Why banks won’t change

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My series of articles about The Intelligent Ledger has now accumulated 10 weeks of reader feedback/objections, conference push-back, and one memorable email. This final article in the series is a reflection on the most instructive disagreements, and what they reveal.

One of the privileges of writing in public is that the readers write back. Since the book came out and across this column series over the late summer and autumn, I have had lots of responses: generous, sceptical, occasionally indignant, and almost always instructive (for which I am deeply appreciative).

As I draw this series to a close, I want to do something with the feedback, because the objections themselves turn out to be the most revealing data I have gathered all year. Not because they are wrong, but because of how they are right.

The most common response, by a distance, was: “You underestimate regulation. Platforms will never be allowed to do what you describe.” A fair point, sincerely held, and historically uncomfortable. I would argue that regulation did not stop Big Tech taking payments, advertising, retail or media; it shaped the terms on which it took them. Licences, as I wrote earlier in this series, are the price of admission, not the moat. The new entrants are paying the price, methodically, charter by charter. Regulation will decide how the platform era of banking arrives. I have seen nothing suggesting it will decide whether it does.

The second most common response was: “Customers trust banks, not tech companies, with their money.” I learned long ago to watch what customers do rather than what they tell surveys, and what they do is follow convenience with their behaviour while expressing loyalty with their words. They trusted the high street and then shopped online. They trusted cash and then tapped their phones. Trust in banking is real, and it is genuinely the incumbents’ greatest asset. But it is really only a head start, not a barrier. And a head start only counts if you run.

The third most common response, and the one I have most sympathy for, was: “We tried journeys and they didn’t work.” I believe you. I tried journeys too; my company died of it. But those journeys failed when orchestration was manual, data was siloed and money moved in batches. Every one of those constraints has moved since. “We tried it in 2019” is only a statement about 2019.

And then there was the email I will remember most, from someone who wrote with honesty, words to this effect: “You are probably right, but nothing you describe will land in my tenure, and everything it costs will.”

I have thought about that email for weeks, because it is the truest objection of all. It is not an argument against the thesis; it is a confession of the reality in the corporate machinery of banks. Every objection above is true locally: true for this budget round, this risk appetite, this tenure. But that is exactly how institutions assemble outcomes nobody chooses. 40 years ago, we started building banking’s legacy systems the same way: one rational, defensible, locally correct decision at a time. Nobody set out to build the tangle, the spaghetti architecture. Yet, everybody did.

So, I end this series more convinced of the argument and more sympathetic to the people inside it. The barrier to change in banking is not a lack of understanding. It never was. The industry is full of people who see all of this clearly. The barrier is that we have built institutions in which seeing clearly and acting accordingly have come apart, and I believe only true leadership: named, resourced, tenure-be-damned leadership, joins them back together.

To everyone who wrote, argued, corrected and encouraged these past 10 weeks - thank you, sincerely. Keep disagreeing. It is the only way either of us gets less wrong and we both learn.

This week, I close by just saying that every objection I received was right, and that is exactly the problem.

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