through online shopping. There are now many online shopping sites similar to Amazon. Also, many physical retail stores and department stores are increasing their customer base through online shopping.

But recently the online shopping trend is changing to include shopping via mobile devices. Retailers are offering products to consumers in real-time through mobile devices new services that introduce products at reduced prices through social commerce are becoming very popular.

Online shopping was once dominated by Internet sites and physical retail stores, but consumers can now shop using their mobile devices and retailers can consumer data in real-time and better understand shopping patterns.

According to Deloitte, there are 1/3rd more consumers using mobile devices and those consumers are more likely to make a purchase even when they initially were not shopping to purchase any products. Also, physical retail stores are able to increase profits by offering products to customers via mobile devices.


Digital disruption is expected to impact not only high-tech businesses but all areas in various industries. This makes the boundaries between companies somewhat obscure. Alibaba started as a Fintech company and Tesla began as a car manufacturer but they both combined efforts with the largest US mobile communications company, AT&T, and are now conducting business in automobile wireless communications.

Also, businesses are now making efforts to provide value to consumers outside of their original scope of business and digital technology is making this possible.

There are still a lot of companies that are not experiencing the threat of digital disruption and do not see the need for rapid innovation or change. But as time passes and digital technology infiltrates each market, these will not be able to ignore the imminent need for adaptation.

As digital disruption innovation becomes more prominent, the companies that succeed will be the one that can implement new technology and rapidly provide value to the customer experience. Now is the time to prepare for digital disruption.

Written by Daeun Lim, LG CNS Student Reporter

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