Bank of the Future: Quo Vadis?


“Status quo, you know, is Latin for ‘the mess we’re in.” – Ronald Reagan



History is littered with examples of derided radical thinkers, revolutionaries and heretics who challenged the status quo. One of the best known examples is the Roman Inquisition’s denial of heliocentricism. The concept of the earth moving around the sun contradicted the Roman Catholic Church at a time when the rivalling ideology of Protestantism heightened the need to defend the status quo. Consequently, in 1616, Galileo was instructed by Pope Paul V to abandon his opinion that heliocentricism was a physical truth even though the well-educated of society at the time accepted the heliocentric view as fact.

While the Catholic Church’s confrontation of heliocentricism was rooted in religious dogma, incumbent financial service providers are arguably stymied by systemic and architectural impediments that make shifting the status quo a near impossible undertaking. The existing conditions in banking are defined by siloed structures built around deep functional specialisation, legacy systems embedded in spaghetti architecture, unwieldy cost bases and a product-centric market-orientation.


The elements of the status quo described here have a profound influence on our approach to dealing with the future. It is extremely difficult for incumbents to deal with the changes brought about by the proliferation of advances in digital technology that enable Fintech startups to challenge one of the world’s most established, tightly regulated, and mature industries.

The financial services industry is awash with more than 1,300 Fintech startups, across over 54 countries, that have attracted in excess of $80bn in funding since 2010 and they are attacking incumbent business models on the three fronts:

  • Pricing transparency through disintermediation of traditional service providers;
  • Democratisation of products and services previously reserved for exclusive market segments; and
  • Provision of a streamlined, intuitive customer experience that make the traditional service providers look like a shoddy alternative.

While the Fintech disruption has so far been more pronounced in the retail space, it would be naïve not to see this as an omen of a fire that will surely spread to corporate and investment banking.


“Those things which I am saying now may be obscure, yet they will be made clearer in their proper place.” – Nicolaus Copernicus



As clear as the threat and need to respond may be, the status quo can never be anything other than a feeble and flawed attempt of yesteryear to prepare for our future, fraught with uncertainty.

Our attempts to corporatise innovation and disruption are often informed by aspirations to emulate Silicon Valley. We all want to be more like Amazon, Google, Uber or Airbnb, so we strive to imbue our organisations with the same dynamism, appetite for failure and creative culture we regard as the panacea for deficiencies in our ability to innovate and disrupt.

What we forget is that as noble as our intentions may be, any disruptive play will face the resistance of the status quo in all its varied manifestations. Roadblocks to challenging existing conditions emanate from the vested interests of its custodians, their emotional attachments, outdated heuristics, the fear of lost revenues, cannibalization and obsolesce. These obstacles are not easily overcome.


“The riskiest thing we can do is just maintain the status quo.” – Bob Iger


To be successful in transforming the status quo, you need to begin by planting a seed at the heart of the organisation and nurture it. That seed is recognising the palpable risk implicit with defending the status quo at all costs. This recognition must occur at the highest levels of leadership, the custodians of the status quo who have the power to shape it. It’s well documented that the most common reason for failed initiatives is the lack of executive support. Solve this problem up front, and you have already won half the battle.

A word of caution though, recognising the risk of maintaining the status quo is only part of the solution as it does not address the systemic challenges faced by banks. For an innovation and disruption unit to be truly successful it must, as far as possible, operate within its own governance framework, unconstrained by the parent organisation’s existing circumstances. Furthermore, banks must be prepared to embrace open innovation principles and collaborate with their would-be fintech challengers. The growing trend towards collaboration between fintechs and banks is well noted and is most prominent in the corporate and investment banking domain.

These pieces of the puzzle are far more difficult to solve but are nevertheless the only way banks can break the shackles of the status quo, innovate freely and keep up with the pace of digital disruption determined by their agile couterparrts.

Counterintuitively, running an innovation and disruption unit such as RMB’s Foundery is less risky than sitting back and taking a wait-and-see approach. The Foundery is a bold declaration of RMB’s intent to challenge the status quo, at both an organisational and industry level.


by David Krawitz



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