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I had a realisation over the past two weeks of conferences. Having attended Finovate, SIBOS, Innotribe, a Financial Services Club meeting on cryptocurrencies and several dinners with bankers, we are at an impasse.
It’s the meeting of two tribes, and the tribes do not mix well.
One tribe is full of suits, fine wines, Michelin-star restaurants and business class jets. The other is all jeans, beer, pizza and Ryanair. It’s not necessarily quite as extreme as this, but it’s not far off.
For some time, I’ve banged on about banks must redesign for a digital core. It’s no longer a world that can live in a batch overnight update, when real-time everything is here.
This has been shown again and again by outages, and all of the incumbent banks are struggling to move from old world to new. In particular, this world is illustrated by the channel debate. As I keep saying, the use of the word channel is a last century hangover, that describes ‘adding to the branch-based core’.
Channel is from the old world, where we built a bank for the physical distribution of paper in a localised network. Now, we are transforming to the digital distribution of data in a globalised world, we have to redesign that core. Channels are replaced by access points, and the totality underlying these access points is a single, consistent, real-time digital core.
That is the huge challenge for banks: how to move from old core to new core, and how to move from a physical infrastructure to one that is digitalised.
Talking of how fast things change, here are a few Friday facts to make you smile (or feel ill).
The UK Office of Communications (Ofcom) run regular surveys on our digital lifestyles.
This year the impact of smartphone and tablet computing hits the radar and shows how things have changed fast.
For example, this year’s survey finds that that the average UK adult now spends more time using media or communications (8 hours 41 minutes) than they do sleeping (8 hours 21 minutes - the UK average).
I was watching this great advert documentary about Amazon on the BBC this week.
It’s a rocking organisation that most of us mere mortals watch with wonder.
From packing and selling books in a garage over the internet, it’s become a global behemoth (although Alibaba is bigger in China). Amazon generated almost $75 billion in revenues in 2013, up 22% on the prior year. Just here in good old blighty, every person in Britain spends over £70 a year on Amazon. And with Amazon Prime, Instant Video, Kindle Fire, Amazon Web Services, Cloud Player, Mayday and more, the innovations and growth seem to just keep on going.
For some years now, banks have been grappling with the idea of cloud.
A bit like Big Data, ‘cloud’ is this amorphic term that offers a panacea of solutions and nothing specific.
This is not actually true, but the wide-ranging breadth of cloud and few and far between examples of depth, make it a term that does not sit well with most in the financial markets.
For those who are uninitiated it means outsourcing your data or losing control, and hence it is resisted heavily; for others, it means agility and the ability to react to any processing needs; whilst for a few, it means saving huge amounts of cost on infrastructure and processing.
The core challenge is defining cloud, as few have.
I saw a great but scary presentation this week from Kamran Meer, Chief IT Security Officer at Bank Alfalah, the sixth largest bank in Pakistan.
Kamran began by asking the audience if they knew about the Stuxnet attack.
Amazingly, 70% of the audience hadn’t heard of it although maybe it’s not so amazing as this was part of a Middle Eastern conference and the Iran-Israel and MiddleEast-USA frictions are not reported as widely here as they are in the West (or so I was told afterwards).
So, the Stuxnet video made the point that we live in a world where cyberattacks are becoming more and more targeted:
Talking of a two-stream market divided between Political and Economic change and Social and Technological change, there are other undercurrents that ripple in these waters.
For example, why is it that most bank conferences are either about regulation or innovation? Because one forces change to happen whilst the other offers the opportunity to change? Or because regulation is political and economic whilst innovation is about the customer (social and technological)?
Why is it that banks only ever respond to two forces of change: regulation and competition? Because one is political and economic whilst the other is normally social and technological.