Banking’s darkest hour: why the new dawn seems a long time coming
The financial media all seem to be agreed. The High Street banks are screwed. Restrictive, greedy, self-serving. Banks have been found guilty on all counts.
What the banks do isn’t all that difficult. Their technology’s an eighties throw back.
Could it be that there are other forces in play here?
Pulling back the heavy City curtains
Few would argue that the banks were at the centre of the economy’s collapse, Even if not the actual cause of it.
Had this befallen any other market sector, we’d have seen sweeping reforms. Those who didn’t change, washed away in the ensuing sanitisation.
Yet banks have emerged unscathed – and grown fatter using public money.
It’s unprecedented. What other industry could behave so badly and still be there? What’s happened – or rather, not happened to banking?
The secret City society
There are dark forces at work here and they’re difficult to categorise and assess. A secret society doing back-room deals and planning senior career moves.
Its here the obstacles, protections and barriers to any new banks are maintained. Meticulously set to exclude any newcomers who may damage the status quo.
Its here our banks have the ears and pockets of the legislature and regulators, not forgetting the senior civil servants who’ll receive non executive directorships and advisor positions after careers spent serving our bankers so well.
Virgin and Metro – the acceptable face of banking
Two new faces have appeared. If all that I’ve suggested is valid, how can that be?
Consider Virgin. The Branson empire is big on bluster yet tiny on customer value. Virgin’s brand is flash, but rarely is it ever cheaper or better.
Branson has warned not to expect “stand-out deals”. Was this the price he paid?
Metro operates in a tiny, constrained niche. No on-line services, no social media.
So there you have our two new banks. Our brave, acceptable face of banking. More like acceptable to the high street banks, I fear.
The real future of banking
What I’ve presented is very cynical. but still true for all that. So what’s the answer?
A sea change – well, more like a 15-scale earthquake and matching Tsunami. We need central control of all standard services – like ATM, voucher (cheque) processing, global payments, card processing and cash handling.
We need to offer these services to any new bank, to level the entry playing field. That would allow new banks concentrate on innovative product strategies.
Without such barriers, banks could find niches where they felt they offered value. Where they have a fair chance to succeed.
Without this cost to support, older banks would also be free to change.
A new breed of banker
The next bank’s culture will be diametrically opposed to what we have currently. Customer focussed, determined to add value with real, differentiated returns. Instilling a sense of community back into banking, like some mutuals still do.
socially empowered, socially aware
Integrated social media must be at the heart of everything, driving every process. This would align the banks, determining what they offer to their client base.
Knocking banks is easy, but let’s not fool ourselves, we need a valid alternative. Services that are customer driven, values that are fit for purpose.
Above all, we need a new dawn for banking. Its been a long, dark night.