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Bankers and regulators: do you want a Red or a Blue Pill (Matrix)?

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I had a Red Pill moment last week.

Not an Aha moment but a Red Pill moment because I realised the false reality of our world.

You see, I present all the time and talk about the forces of change for the future: Political, Economic, Social and Technological (PEST).

I usually skip over the Political and Economic because it’s booooring, and focus upon the Social and Technological because it’s way sexier.

Then we were having a debate the other day, and someone said: “there’s a disconnect between the regulatory and innovation agenda”, and I went Red Pill please, and now there’s no going back.

What was the realisation?

I warn you now, read no further if you want to take the Blue Pill and, just to be absolutely clear, if you haven’t seen The Matrix, this is what we’re talking about.

In The Matrix Neo, played by Keanu Reeves, meets a mysterious man named Morpheus who tells him that he is just a small part of the Matrix and one of its slaves.  He tells him that he can become free, and gives him a choice of taking a Blue Pill or a Red Pill.

The Blue Pill will allow the subject to remain in the fabricated reality of the Matrix, whilst the Red Pill allows him to locate the subject’s body in the real world and to prepare him to be unplugged from the Matrix.

Which pill do you take?

Take the Blue Pill and maintain the fantasy, or take the Red Pill and see the reality.

Each person has only one choice with no possibility to reverse their original choice.

What’s your choice?

Don’t read further if you want the Blue Pill.







Here goes.

Red Pill moment.

We had a financial crisis and I don’t cover the Political and Economic stuff because it’s all about Volcker, Vickers, Barnier, Liikainen, Lagarde, Osborne, Yellen …

It’s all about G20, G8, G7, EU, USA, SEC, Federal Reserve, ECB, PRA, FCA …

It’s all about Dodd-Frank, EMIR, MiFID II, PSD II, Basel III, UCITS IV, Banking Union, Banking Reform Bill …

It’s all about the incredible tsunami of regulation hitting the boards.

Someone at last week’s meeting said that the entire works of Shakespeare amount to around 800,000 words whilst FATCA is 900,000.

I noted a while ago that the Volcker Rule was outlined in a three-page letter to the president.  When the Dodd-Frank Wall Street Reform and Consumer Protection Act went to Congress, the Volcker Rule took up 10 pages.  When the proposed regulations for the Volcker Rule finally emerged, the text had swelled to 298 pages and was accompanied by more than 1,300 questions about 400 topics.

This is not simple.

We are desperately trying to reform the banking system to bring back stability.

That is what the Asset Quality Review is all about, and the implementation of Liquidity and Leverage Ratios.

Now for the Red Pill moment.

Maybe this is all for naught.

Maybe this regulatory stuff is addressing a system that is fundamentally and fatally broken.

Maybe this system was built for the last century world of finance.

And maybe the regulators and governments have got it all wrong.

You see, whilst the Political and Economic agenda is trying to create a stable banking system, Society and Technology are trying to create a new one.

That’s what Bitcoin is all about.

Bitcoin is money without government and no banks involved.

It has been created by the WikiLeaks generation as the Wikicoin for the modern world.

A modern world that has been transformed by air travel and technology such that anyone can connect with anyone, anywhere on the planet and exchange knowledge, ideas, value and currency.

A globalised world that needs a globalised government, not a localised world with a localised government.

The government of the internet is the crowd, and the crowd want to be released from control.

This is potentially a transformational moment or an evolutionary moment, but the key to note is that it is not a transient or quiet moment.

For, as governments and financiers work together to address the political and economic issues, developers and technologists are working together to avoid those issues.

In fact, whilst we have a divide between the PE and the ST of the PEST model, we maintain a divide between the regulatory and innovatory aspects of banking.

We split the new world of finance – Bitcoin, iWoca, Kickstarter, Square, Fidor, Moven, m-Pesa, G-Cash, mBank, the Currency Cloud, eToro, Personal Capital, Zopa, Funding Circle, PayPal, Hello, Soon, the Housecrowd, EZBob  – from the old world banks – JPMorgan, Deutsche, BNP Paribas (who own Hello btw).

The new world banks focus upon the S and the T, and innovate the hell out of the old world banks until, sometime soon, the old world banks will see the regulatory agenda took their eye off the ball.

‘The ball’ being ‘the customer’.

Seems that way to me anyway and even if it’s not a Red Pill moment, it sure-fire means that the Blue Pill doesn’t work anymore.



Chris Skinner Author Avatar

Chris M Skinner

Chris Skinner is best known as an independent commentator on the financial markets through his blog,, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal's Financial News. To learn more click here...

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