The Finanser LogoThe Finanser Logo

Chris Skinner's blog

Shaping the future of finance

Why banks find it hard to change

Chris Skinner Author Avatar

I was in a conversation with a bank executive talking about innovation.   We all know the Catch-22 in a bank: you want to be innovative, but only as long as there’s no risk but, with any innovation, there has to be risk.  You can play in the sandbox like little kids but, if you try to step out of the sandbox, we will slap you back down.  That is your place.  Stay there.

Any innovation the comes out of the sandbox is incredibly hard to internalise as the banks’ culture is there to wipe out the antibodies of the cannibalistic innovators.   That is why heading up innovation in any financial firm is a frustrating job that inevitably leads to moving to a Fintech start-up or the job centre.

The banking guy reflected on this and then said something really interesting.  His comment was that banks don’t like failure.  We know this, but it’s all to do with the compliance culture.  Failure implies issues and can raise regulatory alerts.  Banks want to avoid regulatory alerts at all costs, so failure is not an option.

I took the view that microservices architectures in an open marketplace of APIs allows failure, as it doesn’t have the same repercussions.  He said:

“Look Chris, you should know this.  We, as a bank, find it difficult to invest in conjecture.  So if we trial a project for $1 million and it fails, then we soul search to see what went wrong and, more importantly, who led the wrongness.  Someone has to be blamed.  And that someone is then fired.  However, if we are thinking about a $1 million project and can hire a consulting firm to investigate the project and tell us whether it will work or fail, then we are far happier.  So we might hire one of the big consulting groups and spend $1 million on their report that tells us our project – which would have cost the same to trial – is going to fail, and then we are happy because they told us it would fail for $1 million but look how much further cost, embarrassment and shame they allowed us to avoid.”

Woah.  I realised the enormity and, at the same time, the reality of his statement.  I have seen this first hand.  It is far better to get someone externally to come in and tell you if something is right or wrong because if it later turns out they gave the wrong advice, then you have someone to blame and possibly take to court.  However, if an internal guy says it, then woe betide that person if they are wrong.

It ticks so many other boxes.  For example, I remember a C-suite member of one bank talking about business cases, ROI, cost-benefit analysis and the future project revenues and costs.  He said that the bank was rigorous in ensuring that there was a business case for anything and everything.  If you wanted to do any new project, you had to show the numbers.

That’s difficult if you’re innovating as it’s never been done before, but hey ho, here’s the numbers.  The trick of the game, he said, is to make the numbers convincing.  Show that you’ve done your research.  Show that you used some consultants to bring together some customer focus groups who overwhelmingly believe your next generation app will get a million users in a month, and then flesh that out with projections and graphs.  Make it look amazing.  Don’t just put it in a PowerPoint but PDF it with the best graphic designers in town, and add some GIFs or videos which, when in the boardroom, keeps the management awake.

The reason why this advice is sound and sage is that, once you get the money, stop worrying.  You go the money based upon your sound, but fudged, business case.  You actually made the whole business case up and the numbers are all estimates based upon a finger in the air and a discussion in the pub over a napkin.  The fact you have numbers and seem to have substantiated them, and have research and presentational material that looks amazing, gets you the money.

Once you’ve got the money, don’t worry because no one ever, ever, ever goes back and looks at the numbers from last year to check.  Yes, they may check if you have a substantial failure but, if you work the numbers and the politics, you can pretty much get away with anything for a long time.

OK, the two conversations seem a bit at odds.  On the one hand, if I fail spectacularly then I’m out but if I get the analysis, I’m in; on the other, if I present a load of fictional thoughts, I get the money whilst if I tell the truth, I don’t.

But this is how it works guys.   Not just in banks, but in any large corporation.  It’s called politics.  If you are seen to fail, you are out; if you are seen to be doing the right things, you are in.  Bear that in mind when you innovate.  Large firms will not allow public failures.  Equally, large firms rarely invest properly unless they have numbers.

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...

Best Financial Services Blogger

Chris’s latest book

Chris Skinner’s ‘Digital For Good’ Book Launch Event – CFTE

Global Awards

Best CEO of the Year UK 2022

Best Digital Finance Provider of the Year UK 2022

Best Financial Markets Adviser of the Year UK 2022

Portal to the Knowledge Base of the Financial Services Club UK 2022

Financial Markets Advisor of the Year UK 2022

Corporate America Today Annual Awards

Best Financial Markets Adviser of the Year UK 2022

Portal to the Knowledge Base of the Financial Services Club UK 2022

Financial Markets Advisor of the Year UK 2022

Nominee of MAD33 2021

Kids creating the future bank | TEDxAthens

Join me on Linkedin

Follow Me on Twitter!

UK’s most influential person in technology

Captain Cake and the Candy Crew

Captain Cake Winner of a Golden Mom’s Choice Award


TheNextWeb – #tnw

Learn more about Chris

About Chris Skinner

Digital Bank Presentation

Digital Bank, May 2014 from Chris Skinner

Alex at the Financial Services

Gaping Void's Hugh MacLeod worked with the Finanser