Think about it. Every bust, every scandal: Technology is their undoing. That’s why bankers hate technology. No–that’s not the reason bankers hate technology, I kid.
Why? What’s the biggest issue secular trend staring the industry in the face today? Cut waste and inefficiency. And, you see? Technology is quite capable of solving that problem. But it is in these inefficiencies of information flow and waste that bankers grow fat. They live in the margins of friction.
The truth of the matter is, when these Schwab commercials came out (below), Wall Street laughed. Afterall, he’d started out marketing newsletters. They were on ‘the inside’, no competition.
It was 1974 and the investment world was changing. Legislation had just deregulated commissions and of course, that changed the face of finance.
Computers were beginning to come on-line. Within a few years? Mainstream. And within enterprises all over the world, including the stock exchanges. (read: goodnight trading)
It was technology that was creating the ‘real change’. It started with being able to pick up a phone, call a computer, and put in an order directly into the exchange. Read: No Broker, No Trader. And so, it was light’s out for the business as they’d known it: trading in huge spreads between buyer and seller. Living fat off the land.
Now. Philosophically, banks are nothing more than a manifestation of a bunch of people. And, in, this group of people there is arguably, even probably, a desire to survive. And this grouped ‘desire’ lives, thrives,survives,or dies within the framework we give them: taxes, laws, ðics. We, as a society, grant them their role. To be certain, there are also generational advantages, but most of the wealthiest people are of course, self-made. We create the bankers.
Bankers are a special breed. But they can get lazy. And to be certain, we’ve bred them to not suffer the ills of a plebian life.
So what happens when we take their money? They seek survival in a different profit center: InitialPublicOfferings. (…And didn’t that turned out lovely.)
And then we can roll the tape. From there: we scampered to Loose Lending, which then shotgunned into bizzaro Financial Engineering. Rocket fuel for the entire eco-system. And all within a framework we set up. And, now the genie is out of the bottle. There is no going back. It is a new interconnected world we live in. And this, to me, is incredibly exciting…
And so, why: why, this constant shuffle? Why do the banks keep moving the ball? Well; bankers keep inventing new stuff to sell because, they don’t really ‘make’ anything.
Technology has yet to fully integrate into the banking model. It will though. Sharespost is a perfect example.
You see, bankers exist in the cracks of millions of transactions. They are Friction. The friction of the transaction, is their life blood. They need it. And you don’t. No one in their right mind would.
Technology removes this friction especially from an intellectually based transaction. It’s not like we have to ship you a car or anything. A couple of emails and a phone call, things get done.
Now imagine all of that overhead sitting in those offices….It’s sad but true. Banking is the one industry that hasn’t really seen the change technology is going to bring.
