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Shaping the future of finance

Can banks meet the needs of government and the people?

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I did a search of “Jamie Dimon” the other day, and was intrigued by the results. It reached everything from how cryptocurrencies are dangerous to Jeffrey Epstein, the late sex offender connected to everyone from Prince Andrew to Jes Staley, formerly with JP Morgan and CEO of Barclays.

The search made me realise how much a bank CEO has to deal with these days. Banks are collapsing – Credit Suisse, Silicon Valley Bank and more. We are experiencing what I call a Crypto Winter and FinTech Bloodbath. Small and large banks are going under due to interest rates, and a lot of finance faces a desert of funding. We are in hard times.

Throughout these hard times, JP Morgan Chase has been pretty reliable. As First Republic melted, JP Morgan brought them up, just as they did with Bear Stearns and Washington Mutual. They are a trusted institution and it is a testament to Jamie Dimon’s steerage that this is the case. Officially named CEO of the company back in 2006, he’s seen the company survive crisis after crisis. As he says himself: “my daughter asked me when she came home from school, ‘what’s the financial crisis?’ and I said, it’s something that happens every five to seven years.”

A financial crisis is what happens every five to seven years. Five to seven years. A financial crisis.

As I sit and think about that fact, which is pretty much true, I wondered why this is the case. We are meant to be in a strong and stable industry. An industry that is resilient and reliable. If you were involved in other markets that imploded every five to seven years, where would you be?

Imagine if a plane crashed every five to seven years. Would you fly? Imagine if the pharmaceutical pills you took killed someone every few years, would you still take prescription drugs?

From my own perspective, I find it incredible that we live in an industry that allows a crash to occur so frequently. We claim the industry is regulated, formalised and strong and stable, and yet we expect the industry to crash and burn every five to seven years. Today, it’s Credit Suisse and Silicon Valley Bank. Yesterday, it was a Sovereign Debt Crisis in Europe. The day before, it was the end of Bear Stearns and Lehman Bros. The day before that, the internet boom and bust.

We take all of these occurrences on the chin but, from a non-banker perspective, you have to ask: what is this industry? The claim to be trusted and stable, and yet they crash and burn every five to seven years? Let’s look at alternatives.

No wonder there is this rising movement of Libertarians who believe the internet can create a better way. Bitcoin, cryptocurrencies, altcoins and more can provide a new financial system that doesn’t crash and burn every seven years.

Now, bearing in mind our audience, you will be saying: these guys are nuts. What is backing the crypto-system? Bits and bytes? Air?

The thing you miss in that submission is that the people who believe in cryptocurrencies believe in the power of the network. They believe in the power of the people. The people control the world.

This is when it gets interesting. In governments and banks, we think we control the world through strong and stable economies backed by strong and stable currencies and strong and stable companies, namely banks. Yet banks accept that every five to seven years, we are in crisis and have issues that might destroy the system. We then try to provide CPR (cardiopulmonary resuscitation) to keep the system alive.

Is the system alive?

The challenge that libertarians with their idea of decentralising finance and placing financial services regulation and control in the hands of the people is not madness. It has traction. In fact, it has traction every single day. Should we, as bankers, be worried? Not really. We need to embrace the fact that banking now has dual governance. The governance of the regulators and the governance of the people. I guess the issue is that, if you ignore the latter and only focus on the former, you just become a pawn of the state.

My argument is that we need to be a servant of the state and the people. Can we build a model that meets both such needs?

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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