Confessions of a FinTech Junkie

My name is Frank and I have a problem. I like to put fancy titles on papers and presentations that I write as a way of luring in unsuspecting readers. It seems to have worked with The Hourglass Effect and with The Brave 100, so I’ve decided now isn’t the time to break my habit.

My newest piece is called “The Copernican Revolution in Banking” (hit link to download) and unlike my previous works, this one is a presentation instead of being another dense white paper. I’m hoping the trade-off of “easier to digest” vs. “detailed explanation” is a good one, but if not I can always revisit the topic and fill in the missing pieces later. Let me know what you think!

As for the premise, it’s about Banking being broken (i.e. – Most Banks are producing ROEs that don’t exceed their cost of capital) and that some fundamental a priori beliefs need to be challenged to fix the system. It’s too easy for Banking Executives to blame the structurally mandated changes of the past decade on their woes (i.e. – capital requirements, incremental costs of adhering to regulations, etc). But, there’s a more fundamental change that’s taking place that Bankers need to internalize.

The availability of data paired with the proliferation of channels is resulting in purchase behavior guided by near perfect information.

I know that’s a mouthful to digest….but data is powering the shopping behavior in Banking the same way it has everywhere else. “Best in class” products capture outsized market share, and as it becomes easier and easier to compare products the migration of market share will only accelerate.

The reason the paper is titled “The Copernican Revolution in Banking” is that if Banks are willing to challenge their a priori beliefs there are multiple ways to win in this new world. This fancy concept is based on the aftermath of Copernicus’ statement that the Earth moves around the Sun. Nothing in the physical world changed as a result of this statement and yet everything changed about our understanding of the world. What Copernicus did was take the existing a priori concept of the world (geocentrism) and pose an alternative a priori concept of the world (heliocentrism). Both fit the facts, but the new world view allowed for innovation (Kepler, Einstein, etc) while the old world view had stagnated after 1,500 years and had hit a dead end.

And for what it’s worth, I’m a big fan of cheating when it comes to making big, bold predictions. I love predicting things that are already happening and this presentation is no exception. Connecting the dots is my super-power!

Have fun reading and in all sincerity let me know what you think!