Hate to be Captain Obvious, but sometimes we leave things unsaid for so long, whole armies of people seem to forget that they’re true. Over the past few months (and years), I’ve heard influencers, startup founders, journalists and banker friends from all over the world discuss the things banks need to understand, the timeline in which we need to get to grips with said things, and the ever-diminishing options left on the table as said understanding fails to materialise. I envy their optimism.
The truth as I see it is very different. Banks don’t need to understand how digitisation and new regulation changes their business model. They get it. It’s those of us who drive transformation within banks that need to understand what our mission actually is, should we choose to accept it.
Chief Chaser of Tail Officer
What are banks for? We match those who have money with those who need it. We take deposits and issue loans. We do a whole host of complicated stuff with the money, once we have it, to make it make more money. We also do a lot of cute stuff such as produce reports telling you what the money did, add widgets with all sorts of insights on top of what your money did, so you can use it to make more (or different) money, and we come up with helpful ways of getting to the money – both the money you need and the money you have. But at the heart of it all, we’re just a match-making service that could be replaced by vaults and algorithms. We don’t want to be replaced by vaults and algorithms, thank you very much, so we appoint people to look at the specifics of what we do; the cute stuff, the helpful stuff, the complicated stuff (though not the main stuff), and find cuter, more helpful, more or less complicated ways of doing said stuff – looking busy going around in perfectly formed, digital circles.
It’s important that we give the impression that we’re not running around in circles. It’s important that we exude belief and engender, in our own people as well as our clients and partners, the belief that we are consciously trying to move forward; to change deeply and meaningfully – while we focus on the things that are incidental and not core. The regulator is increasingly onto us, changing the tenor of what’s being regulated and how, and driving the most meaningful transformation agenda of my career (good on you, you Rebel Regulators. I’m a fan). But for everything else, the illusion of change is vital.
Banking as we know it is the creation of accountants and precise men in pinstriped suits, but it started off with a bunch of opportunistic entrepreneurs who saw openings and jumped right in. They did crazy things like hedge risk and sell future prices of made-up things to gamblers and businessmen. Those guys are mostly gone, even though they’re what you would need right now: people who wouldn’t try to find ways to keep hold of what you have, but folks hungry for more, and able to build opportunity out of thin air, just as they did first time around. Still, these guys aren’t here. What we have are the custodians of the structures that were built to serve the business these guys devised to serve a purpose they detected. That purpose has changed. The business needs to change, yet the custodians of the structure aren’t very good at finding a new purpose, and they are most definitely not the opportunistic, creative types who would devise a new business. They’re custodians of structures handed to them, and they have the skill to maintain, not create from scratch. Plus, they like the structure they have, so maintaining the structure becomes their end. And since they pay the bills and set the strategy, maintaining the structure becomes the end game of banking transformation – not because they don’t understand the way the world has changed, but because they do.
Chief Buyer of Time
The world is changing into a place we don’t like very much. The core of what we do could be fairly easily replaced, while the additional things we do could (and are) being rethought. But nobody is going far enough yet. Nobody is envisaging a world with no financial services institutions, just financial services absorbed into the function they support and delivered digitally as part of the transaction, trust relationship or daily activity. We have the tech to do this. We have the imagination. What we don’t yet have is willing owners, drivers and custodians for a sweeping, new paradigm where assets – information and wealth – are held and handled by new players via new means. Crypto folks would disagree, and rightly so. There is change afoot, but it hasn’t swept the tables clean yet. For most of my career, the world has looked to banks to solve this. We’re OK with that. It buys us time to carry on doing what we’re good at, what makes us money, what keeps the world as we know and like it.
There’s nothing sinister here. It’s not even a question of people holding on to wealth or power. Many bankers genuinely and deeply feel a sense of responsibility to their people: the pensioners they serve, the home buyers, the student loan carrier full of dreams. The dams they finance, the world trade they power that collapses borders and brings the world closer together, creating jobs and corridors of knowledge. There is a darker side, of course, to capitalism and bankers, but that’s not what drives this behaviour. We’re looking to the people who have most to lose by a change to drive it. We look to them to believe in it and champion it and then sell it to us. And we shake our heads at the things the bankers don’t seem to understand.
Oh, they understand. We understand. And some of us are excited about the change, because we’re geeks and enjoy the tech; because we’re the sort of people who like new worlds and are keen to explore. Some aren’t excited at all, because they’re human and fear the unknown. Yet, it’s not a lack of understanding that holds us back – it’s a genuine lack of desire to break the structures we know and champion something new that most bankers don’t want on a personal and professional level. You want a brave new world? You believe in it? Then act.
You will find many of us willing to help you. I for one, am game. But until you do, until you pin your colours to the mast and become the champion of a new shape, the custodians of the old will do everything they can to take as much of themselves into the future as they can get away with.
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