I remember organising my first banking conferences in the 1990s and there was a regular mantra amongst the memes of the folks speaking on stage.
There is more change coming and you’re going to be dead meat unless you change.
It was a common theme to hear the word disintermediated being used in these speeches. Microsoft, Wal*Mart and Virgin are all coming for your lunch, you’re going to be disintermediated.
Well, no one ate the bankers lunch and so the over-used term lost its relevance and interest.
Then, in the 2000s, Yodlee and aggregators appeared and everyone thought that this would kill the bank relationship with the customer. At the conferences, many a keynote would stand up and say technologies like data aggregation are going to disintermediate the banks from the markets.
Well, the aggregators have been out there for 20 years and the banks still have strong client presence in mobile apps, so that was a bit of an over statement, wasn’t it?
Then mobile banking appeared and the Mobile Network Operators (MNOs). The mantra at the conferences became look at the threat of the MNOs. They’re all going to disintermediate you. Wake up and smell the coffee.
So, the bankers went and got a triple, venti, non-fat, caramel macchiato … or two … and watched as the MNOs did their business. Nothing happened.
Most recently, Fintech has appeared and all the markets and conferences and media are going look, we finally have real disruption. You’re all going to be disintermediated.
And the bankers watch and wait, and sure enough the Fintech crowd soon realise that banking is a little more complex and end up working with them rather than against them.
So this disintermediation thing is pretty stupid. You keep calling it and it doesn’t happen. Get a new message …
Or is it more that the message is constantly that it is not the aggregators, the MNOs or the Fintech firms that will disintermediate banks, but technology itself. Maybe it is the cry of the technologist that is trying to tell the financial community that software is eating the world; everything that can be automated, will be; as we digitalise everything, you need to transform or die; it’s not an evolution, but a revolution.
In other words, as with all revolutions, they may take a long time coming but, when it finally hits – the digital transformation finally matures – yes, you will be disintermediated unless you adapt to its demands. Its demands I’ve blogged about often – platforms, marketplaces, open sourcing structures, microservices architectures – and so on and so forth. In particular, it demands balance in the boardroom where at least half the leadership team know the difference between a blockchain and a distrusted ledger, e.g. a boardroom balanced between technologists and bankers.
I guess it’s really an update of the old, old story of the shepherd boy protecting the sheep and crying Wolf all the time. Just that this story is about the technologist trying to protect the bankers by crying Disintermediation all the time.
So yes, today marks the day for an update on that good old story:
The Boy who cried Wolf! (#fintech stylee)
There once was a technologist who was bored as he sat in a conference watching all the bankers. To amuse himself he took a great breath and sang out, “Disintermediated! Disintermediated! You’re all going to be disintermediated!”
The bankers ran out of the conference to help their brethren stop them from being disintermediated away. But when they arrived at the end of the project, they found there had been no threat of disintermediation anyway. The technologist laughed at the sight of their angry faces.
“Don’t cry ‘disintermediated’, techie guy,” said the bankers, “when there’s no disintermediation!” They went grumbling back into their offices.
Later, at another conference, the technologist thought he would give it another go, and shouted out again, “Disintermediated! Disintermediated! You’re all going to be disintermediated!” To his naughty delight, he watched the bankers run out of the conference to stop them from being disintermediated away.
When the bankers saw there was no disintermediation, they sternly said, “Save your frightened song for when there is really something wrong! Don’t cry ‘disintermediated’ when there is NO disintermediation!”
But the technologist just grinned and watched them go grumbling back to their offices once more.
Later, he saw a REAL disintermediation coming to hit the market. Alarmed, he leaped to his feet and shouted as loudly as he could, “Disintermediation! Disintermediation! It’s here!”
But the bankers thought he was trying to fool them again, and so ignored him.
At sunset, everyone wondered why the technologist hadn’t returned. They went up the hill to find the technologist weeping.
“There really was a disintermediation here, and now all of your banks, that I used to sell to, are dead! I cried out, “Disintermediated!” Why didn’t you take any notice?”
An old banker tried to comfort the technologist as they walked back to his office.
“Well, thanks for trying to tell me and my friends that we might die,” he said, putting his arm around the youth, “but nobody believes a liar...even when he is telling the truth!”
At that point, the bankrupted banker shot the technologist with a .44 Colt Magnum through the head.
Chris M Skinner
Chris Skinner is best known as an independent commentator on the financial markets through his blog, TheFinanser.com, 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...