I was making a list the other day of the big changes in banking and technology. Distributed ledgers, tokenisation, digital identity, Central Bank Digital Currencies (CBDCs), cryptocurrencies, stablecoins, artificial intelligence (AI), chatbots, hacking, cybersecurity, embedded finance, ecosystems, platforms, fintechs, Application Programming Interfaces (APIs), Open Banking … the list is long. It is no wonder that we feel technology is moving too fast to keep up with the pace.
Having said that, most businesses recognise that they have to invest in technology and talent to maintain competitiveness. According to KPMG, “greater agility and faster decision-making, transparency in communication, and the ability to identify, prioritise and manage risks are seen as the top leadership capabilities needed today”.
That’s interesting as most companies, particularly banks, have slow decision making, are secretive … but are good at managing risks, which is their focus. The thing is you cannot have fast decision making, transparency and strong risk management … or can you?
If you make fast decisions, it implies that you are impulsive and could make the wrong decisions. If you have transparency, it sounds like you wear your heart on your sleeve and yet, when it comes to risks, you should keep secrets. When you focus on risk, the key is to avoid exposures, so you should avoid fast and impulsive decisions and transparency.
These three headlines for a CEO are at odds with each other … or are they? Can you manage risks with transparency and fast decision making?
In my own experience, most companies are not fast in making decisions; they are not great at communicating, particularly communicating with transparency; but they are good at managing risks by avoiding making decisions.
What is interesting today is GenZ are making a big difference in the fintech firms I talk to. Their executive teams are fast moving and transparent. Take Revolut with their new bets strategy. Anyone in the company can propose an idea. If the idea is supported, then a few million dollars and an experienced executive mentor are allocated to the project to make it something that can be taken to market. Result? There are almost 50 new bets made since 2021 of which five have been breakout successes, according to co-founder Nik Storonsky.
What this means is that you have transparency – anyone can propose an idea – and you have fast decision making – if the idea is good, it gets support – and you have risk management – the idea does not go-to-market until proven.
Is this the way we run our banks? Is the CEO accessible this afternoon if you have an idea this morning? Does the CEO communicate regularly with transparency to all staff? Does the management always say computer says no to avoid risks?
If you answered yes to any of the above, you are in the wrong company.
After all, how can you keep up with all of the changes I listed at the start of this blog if you have a management team who avoid all risks, cannot make decisions and cannot communicate?
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...