My dear friend Andrew and I talked about purpose two weeks ago.
In a recent article, I wrote that banking is simple. what we were Act It’s simple. We store and transport objects of value in time and place and keep records of all actions. How to do everything is complex and creative.
This complexity and creativity is how we make a big, profitable business out of all of this. This is how financial services have become a huge vertical in the economy. That is why some of the best and brightest are seeking to join its ranks. It is a simple act, but it is not easy to do.
And Andrew rightly asked about Why from work; behind what and how. If what we do is structured and simple and how we do it is complex, where does the whole purpose come from?
It has given me pause. Andrew has this effect on people: he makes them think.
What about the reason? Why we do this should be more important.
And he’s right, of course.
But if we are honest with ourselves and take seriously the work we do, there is only one reason in our work.
I am not being respectful here. It is the truth.
Unless you’re Scrooge McDuck, financial instruments aren’t an end game. Nobody takes out a loan for fun. Mortgages are not an end in themselves. Even the most complex trading tools are usually a means to an end. Yes wealth. fortune of course. But there is usually a starting point before that. Financial services are about access to money, not money itself. They are about raising money to do things. It might be things about public infrastructure, commercial growth, or personal enjoyment. But our industry’s role never ends at the end of the equation. Even when money is the end game, the financial instrument is not.
It is important that you know where we are.
Mortgages are a means to an end.
Syndicated loans are a means to an end.
Derivatives are a means to an end.
Then, admittedly, the cause becomes a mystery.
So here’s an idea:
Banking is an “even that” business. This is our reason.
We are here to help maintain asset integrity, provide business liquidity and finance infrastructure projects.
We are here to provide children with access to education insurance; their parents’ access to health care; The owner of the corner store is on his way to school with the possibility of obtaining interim loans and bill financing that secures their livelihood. Even in countries where education and healthcare are free, money is helping to access, not to mention helping the state with money to build the school and hospital through sovereign bonds, lending and investment vehicles.
I guess what I’m trying to say is that money makes the world spin, and that “spin” part is for this reason of our business. The reason we exist.
We exist so that money can move in space and time to enable living, trade, and growth. And we do it in a way that makes it a business to do so. That is, we do it for the money.
OK. Brilliant. That’s what financial services do today.
No need to shift.
No need to perform a digital repair. We are achieving our goal. Albeit inefficient, often with confusing and predatory pricing, and access being a problem for people, businesses, and countries alike. Because this is not charity.
But actually, that’s the point.
Transformation is not needed in order to help finance find its purpose, but to help us achieve it.
We know our reason for being. We just need to get better at doing the job.
This is where the digital revolution comes in. This allows us to align a sense of purpose and ethics with businesses that can do well and do well at the same time. Reduce obstacles to access and fairness without compromising the need to maintain business relevance. Earning money is a foregone conclusion. It is work. How you make money is a choice.
If we agree that financial services is an “until that” business, there to empower lives, businesses, and civilizations while making a profit, then that’s our goal and how We do that becomes our mission. How we do this becomes the factor that defines us both morally and practically. It also allows us to draw a line and look at all the activities that don’t fall into this category separately and say: Well, there’s no part of this. I don’t know what your goal is, but not this.
Lawmakers have attempted to apply similar reasoning to this in the wake of the financial crisis. They talked about casino banking and tried to surround retail banks with function and geography to protect consumers. A noble cause, but it is useful to understand how the money flows before trying to draw the lines.
Some circular fence is useless.
Money flows across borders, consumer loans are backed by money that comes from capital market accounts (credit card debt appears in repacks and asset-backed securities may well include your home) and the affordability of consumer instruments often depends on trading returns.
This also applies to instruments traded to make sovereign debt investable.
The money flow method is very integrated. True or Flase. To change it, you first have to understand it. There is no direct line connecting bond issuance to dams or schools but the line does exist. We need to remember that. And we have to keep that in mind: bankers, technologists, and policymakers alike.
If you can’t trace a line on how an activity pumps liquidity into the trade, guarantees mortgages, or something else, put it in the sin basket. I don’t mean to get rid of it. But treat it as a separate thing, because it just might be.
There are some seriously obscure investment tools. There are companies that trade for excitement and profit only in closed circles that are only closely related to the real economy. Treat them as something separate, because they are.
Everything else is part of the “even that” business. Existing business specifically to serve life, trade and development. And yes, make a profit doing that. But did that It is the non-negotiable part. If that’s not what you’re here to do, you’re in the wrong business. Please leave.
It’s not that simple, but it should be.
We have a lot of work ahead of us. We need to use what we’ve learned and the technology we’ve created to make this ‘better’: more powerful, more scalable, more profitable and affordable, because digital connectivity lowers cost allowing you to have a bigger, more nutritious pie. You won’t get it and eat it however you will eat it and others will eat it too and still others to eat later.
That’s why, as far as I see it, to do a better job at the thing you’re here to do.
We are a “so that” company.
So we are here to serve. This means that when we are not in service, we are just in the way.
Leda Glyptis is a resident thought instigator for FinTech Futures – she leads, writes, lives and breathes digital transformation and disruption.
sHe’s a recovering banker, a backward academic, and a longtime resident of the banking ecosystem. She is the Chief Customer Officer at 10x Future Technologies.
All opinions have. You can’t have it – but you are welcome to discuss and comment!
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