Bye Bye Banks?

Author: James Haycock
Wunderkammer: 2015

This was a realtively short booklet that is summarized in a single page.


  • Introduction
  • 1: The Forces of Destruction
  • 3: Displaced, Diminished, and Disintermediated
  • 4: People, Culture, and Technology
  • 5: Introducing a Beta Bank
  • 6: Summary
  • Introduction

    The book opens with something that Bill Gates said in the 1990s: "We need banking but we don't need banks anymore." That is to say that the bank provides a number of useful services, but they don't necessarily need to be bundled into a single institution.

    (EN: This really isn't anything new. The bank as we know it today evolved in the mid-twentieth century, and their services became even broader in the late twentieth century with deregulation of banking. Originally, a bank was secure storage for precious metals, typically for only the wealthy. All the other services they offer were, and sometimes still are, offered by other kinds of businesses.)

    He then turns to the explosion of mobile technology, a field in which niche players have created special-purpose apps, many of which nibble away at the kind of business that was previously done only by banks. And banks, during this time, have remained ultra-conservative and skittish about mobile technology.

    This is not unique to banking, but can be seen in every sector: the incumbent leaders have been successful for decades and are still making money the old fashioned way, sticking to their comfortable traditions. Because they remain viable and profitable, they show little interest in change.

    But even for innovators in banking, there is the added hurdle of regulation. There are any laws and regulations that restrict what a bank can do simply because it calls itself a bank. Small, independent financial service companies have no such restrictions upon them and can do things that banks are not allowed to do.

    In all, the author considers it to be a "perfect storm" of increasing competition, technology advancement, changes in consumer behavior, and outdated regulations that put banks in serious jeopardy.

    There follows a lengthy passage in which there are case-studies of firms that offer bank-like services across every product line: everyday banking, lending, savings and investments, payments and money transfers, and even coinage.

    Currently, most of the niche players are not entirely taking customers away from banks, but merely service as intermediaries: a P2P money transfer application requires both parties to have accounts with existing banks, but merely facilitates the transfer of funds. But in other cases, banks are being taken out of the equation: a P2P lending firm acts as a bank in which loans and payments are collected and disbursed through their own treasury. (EN: However, participants in P2P lending must still have their own banks to send and receive funds, so the bank is cut out of the lending business, but still manages financial accounts.)

    He then speaks of the "beta bank," which is a bank that is established as a subsidiary to a financial services company. Because they are banks, they have the same capabilities, but because the parent firm is making profit from another line of business, the beta bank does not need to turn a profit on maintaining accounts and transferring funds. There is also the opportunity to create a beta bank as a standalone entity that provides supporting services to corporate customers, but does not service individuals' private accounts, which also enables them to skirt a great deal of regulatory restriction.

    It would be an exaggeration to suggest that banks are entirely ignorant and passive - but they are very casual in their reaction. Banks do not innovate, but attempt to catch up to the innovators by offering "me too" services months or years after a new idea has hit the market.

    The argument, which is the chief point of this book, is that banks can no longer afford to remain passive and reactionary to the market, but must take steps to become innovators and leaders if they are to hold on to their business. They must recognize that their greatest threat is not other banks, but these niche players who are nibbling away at their core business, and act accordingly.

    1: The Forces of Destruction

    The author mentions the concept of "creative destruction" - that any advance in technology causes its predecessors to become obsolete. While it is good that progress is made, as it makes the lives of all consumers richer, it is not good at all for the producer who fails to keep pace with change.

    This is how large and established firms, and even entire industries, meet their demise: the world changes and they try to stay the same. In almost every industry, most of the twenty largest firms were not on that list a decade ago - which means that most of the firms that are on that list today will not be in another decade.

    It has long been said that the pace of change is furious and keeps getting faster - and the author feels that this is the convergence of three significant forces: advancing technology, increasing competition, and changes in consumer behavior.

    Of the three, technology is likely the most significant because it enables the others to occur: customer behavior doesn't change until technology provides a better solution, and there is no better solution to offer until it has been provided by technology.

    The chief technology driving change in the present day is internet and mobile - the ability to be connected to others in virtually any location. The author elaborates rather overmuch on the developments in the past twenty years that have led to an always-on/always-connected world.

    It's also worth mentioning that the new technology is also a facilitator to business: it has never been so easy, fast, and cheap to start a new business. Information technology allows a firm to serve customers directly and arrange to be supported by other firms quickly and easily.

    Consider the ease of setting up an online store. It is no longer necessary to construct a facility, arrange for suppliers, and market to customers through traditional media. One can simply build a software application that presents a virtual storefront and connect to the back-end systems of suppliers who will provide and ship the merchandise. Setting up an online financial service is even easier because there is no physical product at all. Money, such as it is, is merely numbers stored in data systems.

    For a time, there was the tendency to cling to tradition - both firms and customers continued to do business through outdated channels because it was familiar, even though it was costlier and less convenient. But cost and convenience have made customers fickle, ready to try whatever provider offers the best service at the lowest price, and start-up firms have been very nimble in adjusting to the desires of the customers.

    2: Unbundling Banks

    The author provides quotes from "anonymous banking executives" about the increase in the use of online transactions and a decrease in the use of physical branches. Most traditional banks offer web and mobile presences, and the ability to transact online provides a cost savings for the bank and convenience to the customer.

    However, very little has changed since banks first went online and most bank experiences are like "the Web of 2000" - essentially, they have digitized their forms and statements and have done very little to take advantages of the capabilities of the channel.

    Neither has the attitude of banks changed much, pandering to the wealthy depositors and treating their loan customers like mendicants. There's a great deal of arrogance and complacency that signal opportunities for other firms that customers may value a better customer experience.

    There are a few online-only banks that launched with a broad array of services, but far more new competitors who have unbundled the banking business model and focused on only a few types of transactions. This is a particular problem for traditional banks that count on the high profit of some products (such as credit cards) to balance out the cost of providing other services at break-even or a loss (deposit accounts). Where a niche competitor offers a better deal on a high-margin product, a full-service bank must lower its rates to compete, robbing it of a cash cow that once funded unprofitable products.

    In theory, a bank can integrate services to provide for multiple needs, but in practice this is only done for the wealthiest customers, who are assigned personal bankers. For the average customer, services remain decidedly disintegrated, with entirely different business units managing deposit accounts, credit cards, loans, mortgages, and other products - without a personal banker to serve as their concierge, the average customer must navigate the bank and negotiate with different service personnel for each product they wish to acquire.

    So in that sense, banks have unbundled their own services, creating their own vulnerability to niche players. A customer who needs a credit card may deal with his own bank, or more aptly a team of people within his own bank who treat him as a total stranger, or he may obtain a card from an independent provider.

    A niche firm is focused on its product and the customer's needs for its specific product and does not need to overcharge on its product to cover the losses on money-losing services it does not offer. In essence, the independent credit-card provider offers the best product at the lowest rates - all for the same amount of effort, given that the credit card department at his bank treats the customer no better.

    Next, the author means to consider various banking products and some of the players involved. (EN: I will likely skip much of the specific details, as the firms in each area change so often).

    Everyday Banking

    The "everyday banking" business of a customer consists largely of his checking account and debit/credit cards. These are the accounts used for daily transactions, and into which his income is typically deposited.

    The chief advantage of the digital bank is the lack of overhead costs in maintaining a physical branch, and the chief advantage of electronic transactions is the elimination of processing fees for paper transactions (checks) - so in all it costs much less to service daily transactions than ever before.

    For customers, the thought of being charged fees for their everyday banking is unthinkable - with the exception of interest on credit balances, customers are unwilling to tolerate costs - so everyday banking is a money-losing service provided by banks.

    Even so, the income derived from merchant fees (who pay a small fee on transactions to accept a given method of payment) is sufficient to attract a number of niche players to the game. PayPal has been in the business of online transactions for over a decade, and major firms such as Microsoft, Apple, and Google are all showing considerable interest in offering a "digital wallet" to customers.

    Thus far, the niche players have been specific to digital transactions, as most merchants do not have point-of-sale ability to accept a payment without a physical artifact (card or check), but this is slowly changing as POS providers are more accommodating to digital payments made via smartphone.

    Value-added features for niche players are largely in the area of money management: enabling customers to be aware of the funds they have available without having to maintain their own record of transactions as well as providing counseling about whether a given transaction is in line with the customer's budget.

    It's also mentioned that for most customers their checking account is the beginning of their savings and investment activities - whether they are top-line saver or a bottom-line saver, all of the funds that will eventually enter savings are originally deposited into a checking account, whence they are transferred into an investment account.

    There's some mention of a service that makes multi-currency transactions easier, which is likely of greater importance in Europe, where the book was written, as countries are very small - so it's a regional issue that is becoming less germane because of the common currency adopted by many European nations.

    One unusual feature that is mentioned is shopping assistance: the service provider helps it customers to spend less by helping them find better deals. This involves the integration of shopping tools into the banking application.

    There's a brief mention of government in the UK lowering barriers of entry to the everyday banking business, as well as mentions of a number of well-known entrepreneurs who have recently started online banking ventures as a consequence.

    Another advantage of the niche players is their openness to collaborating with other firms. Traditional banks are reluctant to make it easier for their deposit customers to purchase or service loan products from other providers - but niche players who have no intention of offering other products are eager to be supportive, recognizing that collaborating with other firms makes their product more useful to the customer.

    It is services, rather than rates, that cause customers to switch their everyday banking accounts. Because checking pays interest of a fraction of a percent (if any at all) there is little interest in the pennies they might gain by switching to another bank. When a firm has a problem processing transactions, that is a very serious offense, and customers leave very rapidly.

    Trust is also mentioned as a competitive advantage. Many of the smaller niche players have difficulty gaining the trust of customers, who fear that they are here-today-gone-tomorrow, so any funds on deposit are at risk with an unknown brand. This has been a significant advantage for traditional banks, who retain customers who are well aware that better service is available elsewhere, but who are unwilling to take on risk. Trust takes years to build, so it is not an immediate threat - but as the niche players persevere they will overcome this reservation.

    It's also mentioned that younger generations have less concern about the history of firms - they are not reluctant to leave a bank that has been in business for centuries in order to get a better deal from a start-up. As the older generations pass away, older banks will find they have fewer timid customers who cling to them.

    But at the same time, family tradition seems to remain important. A majority of Millennial generation consumers bank at the same company their parents did, and see no reason to change banks. So there is a streak of conservatism in even in the most fickle market segments.

    A last but: in interviewing banking customers, it was clear that they recognize banks possess a lot of data about their personal spending habits, and are disappointed that this information is not put to better use. That is, banks merely stick to the business of processing transactions and few leverage this data to become informed financial advisors to their customers - which is a service that is seen as desirable rather than intrusive by the customers.


    Lending encompasses a wide array of products, from credit cards to mortgages. This is where banks make a significant amount of revenue.

    It's suggesting that peer-to-peer lending has grown significantly. It's a model by which a firm merely serves as a facilitator between those with money to lend and those who need to borrow, and therefore stakes no capital of its own.

    It has been around for a while, but is still seen as a "niche" practice that largely caters to individuals who are not creditworthy enough to obtain a bank loan. However, as the operating costs of these operations are low (2.7% compared to 6.9% at banks), they have the potential to pose a threat to the mainstream consumer credit market.

    P2P lending is also a considerable threat in the market for small business loans. It is already making inroads into emerging markets, where there are many small business operations that banks consider too risky to fund.

    Savings and Investments

    A few online services are mentioned that seek to help people save - either by withdrawing small amounts or rounding up purchases and depositing those funds into savings and investments.

    These services fill a gap in the banking industry caused by minimum balance requirements: people who cannot afford to save are often those in most desperate need of a service to help build their assets. It's also suggested they may benefit by catching investors early in life, so that when their income and wealth grow, they will already have an established relationship.

    Various services are mentioned, most of which are relatively small (no more than $1B in managed assets, which is small compared to banks). It's also mentioned that they are able to offer better returns and lower fees because they are digital companies without the overhead of physical branches.


    The payments market provides an interface between the customer and merchant, enabling cashless transactions by transferring balances. Banks originally provided this service by means of paper checks, then later developed payment card networks, which evolved into debit cards.

    It's worth noting that credit cards had an entirely different origin, and were more akin to small personal loans than banking services, but banks eventually coopted this service as well, such that a credit card, check, or debit card all function essentially the same.

    PayPal is specifically mentioned as an early online bank, facilitating payments between sellers on eBay - sales and purchases on the site would be balanced against one another, with payment or pay-out necessary only to cover the difference (and payouts were often held in an electronic balance rather than withdrawn). But with the growth of the site and an increasing tendency for users to act as merchants or customers rather than both, PayPal mutated into more of a commercial service, and began facilitating payments on other sites.

    Then, there's mention of digital wallets, in which it is no longer necessary even to have a physical card. The digital wallet began as a intermediate account that could be given to online merchants, with payment being made to a bank account or credit card provided by other financial institutions, as a means to prevent actual account numbers falling into the wrong hands. However, as trust has increased online, the digital wallet has done away with the intermediary account and simply become a method of maintaining information about various payment accounts.

    There is currently work toward using virtual credit/debit cards at merchants, though the point-of-sale equipment for accepting "touchless" payments still is not very widespread. With major players such as Apple, Google, and Microsoft now showing interest in the technology, it stands a better chance of becoming more widespread.

    Then, there's mention of P2P payments, in which a person can pay another person, rather than a merchant. Generally, this is swept into the category of P2P lending because the most common reason for paying someone is the repayment of a debt, such as splitting a bill at a restaurant.

    The author concedes that there is no profit in P2P payments, but maintains that banks should still be concerned because it is another transaction for which people will not turn to their banks.

    International Money Transfer

    Regarding overseas transfer, the author state only that it used to be "a time-consuming exercise and one that entailed lots of fees." He names a few firms that are very small by comparison to the market leader (Western Union), but who specialize in minimizing fees for transferring small amounts by doing things like transfer switching (when money is going into and out of a given country, they act as a clearinghouse to minimize the amount of funds that have to actually be exchanged).

    Money Management

    Personal financial management (PFM) represents a longstanding deficit in financial services. This is largely blamed on regulations that were enacted because of the misconduct of some firms that sought to leverage trust by delivering "advice and planning services" that were simply methods of manipulating their customers into purchasing more products, and products that were not right for their customers. As a result, most financial advisors are independent from banks, and banks do not provide financial advice to their customers.

    In the digital channel, it is easier than ever before to aggregate all of a person's financial information and keep it updated in real time, tracking spending and savings and providing advice and guidance. Currently, third-party services such as min.com are doing this for millions of individuals, while traditional firms remain shackled by legislation. The few that seem to wish to become financial advisors seem to be back to their old tricks, "advising" people to purchase more of their services.

    Furthermore, those who monitor this practice routinely comment that there is no evidence that PFM sites provide any appreciable benefit to their users. They provide visually interesting interfaces full of charts and graphs that track historical transactions, but there is no substantial proof that the people using these sites make any changes at all in their actual spending behaviors - it's information for information's sake.

    (EN: I've spoken with some of the people who are attempting to provide PFM online, and it seems that they are entirely clueless. They will show off a slick new gimmick, but when asked what decision it is meant to facilitate or inform or what metrics they will use to determine whether the tool has been successful, and they struggle to provide even an oblique response to questions that would seem to be fundamental.)

    Money Itself

    The author then returns to the notion of independent digital currencies, admitting that every attempt thus far has been "a gimmick and a flash in the pan." Even bitcoin, the latest experiment, has received very low adoption in spite of a great deal of hype in the industry press.

    Even traditional currencies are largely digital currencies because the vast majority of transactions are done without the need of physical currency. Dollars are just numbers, debited from one account and credited to another without any physical currency changing hands. There is also a growing sense of distrust of governments, whose traditional practices range from debasement to outright fraud, and whose currencies are not regarded as reliable.

    (EN: No proof is provided to back that statement - and it's clear that people have great faith in traditional currencies by the simply fact that they actually use them. It is rare for a state currency to fail, and when that occurs people are seen to use foreign currencies for commerce - but eventually a new state currency is established. So while the notion of independent currency is appealing, it remains a notion.)

    He then goes into a lengthy explanation of how bitcoin works - its underlying value is the effort (or at least the electricity) that is used to solve complex mathematical problems. The author asserts that this effort is what substantiates the currency.

    (EN: I also disagree here. People trade benefit for benefit through the conduit of money, so effort is only worthwhile if it creates a benefit for someone. I am unaware that anyone benefits from the solutions to mathematical equations that back bitcoin. Whether it's doing math or writing poetry, the effort must produce something people want in order to be worthwhile. And people do not want bitcoin any more than they want to purchase collections of amateur doggerel.)

    Even so, the author concludes that independent digital currencies will somehow take hold and displace traditional currencies. He then distracts by making an empty threat: that because those who create digital currencies also serve as banks to store and transfer value, this should be considered a significant threat to the banking and transaction industries.

    3: Displaced, Diminished, and Disintermediated

    At any moment, there are a number of start-ups that are seeking to compete with established firms in every industry - some of them have the potential to topple industry giants, and a few of them may eventually do so. It is highly unlikely (though not impossible) that a single large firm will appear all at once and take command of an industry, but instead many smaller firms will nibble away at industry leaders.

    It can also be observed that dramatic innovation happens only at these smaller firms, as larger firms tend to be institutionalized and cling to the status quo, defensive of business as usual and obsessed with sunk costs and established practices. These small firms generally follow a three-phase strategy: to displace, then diminish, then disintermediate the established firms.

    Consider the fate of the telephone corporations as a harbinger for financial services. These companies regarded the internet and wireless as distractions, choosing instead to focus on maintaining their traditional landline voice products. When customers switched to cell phones and businesses to IP telephony, they found their core product unsustainable - some survived, but many did not.

    In the financial services industry, many small firms are focused on limited products while the large firms seem set in their ways. The author mentions a UK survey, which found that nearly two-thirds of customers had used PayPal for making online payments and continue to do so, even when their primary banks began supporting digital payments.

    New entrants are unencumbered by devotion to outdated ways of doing business, can be much more responsive to changing demands, and are not distracted by established infrastructures and sunk costs. Furthermore, regulations seem to be supportive of fragmentation: in most developed economies, there are established or proposed public policies compelling banks to provide APIs to allow other firms to access their customers' accounts.

    In effect, this is opening the gates to the band of raiders who want to carry away their customers, who consider the walls around them more in the nature of a prison than a fortress. Or more aptly, it's merely opening the gates wider, as the banks themselves became vulnerable when they jointed ATM/ACH/POS networks to facilitate transactions with other banks, not considering that these were inroads for the newcomers as well.

    The banks justifiably fear that these small companies will focus on the most profitable customers and the most profitable lines of business, leaving existing banks with a set of core services that are not profitable and are often entirely unsustainable without the subsidy profits of the more profitable products that raiders seek to take over.

    Aside of losing the revenue of customers who use one-off companies for specific products or transactions, the banks are also losing critical information about transactions and the relationship with customers that they might otherwise leverage to retain customers. In essence, they are being blinded by their opponents.

    The terminal stage in the fall of incumbents is when even their core services are improved upon by competitors, at which point they are already too weak to defend themselves. Many of their competitors already have the required infrastructure, or could quickly build it, to replace the core services and only refrain from doing so because they are not sufficiently profitable. Should it become necessary (such as when a major bank collapses), the newcomers can simply switch on core services and abide the loss.

    By far, the greatest assistance to the newcomers is the banks' own complacency. All signs indicate they are indifferent to new technologies and dismissive of small upstart firms until they have proven their value by taking away a significant amount of customers. They are also undone by their own arrogance, believing that customers will remain loyal and wait for them to adopt new technologies. Instead, what they are discovering is their customers are quite ready to switch - they are dissatisfied by poor service, disappointed in the amount of time it takes their bank to adopt new technologies, and resentful of having their accounts held hostage and/or being taken for granted.

    4: People, Culture, and Technology

    The technology exists to propel the banking industry into the future, or even into the present age - but banks are one of the most conservative and stodgy industries, forever fearful of disrupting their cash flows. It is the culture of banking that is one of the most significant factors in their resistance to evolving. And in the present day, where interest rates are so low that it is a struggle to be profitable, the fear of change is amplified significantly.

    The banking industry has a very long tradition, as it has been in existence for millennia, and it has been profitable under existing business models. There are banks that are centuries old, and who believe that they have survived by avoiding risks whereas competitors who seized upon opportunities have enjoyed a brief period of success before complete ruination. So there is a belief, supported by centuries of success, that doing the basics well is the best path to long-term survival.

    Regulators also prevent innovation, as customers and the governments that are supposed to protect them are also skittish and wary of anything that could threaten their money. And so, regulators feel that it is in everyone's best interest to prevent evolution in order to protect the banks, the monetary supply, and the state economy. Any activity that carries the hint of risk will quickly be shut down by outsider if insiders don't squelch it first - and banks fear of punishment lead them to avoid doing things that would likely not be punished.

    People are also a significant challenge to banks, as a stodgy and risk-averse company (or industry) attracts stodgy and risk-averse employees. So hiring talent is difficult - people who are skilled in digital innovation want to work in an environment that will enable them to pursue their passions and avoid industries like banking because they are averse to change. Those who have never worked in banking expect they will be restrained and smothered - and those who have worked in the banking industry know it for a fact. Smart and ambitious people, the kind who have innovative ideas, keep well away from conservative industries.

    Leadership is cited as another issue: "The vast majority of the leadership of banks doesn't understand how digital works, so they are very worried." They have been successful by clinging to tradition and avoiding risk, and sense that being enthusiastic about technology could be a career-ending mistake.

    In terms of technology, banks are anchored to legacy systems and are limited to what they can support. These systems hail from the era of mainframe computing and are designed for stability and security rather than flexibility. Existing employees who manage these systems are often those whose knowledge and skills have not evolved, and who regard new technologies as a threat to their livelihood, as new technology makes old technology obsolete, and people with old-technology skills obsolete as well, and there are few industries in which they could find employment if their safe haven were invaded.

    It is necessary to look at the actions that banks take, the decisions they make and where their money is spent, to appreciate their hostility toward evolution. Banking executives speak enthusiastically about technology, but they do not allocate budget accordingly. The biggest allocation of funds is to adapt legacy systems to accommodate new regulations and the second biggest is in keeping those legacy systems limping along. Innovation gets the leftovers, if there's anything to be had - and most often, there is not.

    5: Introducing a Beta Bank

    In this chapter, the author means to advise established banks on defensive strategy. Essentially, it is a program of "digital transformation" that requires investing in innovation efforts and partnering with small startups, preferably through a structure he calls a "beta bank," which is a self-contained subsidiary that functions as a fighting brand.

    It's important for the beta bank to be self-contained and separate. The reason banks have failed to innovate is because they really don't want to: insiders resist change, consciously or unconsciously acting to undermine innovation initiatives to cling to business as usual. To make significant changes requires the full support of the organization - and the only way to have that is to create an entirely separate organization that functions autonomously.

    He lists some of the key qualities of a successful program:

    He then lists ten core elements of the beta-banking model:

    1. Purpose - The beta bank begins with a clear sense of purpose that creates a clear vision of the problem that the business is trying to solve for its customers. This purpose unites the organization and focuses it on its task: anything that is not clearly related to its stated purpose is not pursued.
    2. Customer - The purpose of the bank is to solve a problem for its customers, so knowing who the customer is and what his needs are is critical. As stated before, the beta focuses on a niche market, not the entire public, and specializes. It starts with the customer and defines the product according to their needs, not with a product in search of customers.
    3. Leadership - The leadership of the beta bank should be someone who is experienced in digital experience design. The author cites examples of a few large banks that underwent significant transformations, and feels that a person who knows digital and is customer-focused can be taught the banking business easier than an experienced banker can learn digital and service.
    4. People - The key qualities of employees should be the three "D"s - they should be design-focused, digitally native, and diverse in their background. A fourth "D" would be "deviant," as innovation requires rebelling, questioning assumptions, and disdaining the business-as-usual mindset.
    5. Culture - To innovate requires a culture of experimentation and learning, which is unlike the culture of safety and control that dominates existing banks. It must be a culture in which failure is accepted as a risk and seen as a learning experience rather than a fatal flaw.
    6. Principles - The principles of an organization are the "how" that qualifies the "what" of its purpose. There need to be clear principles that are communicated and practiced, and to which employees on every level should be held accountable. Principles give direction and meaning to work.
    7. Team Structure - Rather than having a single hierarchy, a beta bank should be organized into small and independent teams. Large organizations are slow and stodgy, they develop warring silos, and it is easy for loafers and subversives to hide in the herd.
    8. Working Practices - The author briefly mentions a few methodologies that are lately in vogue: user-centered design, lean startup methodology, agile development, and continuous delivery. These are common practices in small start-up organizations that enable them to be nimble.
    9. Flexible Infrastructure - A serious problem for many established banks is that their organizational and technical infrastructure is monolithic, and as such it is very difficult to change. To be nimble requires an architecture that is open and can be modified and changed with minimal effort. He speaks specifically of application program interfaces (APIs), which allow a system to be modified or replaced easily so long as the rules by which it receives and shares information with other systems are maintained.
    10. Long-Term View - Another factor that smothers innovation is focus on short-term performance. Attempting to make quarterly or even annual goals leads organizations to take steps that are harmful to its long-term success. In particular, pay careful attention to the metrics that are used to evaluate employee performance to make sure they do not encourage short-term thinking. It may also be necessary to level with investors who will otherwise expect short-term profit.

    6: Summary

    The final chapter recaps some of the major points of the book ...

    Changes in technology, consumer behavior, and the competitive landscape have impacted every industry, and banking has been much slower to respond than others. While we haven't yet seen a major transformation, the author feels that it is likely to occur in the next ten years. (EN: This book was published in 2015, so it may be worth a look back at that time to see how prophetic this actually is, as the same was said in the nineties about other industries that, twenty years later, remain largely unchanged.)

    Readers who dismiss this prediction should consider a few things, which surely cannot be doubted:

    1. Technology has had a significant impact and newer technology that is under development (specifically machine learning and artificial intelligence) will likely have an even greater one.
    2. The X and Millennial generations are significantly different than their Silent and Boomer generation parents, and that the generations after them will likely be more different still to the traditional banking customers.
    3. Deregulation and globalization are a "perfect storm" for international commerce and banking industries, giving them access to opportunities and exposing them to threats from which they had been shielded for nearly a century

    In the face of all of this, dramatic change is inevitable. Even if you disagree with the author's idea of exactly what that change will be, it seems undeniable that there will be an upheaval in the banking industry in the near future. These changes are too broad to be effectively managed by making minor adjustments to the existing ways.

    He then recounts his assessment of the current marketplace - with many small start-up companies nibbling away at the behemoths of the industry - and repeats his advice for big banks to form small and nimble subsidiaries to counter the threat by using the very same tactics to be proactive in innovating to define the next generation of banking solutions.

    And there, the book abruptly ends.