Financial Services have been and still are undergoing a time of intense disruption of all its aspects. Change is the only constant in this equation and it is difficult to stay on top of developments. A new book published by the London Institute of Banking & Finance provides insights by experts and influencers from across the financial services industry on some of the central questions facing the finance sector today: Banking on Change – The Development and Future of Financial Services.
An Age of Disruption
Financial Services has and still is undergoing a time of intense disruption of all its aspects. Looking back at how banking has changed over the years, it has experienced before periods of fundamental change, but it is probably fair to say that the last decade or so may have had the biggest impact for a number of reasons. The Global Financial Crisis of 2007/2008 and its economic fallout, the regulatory response to the misbehavior and shortcomings before, during and after the crisis, and the rise of Financial Technology aka FinTech that turns all areas of financial services upside down and leaves no stone unturned in its quest to bring an end to financial services as we know them. These three aspects alone would suffice for a transformation of epic proportions but there are several other elements that deserve to be mentioned as they play an important role in contributing to this change: Libor (more misbehavior and more regulatory action), sustainable finance (the impact of finance on environment and society and vice versa), or the shift in demographics with regard to pensions and retirement of an ever aging (Western) society – the list goes on and guarantees a decade if change and a future for banking that seldom if ever has been so uncertain.
Banking on Change
Banking on Change actually is the title of the book published to mark the 140th anniversary of The London Institute of Banking & Finance. The book touches on many facets of financial services, tells its story, provides answers on the present and future while often raising additional questions about what lies ahead and how financial institutions, the authorities, but customers, too, need to address.
The Future of Financial Services
19 authors write in 18 chapters about numerous important aspects of banking past, present and future like the important social roles played by retail banks and the value they provide in being trusted guarantors of privacy and data integrity. Or the importance of banks, and in particular of bank risk culture, in developing and supporting a more sustainable economy. The impact that post-crisis regulation has had on banks’ capital and liquidity ratios and how the current – and prospective – macro-economic environment threatens the continued sustainability of banking as we know it. How the demographic shift in the UK has left many people ill-prepared for retirement, and why gender diversity, particularly in the senior ranks of financial services firms, is still limited, why that needs to change and what might be done. Or the way in which banks approach career development needs to undergo a sea change and the finance sector professionals of the future.
Every single one of these chapters merits studying as it affects all of us, but we picked one to examine more closely to share some of the insights with you. Chapter 8 of Banking on Change is on the empowerment of the customer in the FinTech movement and the disruption of banking. It was written by Anne Boden who is probably best known for being the founder and chief executive of Starling Bank, the digital, mobile-only challenger bank based in the UK, but she has plenty of experience from senior leadership positions at several large financial institutions. In her contribution, she explains the thinking behind the launch of her fintech retail bank, why retail financial services will be disrupted and the rise of marketplace banking.
“Each new development is another step towards making sure customers are in complete control of their own financial destiny, which is just the way it should be.”
– Anne Boden
A FinTech Case Study
Amazon has transformed the way we shop, Airbnb remodeled holiday aspirations and Uber changed the face of public transport, so it was only a matter of time before consumer attention turned to banking. Using a relatively recent example from one of her roles about the efforts of a traditional bank to bridge the gap into the digital age, Anne Boden tells us how she realized that banks struggled to adapt and give customers what they want. In her view, banking was broken and ready to be disrupted. In the case of her digital only bank, it was a number of technological developments that made this disruption possible, in particular smartphones, high-speed mobile networks and the very widespread use of application programming interfaces.She portrays the legacy problem incumbent banks face with regard to their IT infrastructure and the challenges to make changes in such organisations. She stresses the need for different business models and different organizational structures. Anne Boden also talks of the need to constantly adapt and update as well as the case for breaking things on purpose. It provides an insightful example on the inside of a FinTech company, how it deals with technology and innovation and creates competitive advantages; even about how regulation can benefit change for the better, but all the time it seems that the key to success for banking of the future has to be a focus on customer satisfaction. Or to say in in her words:
“Each new development is another step towards making sure customers are in complete control of their own financial destiny, which is just the way it should be.”
“Banking on Change – The Development and Future of Financial Services” was commissioned by the London Institute of Banking & Finance to mark its 140th anniversary. All royalties go to The Institute’s 140th fundraising appeal to provide scholarships to disadvantaged students and to extend financial capability projects in the wider community. The book has been published by Wiley and is available here: