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Reports of our death are an exaggeration: Difference between revisions
Reports of our death are an exaggeration (view source)
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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 sin’tctg7nk it would? Have you seen the cut it takes from the play store?</ref> | 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 sin’tctg7nk 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.” | ||
But, but, but — any number of artificially intelligent startups can manage that regulatory risk, right?<ref> The JC’s [[legaltech roll of honour]] refers.</ref> | But, but, but — any number of artificially intelligent startups can manage that regulatory risk, right?<ref> The JC’s [[legaltech roll of honour]] refers.</ref> | ||
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Those Occupy Wall Street gang? Apple fanboys. ''At the moment ''. | Those Occupy Wall Street gang? Apple fanboys. ''At the moment ''. | ||
The business of banking will trash the brand. | |||
====Bank regulation ''is'' hard==== | ====Bank regulation ''is'' hard==== | ||
Fourthly regulatory compliance is hardly formalistic, let alone “the easy bit of banking”. If you could solve it with tech, the banks would have long since some it. They gave certainly tried. Regulations change, contradict, don't make sense, overlap, are fiddly, illogical, often counterproductive and they are subject to to interpretation by regulators, who are themselves fiddly, illogical and not known for their constructive approach to rule enforcement. | Fourthly regulatory compliance is hardly formalistic, let alone “the easy bit of banking”. If you could solve it with tech, the banks would have long since some it. They gave certainly tried. Regulations change, contradict, don't make sense, overlap, are fiddly, illogical, often counterproductive and they are subject to to interpretation by regulators, who are themselves fiddly, illogical and not known for their constructive approach to rule enforcement. | ||
Getting regulations wrong can have ''bad'' consequences. Even apparently formalistic things like [[KYC]] and [[CASS 6|client asset protection]]. Banks ''already'' throw armies of bodies and [[legaltech]]<ref>Our [[legaltech roll of honour]] refers.</ref> at this and still they are routinely breaching minimum standards and being fined millions of dollars. | |||
===The gorillas in the room=== | ===The gorillas in the room=== | ||
But in any case park all the above, for it is beside the point. For Mr Perez overlooked the same core banking competence that Mr Cryan did: quality ''people'". | But in any case park all the above, for it is beside the point. For Mr. Perez overlooked the same core banking competence that Mr. Cryan did: quality ''people'". | ||
They are the irreducible, ineffable, magic difference between excellent banks and hopeless ones: the transparent ''informal'' networks by which it mysteriously navigates all kinds of terrain like some hovering, morphing jellyfish. 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. Neither Cryan nor Perez seems to think it exists. | They are the irreducible, ineffable, magic difference between excellent banks and hopeless ones: the transparent ''informal'' networks by which it mysteriously navigates all kinds of terrain like some hovering, morphing jellyfish. 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. Neither Cryan nor Perez seems to think it exists. | ||
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Now, to be clear, the tech stacks of most banks are dismal. Perez is right about that. Amazon’s tech ''would'' wipe the floor with any banks tech: most are sedimented, interdependent concatenations of old mainframes, Unix servers, Windows terminal servers, 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. And banks are tech companies: you can't stop a bank and put it up on the blocks for 6 months while you rebuild it. (though covid: opportunity missed.) it is hard to rebuild the engine of a car while it is barreling down the motorway at 70mph. Banks didn't start thinking of themselves as tech companies until the last twenty years. | Now, to be clear, the tech stacks of most banks are dismal. Perez is right about that. Amazon’s tech ''would'' wipe the floor with any banks tech: most are sedimented, interdependent concatenations of old mainframes, Unix servers, Windows terminal servers, 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. And banks are tech companies: you can't stop a bank and put it up on the blocks for 6 months while you rebuild it. (though covid: opportunity missed.) it is hard to rebuild the engine of a car while it is barreling down the motorway at 70mph. Banks didn't start thinking of themselves as tech companies until the last twenty years. | ||
Per John Gall: temporary patches have a habit of becoming permanent. | Per [[John Gall]]: [[The temporary tends to become permanent|temporary patches have a habit of becoming permanent]]. | ||
We presume Google and Amazon, who always have, are better and more disciplined about their tech infrastructure than that.<ref>See the [[Bezos memo]].</ref> | We presume Google and Amazon, who always have, are better and more disciplined about their tech infrastructure than that.<ref>See the [[Bezos memo]].</ref> | ||
The tech stack can give them wings, but they have to decide where to fly. They narratise. | The tech stack can give them wings, but they have to decide where to fly. They narratise. They bond, form networks, make connections, ''persuade''. These things a machine cannot do. | ||
So, note the category error bank leaders make in seeing technology as the competitive threat it is not. It is just the ticket to play. | So, note the category error bank leaders make in seeing technology as the competitive threat it is not. It is just the ticket to play. | ||