Times of stress

As the year is coming to a close, the predictable round of predictions for the year ahead is beginning.

The stresses of financial services have changed, proliferated and shifted, but never lifted

And although I have some thoughts on that (and yes, yes, you are getting an article with my predictions next week), I can’t help but look back a bit. To the year that is coming to an end. And even before that, to the very start of my FS journey.

I entered banking as the financial crisis was picking up steam. At the time, it felt like a rather stupid and counter-intuitive thing to do, truth be told.

But hey, I did it anyway.

With hindsight, it was a coup. A move of sheer genius.

Yes, yes, whatever. It was actually blind luck.

I will take that. But it worked.

Magic mistakes, remember?

It turns out that was the best time to enter banking, if I may say so myself.

For two reasons.

First of all, unbeknownst to me and most of us at the time… fintech was about to happen.

I am increasingly annoyed with the use of the word ‘fintech’, by the way, so I hate myself a little for using it, but there is no other way to describe what I am referring to: that confluence of new technology adoption, new business models and the rapid and sustained regulatory, societal and economic change that started happening around 2005… then the iPhone landed two years later and off we went to the races.

Obviously we didn’t know as it was happening how significant it all was.

We didn’t know that P2P lending was only the beginning. That wrapping our head around what API pricing needs to look like was only the beginning.

What is encompassed today in the word ‘fintech’ is too big to fit into one room. Too big to fit in a single vertical. It’s a cornucopia of rapidly maturing technical capabilities, new business models, new discipline around data, value and human-centricity. Nobody can know All the Things. Nobody can learn All the Things. Nobody should even try.

But for those of us who entered this dance at the start… we were in the room where it happened… and back in 2007, with a brand new iPhone in hand and a copy of the first payment services directive (which we also had no idea would be part of a transformational wave of regulatory thinking)… we could all almost fit into one room. We all knew each other. Not six degrees of separation, but two, at most.

We had a unique opportunity to try and learn All the Things. Or at least familiarise ourselves with them.

We boarded the train when it first pulled into the station not knowing how far it would go or how fast it would get us there.

And boy did it take us places.

There is a second reason why it was a good time to join, and that is less shiny.

Entering the financial services sector mid credit crunch, waiting for the Canary Wharf Tower lifts to zoom us up to meetings as Bear Stearns and Lehman Brothers closed their doors… it meant that I entered the system in a time of crisis. The Gordon Gecko years were not for me to experience. And although banking remains a profitable business, that time of Wall Street excess has never come back.

The times of stress I entered almost 20 years ago were new to my bosses. But they were all I knew.

And frankly, almost two decades on… they are all I have ever known. The stresses have changed, proliferated and shifted, but never lifted.

What has changed is that bankers no longer go round feeling uncomfortable at the discomfort. We are used to stress and constraint. The fat years are no longer within living memory. None of the leadership rising as we speak have ever known anything other than times of stress.

Which is no bad thing.

Because that’s all we are getting for the foreseeable future.

I know I have spoken a lot about the cost-of-living crisis, and I know you get it, but it’s not going anywhere, so neither am I.

Technology adoption will only get faster. Computing power will only become cheaper. And innovation will continue to dazzle and occasionally scare us.

And the regulatory wave that brought us here is about to shift.

Because the early wave of fintech is coming of age and adolescence is… awkward.

Regulatory stresses among challengers of all shapes across all geographies are bringing a new kind of stress into the system.

Will the regulator swing too far the other way? Will they see all the strain coming of age puts on the neos and go, “What have I done?” and stop granting licenses? Maybe. I hope not, but maybe.

Will the operating tensions between ageing systems and rapid technical evolution create systemic events? Again, I hope not, but I don’t sleep easy at night.

There is a hard slog ahead for the whole industry. Not just the fintech vertical, as there is no such thing anymore.

Whether you are a start-up or a 200-year-old bank, the division of who has shiny new capabilities and new ways of working is no longer as clear as it once was. We are facing the next order of challenges now: harmonising the cost to serve, streamlining operating models, tightening controls, protecting consumers and shareholders no matter how big your organisation is.

Same old, you may be saying if you’re a banker.

Maybe the start-ups are experiencing new problems, but for the rest of the industry, this is the movie we’ve been watching for a while.

It’s been times of stress all the way around here, captain.

So, it is just as well that the bankers of today know nothing but times of stress, because it’s set to continue.

And grim as it sounds, maybe facing into all that stress now is what coming of age looks like for what we thought of as fintech once upon a time. Adolescence is an awkward phase alright. But as I always tell friends who complain about getting older… yup, getting older sucks, but the only possible alternative is a lot worse.

So, times of stress it is. And there’s plenty of it. But the way out is to go through. And there is a lot of work ahead.

We won’t be able to learn All the Things. We won’t be able to do All the Things. We will have to carry on operating under stress, it seems. So all we can do is double down and hope for a magic mistake or two to help us along the way.

But now we know at least that the train we are on is going far, it is going fast and each place it takes us will be new and stressful and will take some working out… and wasn’t that exactly what we signed up for right at the start of it all?

#LedaWrites

Leda Glyptis is FinTech Futures’ resident thought provocateur – she leads, writes on, lives and breathes transformation and digital disruption.

She is a recovering banker, lapsed academic and long-term resident of the banking ecosystem. 

Leda is also a published author – her first book, Bankers Like Us: Dispatches from an Industry in Transition, is available to order here.

All opinions are her own. You can’t have them – but you are welcome to debate and comment!

Follow Leda on Twitter @LedaGlyptis and LinkedIn.