The revolution will be regulated
I hate guessing games. They are never any fun.
The person asking the question always knows the answer and they are hoping for flattery or agreement. Or to show you how widely off the mark you are, you silly thing.
Where do you think I am from?
Who do you think won the RFP?
How much do you think that cost?
Come on now.
You know what I hate more than guessing games?
They may not have a right or wrong answer, but the potential answers are either irrelevant and uniformed or depressing in their mundaneness.
What do you think will happen next?
Who do you think will win the league?
Who will be the winners and losers of digital banking?
Guesses at the shapes our unknowable future may take. The ways in which the world may fail to surprise us. The ways in which the future may trip us up.
I don’t enjoy it.
I don’t find it valuable.
Don’t ask me, “if you had a crystal ball, what do you think the biggest change of the post-COVID world will be for banks?”.
Ask me a better one.
Ask me, “if you had a magic wand, what would the single change you choose for the post-COVID world?”. If we are going to go all unrealistic and supernatural, I find that a star-topped wand suits me better than a swirling orb. Aspiration suits me better than guesswork.
I have a wish list, even if I have no second sight.
Plus my prediction is depressing.
I don’t think the next few months will be defined by much more than anxiety, a desperate effort to return to an elusive normality, an attempt to bridge gaps, close the gulf between plan and reality and the complete displacement of ambition by expediency.
That is my prediction.
It’s not the stuff of poetry.
And it is not my wish.
So ask me the better question.
What do I think would help us do better next time? Because I have a much more exciting answer for this. Though you may not like it.
It wasn’t all bad
The feeling in the industry is that, all things considered, we haven’t done too badly dealing with the curveballs that came as part of the COVID crisis. From the challenges remote working presented, to the need to disseminate loans in record time, create disbursement schedules and payment holidays in quasi real-time, on coal-operated systems held together with sticky tape and string, banks rose to the challenge admirably.
If people feel pride in the work they did, they are justified.
If you look closely you will see that the humans rallied. They rose to the challenge and found ways around problems through sheer determination and immensely hard work. Sleepless nights, weekend shifts, relentless dedication.
And that is amazing.
The reason all that was needed in the first place was because the systems we work on top of are not fit for purpose for a digitally native, real time world. They are not responsive and they are not adaptable. They are hard to change and hard to make change through. They are rigid and lack agility.
So to say that we discovered that, when the globe went into crisis, our systems lacked the requisite agility implies a degree of surprise that is, frankly, not entirely honest.
We knew that our systems lacked agility.
What we didn’t know was that agility may become a matter of societal expediency rather than just market positioning. As if the stakes were not high enough already.
So did the banks do well?
The systems were found wanting in every way we knew they would be.
The people rallied. The people overcame. The people are something to be proud of. But if that pride translates to the complacency that, next time the world is on fire, our amazing teams will do the same, work 18 hour days for days on end to find a way through the obstacles we have ourselves put in their way, then we don’t deserve those teams. And we don’t deserve a second chance.
We knew we had a problem before.
We knew our systems were inadequate.
We know we have a problem now.
We have seen that, at a moment where societies and humans needed banks to deliver against their systemic infrastructure duties, not just against their capitalist mandates (and nothing wrong with those either), the banks were unable to do so in a way that was efficient, economical and smooth.
The end result was achieved through sheer human toil, effort, rabbits out of hats and caffeine-fuelled doggedness.
This cannot be the plan.
And yet it has been the plan for so long, in banking, that I am certain people may be seeing nothing wrong here.
But see it or not, it is here, it is wrong and it is time we did something about it.
“Agile” is not a software development methodology. Agility is a measure of your ability to respond to changing circumstances and external stimuli – be it danger or opportunity – efficiently.
And that’s the key.
Surviving by the skin of your teeth makes for a great movie. But it is a testament to a problem with agility.
If COVID taught us anything, it is not that our systems lack agility, it is not that antiquated systems that are kept at the core of our FIs rob us of agility in the name of risk management or cost controls. We knew all this. What COVID taught us is that agility is not about market capture and corporate survival. It is not about competitiveness, it is about living up to our systemic duties to the communities we serve.
Agility is not a choice, a way of increasing share of wallet or reducing time to market.
It is all that. But it is more than that.
COVID has turned it into a litmus test of whether we can deliver against our duty, writ large.
The revolution will be regulated
Now, before I swish my magic wand let me repeat two things I have said ad nauseam before, just in case you are new to the party or haven’t been paying attention:
- I believe the biggest driver of accelerated change in the more mature markets globally, when it comes to digital adoption, has been the regulator. Reducing barriers to entry, switching the focus from check-lists to the appropriate use of relevant technology, focusing on consumers, literacy and advocating – nay, expecting – the use of technology to be a force for good by all players of all sizes, the regulator has made the democratisation of finance and tech transformation of the industry a moral imperative, not a commercial choice.
- Globally, the business models and partnership models that have succeeded and thrived in each geography have been to a very large part driven by regulatory provisions and strategic imperatives. No accidents there.
So. Magic wand time.
Knowing what we knew anyway pre COVID. And knowing what we know through COVID, what I would like to see is regulators looking at, not just capital adequacy and systemic robustness, but agility as an active measure of compliance.
Because we know beyond the shadow of a doubt that we may have responded to the crisis, but we didn’t do so efficiently. And the ways in which that would have been preventable were known before and known now. They look like profound infrastructure overhauls and a massive revamp of core tech so that the next time agility is of the essence, be it in crisis or opportunity mode, we can respond as an industry with speed, efficiency and no all-nighters.
So that in the next crisis, the creative energies of the amazing people inside our buildings can be focused on creative solutions for our customers and business rather than entirely avoidable fire-fighting.
And since knowing that we have a problem is evidently not enough for us to fix it, I am summoning the power of the wand to get the regulator to expect a fix and demand demonstrable agility from us.
Because if they raise the bar, we shall meet it.
And when that happens, ask me about the crystal ball.
When we stop trying to live with known problems and choose to fix them and move on to taking on creative challenges with panache, I may be willing to play a prediction game after all. Till then, I am all about using my magic wand for good.
Because although I have no illusion that, as an industry, we won’t take this on out of choice, I also have no doubt we will rally, deliver and do great things when it becomes expected of us.
With a little nudge from the regulators and a little swish of my wand.
About the author
Leda Glyptis is FinTech Futures’ resident thought provocateur – she leads, writes on, lives and breathes transformation and digital disruption.
She is a recovering banker, lapsed academic and long-term resident of the banking ecosystem.
All opinions are her own. You can’t have them – but you are welcome to debate and comment!