I was chairing a conference recently at which a Gartner Group consultant talked about the firm’s annual bank survey. Gartner found that of the senior bankers it surveyed, 76 percent don’t believe that digitalization will affect their business model.
I can tell you that 76 percent of those survey respondents were wrong. Of course digitalization is affecting the business model, and if you don’t think it is then you need to read my blogs about platformification; back office overhaul through the cloud and machine learning; the impact of shared databases through blockchain; the rapid cycle change of microservices organizations; and the rise of innovation economies in Africa and growth economies like China’s.
In fact, I would be amazed if any banker who reads my blog could honestly say that digitalization doesn’t change their business model. After all, the business model of traditional banks was built for face-to-face interactions backed up by paper documentation; the business model of digital banks is for device-to-device interactions backed up by data. The two are completely different.
It doesn’t worry me that bankers think their banks business models don’t need to change—after all, banks are run by bankers and it’s their problem if they believe otherwise—but it does worry me that people in charge of systemically important institutions that are so important to so many aspects of our lives could be so ignorant. I think it reflects the lack of insight into how digital transformation is impacting the world, and also the lack of balance in bank boardrooms.
This was evidenced by a recent Accenture analysisof the boardrooms of the 100 biggest banks in the world, which shows that:
- Only 6 percent of board members have professional technology backgrounds.
- Just 3 percent of these banks have CEOs with professional technology backgrounds.
- Forty-three percent of the banks analyzed don’t have any board members with professional technology backgrounds.
- Thirty percent of these banks have only one board member with a professional technology background.
- In North American banks, 12 percent of board members have professional technology experience, compared with 5 percent in both European and Asian banks.
- Though boards of banks in the United States and the United Kingdom have higher percentages of directors with professional technology experience than others, the numbers are still low—at 16 percent in the U.S. and 14 percent in the U.K.
Banks are led by bankers even though banks are actually fintech companies—even if they don’t yet realize that. That is the fatal flaw here, as fintech firms are led by a combination of technologists and bankers. Most fintech firms I meet have a healthy balance of young, bright technology experts and seasoned financial people.
That is why it’s interesting to see that the biggest banks are gradually reconstructing their boardrooms for more balance, or sothis year’s trendspredicted. When I think of a bank boardroom, I picture a lot ofold menin suits (andthe numbersprove this). When I think of a fintech firm’s boardroom, I see something that is young, diverse and visionary. It does have some old hands on board, but it’s balanced. So what I really expect in the next decade is to see a bank boardroom become just a little bit more awesome. Still a bit grey, but also a little younger, more diverse and a healthy mix and balance of financial acumen and technology vision. Please.