Reports of our death are an exaggeration: Difference between revisions
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Apple, Amazon, and Google ''wipe the floor with any bank on technology'' is presented ''[[res ipsa loquitur]]'' — we can go with that without any first hand evidence, just based on how lousy bank tech its — and, sure, the FAANGs have better standing with the public. Who doesn’t love Amazon? Who ''does'' love Wells Fargo?<ref>Though we think Mr. Perez rather confuses the product for its manufacturer. We might feel different about Amazon if, rather than making neat space-aged knick-knacks it made a business of coldly foreclosing mortgages, and charging usurious rates on credit card balances. You | Apple, Amazon, and Google ''wipe the floor with any bank on technology'' is presented ''[[res ipsa loquitur]]'' — we can go with that without any first hand evidence, just based on how lousy bank tech its — and, sure, the FAANGs have better standing with the public. Who doesn’t love Amazon? Who ''does'' love Wells Fargo?<ref>Though we think Mr. Perez rather confuses the product for its manufacturer. We might feel different about Amazon if, rather than making neat space-aged knick-knacks it made a business of coldly foreclosing mortgages, and charging usurious rates on credit card balances. You don’t think it would? Have you seen the cut it takes from the play store?</ref> | ||
Therefore, Mr. Perez’ argument goes, the only place where banking presently has an edge is in regulatory licences and approvals, capital, and regulatory compliance. It’s wildly complex, fiendishly detailed, the rules differ between jurisdictions, and the perimeter between one jurisdiction and the next is not always obvious. To paraphrase {{author|Douglas Adams}}: “You might think GDPR is complicated, but that’s just peanuts compared to MiFID.” | Therefore, Mr. Perez’ argument goes, the only place where banking presently has an edge is in regulatory licences and approvals, capital, and regulatory compliance. It’s wildly complex, fiendishly detailed, the rules differ between jurisdictions, and the perimeter between one jurisdiction and the next is not always obvious. To paraphrase {{author|Douglas Adams}}: “You might think GDPR is complicated, but that’s just peanuts compared to MiFID.” | ||
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Thirdly a cool gadget maker that pivots to banking ''and does it well'' has as much chance of maintaining millennial brand loyalty as does a toy factory that moves into dentistry. | Thirdly a cool gadget maker that pivots to banking ''and does it well'' has as much chance of maintaining millennial brand loyalty as does a toy factory that moves into dentistry. | ||
Those Occupy Wall Street gang? Apple fanboys. ''At the moment ''. | Those Occupy Wall Street gang? Apple fanboys. ''At the moment''. But it isn’t the way trad fi banks go about banking that tarnishes your brand. It’s <nowiki>''banking''</nowiki>. IT’s a dull, painful, risky business. Part of the game is doing shitty things to customers who lose your money. That ''isn’t'' part of the game of selling MP3 players. | ||
The business of banking will trash the brand. | ''The business of banking will trash the brand.'' | ||
====Bank regulation ''is'' hard==== | ====Bank regulation ''is'' hard==== | ||
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Why surrender before kick-off like that? | Why surrender before kick-off like that? | ||
===A real challenger bank=== | ===A real challenger bank=== | ||
Programmatisation has its place | Programmatisation has its place. | ||
''People'' are the irreducible, ineffable, magic difference between excellent banks and hopeless ones: the transparent ''informal'' networks by which a good institution mysteriously ''avoids'' landmines, pitfalls and ambushes, while a poor one walks into every one. | |||
Sundar Pichai can’t code that. The same human expertise the banks need to hold their creaking systems together, to work around their bureaucratic absurdities and still sniff out new business opportunities and take a pragmatic and prudent view of the risk — this is not a bug in the system, but a feature. | |||
This is the view from the executive suite. They measure individuals by floorspace occupied, salary, benefits, pension contributions, revenue generated. Employees who don’t generate legible revenue show up on the map ''only as a liability''. The calculus is obvious: why pay someone to do badly what a machine could do cheaper, quicker, and more reliably for free? | |||
Thus, Cryan says and Perez imnplies: ''prepare for the coming of the machines''. Automate ''every'' process. Reduce the cost line. Remove people, because when they come for us, ''Amazon won’t be burdened by people''. | |||
===Yes, bank | ===Yes, bank tech is rubbish=== | ||
To be sure, the tech stacks of most banks ''are'' dismal. Perez is right about that. Most are sedimented, interdependent concatenations of old mainframes, Unix servers, IBM 386s, and somewhere in the middle of the thicket will be a wang box from 1976 with a CUI interface that can’t be switched off without crashing the entire network. These patchwork systems are a legacy of dozens of mergers and acquisitions and millions of lazy, short-term decisions to fix broken systems with sellotape and glue rather than maintaining and overhauling them properly. They are over-populated with low quality staff. Citigroup claims to employ 70,000 technology experts worldwide, and, well, [[Citigroup v Brigade Capital Management|Revlon]]. | |||
To be fair, it ''is'' hard to imagine Amazon accidentally wiring half a billion dollars to customers because of crappy software. Banks do have a first-mover disadvantage here, as most didn’t start thinking of themselves as tech companies until the last twenty years, by which stage their tech infrastructure was intractably convoluted. | |||
We ''presume'' Apple, Google and Amazon, who always have thought of themselves as tech companies, are naturally better at it and more disciplined about their tech infrastructure.<ref>See the [[Bezos memo]].</ref> But you never know. | |||
In any case, a decent technology platform is a necessary, but not sufficient condition to success in banking. You still need gifted humans to steer it, and human relationships to give it somewhere to steer to. The software won’t see itself. Bank technology is not, of itself, a competitive threat it is not. It is just the ticket to play. | |||
This is not to say | === Yes, bank staff are rubbish === | ||
We lionise the human spirit in the abstract. This is not to say we sanctify all bank employees in the particular. an unusually are gifted, intelligent bunch. You are invited to read other pages of this site for our views on that. Commercial banks act as boggling flywheels ''despite'' disastrous tech and a surfeit of mediocre, bureaucratically-conditioned staff. | |||
Imagine setting them free: automating the truly quotidian stuff, re-emphasising away from bureaucracy as the greatest good,and towards relationships management and expertise? | Imagine setting them free: automating the truly quotidian stuff, re-emphasising away from bureaucracy as the greatest good, and towards relationships management and expertise? | ||
Imagine a bank strategy that said the in | Imagine a bank strategy that said the in |