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'' — I can go with that — and have materially better standing with the public. Who doesn’t love Amazon? Who ''does'' love the Wells Fargo bank? The only place where banking presently has an edge is in regulation. 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.”
+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.”
+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 — there are any number of artificially intelligent startups that can manage that regulatory risk, right? The [[legaltech roll of honour]] refers.
 But really. Let’s park a few uncomfortable facts and give Me Perez the benefit of the doubt:
-Firstly — if it is such a cinch, where the hell are they? It is 2023, for crying out loud. None of Apple, Amazon, or Google as so much as cast a wanton glance in the direction of the financial services industry, despite the revenue opportunities. ''Something'' is keeping them away. Maybe the regulatory piece is a lot harder than it looks.
+====So where are they?====
+Firstly — if banking ''is'' such a cinch, ''where the hell are they''? It is 2023, for crying out loud. Wells Fargo is still with us. None of Apple, Amazon, or Google as so much as cast a wanton glance in the direction of financial services, despite the colossal revenue opportunities. ''Something'' is keeping them away.
+And it’s not the regulatory issues: if it were then you would expect tech firms to be awesome at ''unregulated'' financial services.
-But that’s not it: if it were then you would expect tech firms to be awesome at ''unregulated'' financial services. But — secondly — ''they’re not''.  We’ve been treated to a ten-year, live-fire experiment with [[Cryptobabble|unregulated financial services]], from which the traditional financial institutions have mainly stayed away, ''and it hasn’t gone well''. The [[cryptobro|cryptobros]] have rediscovered, and promptly fallen down, pretty much every manhole known to the world of money management — they’ve even found some new ones of their own to fall down that money management didn’t know about. Helpfully, [https://web3isgoinggreat.com/ Molly White] is keeping a running score. Crypto, despite its awesome tech and fabulous branding, has been a disaster.
+====Technros aren’t naturals at banking====
+But — secondly — ''they’re not''.  We’ve been treated to a ten-year, live-fire experiment with how good tech firms will be in [[Cryptobabble|unregulated financial services]], during which the banks — “[[trad fi]]” — and, notably, the FAANGS have mainly stayed away, ''and it hasn’t gone well''.
-Secondly a company that makes cool gadgets has as much change of keeping its branding following a pivot to banking as does it is a toy factory could that moves into dentistry.
+In their abstinence, [[Chauncey Gardiner|credulous cryptobros]] have found, and promptly fallen down, pretty much every open manhole known to money management — and discovered some whole new ones of their own to fall down too. Helpfully, [https://web3isgoinggreat.com/ Molly White] is keeping a running score. Crypto, despite its awesome tech and fabulous branding, has been a disaster.
-Thirdly it is naive in the extreme to prime that regulatory compliance is formalistic, let alone “the easy bit of banking”.
+====Tech brands won't survive contact with banking====
+Thirdly, a company that makes cool gadgets but pivots to banking has as much chance of maintaining millennial brand loyalty  as does a toy factory  that moves into dentistry.
-Park all that. For what Mr Perez overlooked as a core competence in a successful bank is the same thing Mr Cryan did: its ''people'". They are the irreducible, ineffable, magic difference. The ''informal'' networks by which it works, magically crossing the terrain like some hovering, morphing jellyfish.  Sundar Pichai can’t code that. That human expertise is required to hold the creaking systems together, to work around absurdities and take a pragmatic view — this is not a big in the system, but a feature.
+Those Occupy Wall Street gang? Apple fanboys.
-Not how modernist a disposition this is. It is to critique an organism by its formal, legible operation. It is the view from the disembodied luminaries who occupy that Cartesian theatre called the executive suite. They see only formal vulnerability, because formal structures are all they can see. Individuals are measurable by floorspace occupied, salary, benefits, pension contributions, revenue generated. Most employees don't generate legible revenue. They show up on the map ''only as a liability''.
+====Bank regulation ''is'' hard====
+Fourthly it is naive, to say the least, to presume that regulatory compliance is formalistic, let alone “the easy bit of banking”. If you could solve it with tech, the banks would have.
-From the executive suite, the calculus is obvious: why hire a dude to do that, when a machine could do it cheaper, quicker, and more reliably?
+Park all that. For what Mr Perez overlooked as a core competence in a successful bank is the same thing Mr Cryan did: its ''people'". They are the irreducible, ineffable, magic difference: 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 take a pragmatic view — this is not a bug in the system, but a feature. Neither Cryan nor Perez seems to think it exists.
+Note how [[modernist]] this disposition is. The critique addresses only the formal, legible operational fame work. The chains of command. The [[silo]]es. The [[reporting line]]s. The [[dotted reporting line]]s.
+This is the view of the disembodied luminaries occupying the executive suite. They see only formal vulnerability, because formal structures are all they ''can'' see. Individuals are measurable by floorspace occupied, salary, benefits, pension contributions, revenue generated. Most employees don’t generate legible revenue. They show up on the map ''only as a liability''.
+From the executive suite, the calculus is obvious: why hire a dude to do what a machine could do cheaper, quicker, and more reliably?
 Therefore the model, articulated by Cryan and implied by Perez: ''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 staff are mediocre===
 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.