Are banks serious about fintech?

I’m often asked how I got into FinTech. It’s an interesting question as I’ve been involved in Finance and Technology all of my life. Back in the day, it wasn’t called FinTech. It wasn’t cool. It was just boring old tech in banking.

Interestingly, for almost a quarter century, tech in banking was all about efficiency and automation. It was all about reducing overhead and cost. It was all about processing.

Then, around 2005, cloud computing came along. Cloud computing combined with modular computing to create the API revolution we see today. But it was more than that. It was the combination of ideas and vision of many young players, and money and investment from people who wanted to change the system, that created this FinTech revolution.

That revolution bubbled away in the mid-2000s but really took off after 2008, when the Global Financial Crisis hit. Looking back, I find it interesting that most of my writing was about regulatory change and globalisation until 2008; then it pivoted to focus almost solely on tech.

Now, I spend 99% of my time talking innovation, technology, start-ups, ideas, vision and change. Ten years ago, I spent most of my time talking regulation. How times have changed.

Part of the reason for mentioning this today is that I find myself more and more alienated from banks. Or, rather, from some banks. Ten years ago, I would regularly present to the big banks of the world; today, I make such presentations less often. In some ways that is strange, as you would think that the big banks of the world would be more engaged with me now than ever before. But no.

This is because the big banks are embroiled in a mess of change. They have huge pressures from regulators to reform. They have massive shareholder involvement, demanding change and better returns on investment. They have a focus on the balance sheet and return on equity. Their management teams are being beaten up from all sides.

The CEO knows that the bank must look like its an innovator, heavily involved in FinTech. He or, more rarely, she knows that they must mention AI and Blockchain as often as possible. It doesn’t matter whether such commentary is real, as long as the bank looks as though it’s real by association.

I find it interesting to meet bank’s leadership teams, and my message is always the same: embrace change, learn to code, encourage youth and vision, change the leadership and so on. I don’t make for comfortable listening. However, equally, times are not comfortable.

Ten years ago, banks purely focused upon the cost-income ratio, growing the asset base, reaching a wider audience, globalising and becoming universal banks. They fought regulation and often were in the driving seat. Today, the regulators have cracked down and opened the market to more competition; the markets have opened up through technology to allow competition to walk in; the drive to globalisation has halted and many institutions are refocusing upon core markets and core competencies; and the balance sheet no longer yields easy profits.

This was evidenced to me the other day when talking to a bank about sponsoring a philanthropic and charitable competition. The bank’s chairman said well, ten years ago, this would have been easy but, today, no bank has money to give away. These are interesting times and yes, banks have big challenges and they get bigger every day.

Even so, The Banker magazine’s summary of the Top 1000 banks of the world tells a different story. Interesting times indeed.