Banking in a new world

The past week proved another brilliant combination and contrast of old an new. Old and new technology, old and new generations, old and new methods…

I attended a meeting of a group with an average age of, I would imagine, 60 (minimum!) where the topic of the discussion centred around the necessary controls that should be implemented in and by society to prevent another crisis such as the financial one we are living through at the moment. I personally believe that you cannot prevent it however stringent your controls, and that a crisis such as this will occur in another industry in another 40-50 years,with many smaller crises every 7 years, as I have written in one of my prior blogs. It is part of nature to be cyclical, and even our human systems and structures suffer from this cyclical path.

Having said that, I also do believe that a little more (mosty SELF-)control would have prevented the crisis to be as deep as it is. Humans are loath to apply self-control though since it might spoil all our fun too – and fun here means more money, bigger houses, better cars or status and power of course which humans typically seem to long for. We talked about technology being a part of the problem – the fact that there is much more technology executing trades based on algorhytms and historic pattern analysis which does create a remoteness of feeling that was not there when you were counting the change in your pocket in order to make a decision whether to buy something or not. But even so, I am a strong believer in that technology can also be one of the controls that actually do make sense to apply. And that is where you see a difference in generation immediately. The group mostly saw technology as being the main risk factor, whereas the younger part of the group sees it as our way out, a way forward that allows us to move into new directions. The older generation fears that it will force financial institutions to again look for the edges of the existing playing fields. Whereas I think that they actually need to go beyond those edges, but in line with their chosen risk profiles, to have any chance of being competitive in the new markets at all.

Technology will continue to play a huge role, a growing role in our society and that of our next generation and you cannot pretend it doesn’t exist and won’t happen. It will – and behaviours are changing already from being more personal to being more virtual. My belief is that one of the by-products of this more virtual existence,  the need for human face-to-face contact will see a “revival” although it is a little early in the trend to talk about a revival yet. But there is a hankering for smaller groups, more connection, deeper contact that will result from all of these virtual spaces and possibilities. And that is where a bank, or financial institution should be playing a new role – not only the online aspect making the daily activity better, but a stronger relationship with their customer, a PERSONABLE relationship with their customer will allow us to prevent another major crisis in this field. And I do not mean the one that is forced upon all of us by banking watchdogs (show your ID before you can open a bank account), I mean that the “bank manager” takes an interest in his clients’ requirements. A bit like the loose change in your pocket – he needs to know what you can and can’t do – not as a regulator of what you decide you want to do, but as an advisor guiding you through all those complex instruments. Now that the markets consist of a large % of small time investors, instead of only the sophisticated, professional investor community – we would all do well to look for an advisor like that. And it will help the global markets stabilize if such a “social control” system got back into fashion.
Now – I am sure that would make the older generation v. happy indeed!
 

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  Chris Bateman

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  Elmira Johnson