Banking Fintech

Banks could change, but the regulator won’t allow it … right?

Banks could change, but the regulator won't allow it ... right? Image: Aurelien Guichard
Written by Chris Skinner

The regulator won’t allow it? Are you sure? Chris Skinner thinks the combination of fear and assumption has no part to play in digital innovation.

I mentioned yesterday that a bank CEO asked me the three things I would do if I were him. My response was, “create the dream, live the dream, deliver the dream.” A bit cheesy, but you need to read the context if you want to know more about the background to this. He responded by saying, “But what if the regulator won’t allow it?” Oh no. Not that old chestnut.

Regulations are far too often used as an excuse to not do something, rather than thinking about what to do. If you come up against a regulatory issue, rather than giving up, my advice is to go and see the regulator. Regulators are human too, and if you really believe in your vision, so will they (if it makes sense). Of course, a regulator won’t sign off on a vision that says we’re going to tackle all of our customer deposits and gamble them on mortgage-backed securities (they’ve learned that lesson!), but they will sign off on a vision that says this is why this will work.

Most banks run afraid of regulators and use this as an excuse to not do things that make sense
It reminds me of the story shared by Michael Harte of Barclays, but then at Commonwealth Bank of Australia (CBA). He went to the executive team and said that he thought they should put all of their infrastructure into the cloud. The executive team told him to get lost and that the regulator wouldn’t allow it, so Michael being Michael went to the regulator and shared his plan. He explained how cloud would work for the bank, the cost savings it would achieve, and the flexibility it would give the bank to respond to new and challenging customer needs for real-time mobile. The regulator prodded, poked and queried the plan and, realizing it was robust, stable and would work, signed off on it. In other words, the executive team of most banks run afraid of regulators and use this as an excuse to not do things that make sense. If they talked things through with the regulator rather than assume they would shoot things down, the regulator would see the sense in their thinking.

This is a key to digital change: don’t believe in false assumptions. We often believe in false assumptions. We assume the regulators wouldn’t allow such things. We assume the banks’ management team would shoot our ideas down. We assume we will not get the money to make these changes happen. We assume we don’t have the skills to make it happen. We assume too much or, as my old teacher used to say, if you assume it makes an ass out of u and me.

Don’t assume anything, but challenge everything. Challenge the thinking. Shoot down the false assumptions. Get out there and change the world. After all, if you don’t, who will?

This article is reproduced with kind permission. Some minor changes have been made to reflect BankNXT style considerations. You can read the original article here. Image: Aurelien Guichard

About the author

Chris Skinner

Chris Skinner is an independent commentator on the financial markets through the Finanser, and chair of the European networking forum the Financial Services Club, which he founded in 2004. He is an author of numerous books covering everything from European regulations in banking through to the credit crisis, to the future of banking.

Leave a Comment