I’m acutely aware that so many people write and talk about how big banks are dumb and stupid and don’t get digital, that I try to avoid that mantra personally. People do accuse me of being a bank basher, but I’d rather say that I’m a bank challenger (not a challenger bank). I challenge the banks to change and change in the right way. I’m not saying they’re rubbish, stupid or dumb. I’m saying they’re big and strong but slow and often misdirected. They lack the right leadership and don’t deal with technology in the right way. That’s a view I’ve had for a long time and every day it becomes more prescient, as demonstrated by yesterday’s blog about HM Treasury, UK Gov and regulators all cracking down hard on bank IT failures.
So, it does gratify me a bit when I see that banks are doing good things to respond to this challenge. They’re not dumb and stupid. They are dealing with it. Some are dealing with it better than others and some are doing amazing things right. No many, but some.
Take Deutsche Bank.
Technology has long been a problem for Deutsche Bank. Former Chief Executive John Cryan complained in 2015 about “lousy systems” and “very slow processes”, and former operations chief Kim Hammonds last year described Deutsche as “vastly complex” and the “most dysfunctional” workplace she has known.
The central technology division announced on Monday will be led by Bernd Leukert, overseeing tech security, data and innovation functions among others, the bank said in a note to employees seen by Reuters.
“At its heart, our technology strategy empowers our businesses to control ‘what’ is produced, while technology has control of the ‘how’. In the past, the ‘how’ offered too much optionality and did not consistently follow group-wide architecture and tooling,” it said.
I love this quote as it so encapsulates the world today. Finance is what banks do; technology is how they do it. Love it.
In a separate note on Bob’s Guide, Paul Maley who is the Managing Director and Head of the Corporate Bank for the UK and Ireland at Deutsche Bank, is quoted as saying (quote shortened for effect):
“[Banks] have allowed fintech to take away a lot of market share, a lot of access to clients, and therefore, a lot of profitable revenue streams … we just gave away too much, and there was often a mindset about meeting the requirements of the regulation rather than being in front of it, and thinking about the business models that were going to come as a result.”
Interesting. I agree btw, and believe that banks have rarely been in front of the game with technology or regulation. They tend to wait until they’re hit round the head with a wet fish before they respond to anything.
(note: anyone using Monty Python sketches in a blog is obviously seriously over the hill)
“In the world we live in today you just have to admit you can’t do everything yourself. There are some really smart people out there with great technology, and partnerships can be hugely valuable … my perspective was that it was a growth part of the marketplace. It wasn’t either ‘them or us.’ We could both be successful and we could actually learn from outsiders in the industry.”
All players in financial services, Scharf maintains, “should be asking themselves, can we be replaced? The answer is theoretically, yes, they can, so, what are they doing about it?”
Too right. Nothing is unassailable, irreplaceable, sacrosanct. A good lesson to remember if you’re in a large, successful bank. Change is the only constant. Get with it!