Jump to content
House Price Crash Forum
Sign in to follow this  
fru-gal

Ex-Barclays Boss: This Is The “Uber Moment” For Banks

Recommended Posts

He doesn't know what he is talking about. Clearing banks are in a very specific privileged position that allows them to lend their money many times over simultaneously and always balancing the books with other banks in the central system.

It will be interesting to see what (if anything) happens to bank savings rates when the P2P ISA comes into effect next April (along with the ceasing of the FLS).

Share this post


Link to post
Share on other sites

He doesn't know what he is talking about. Clearing banks are in a very specific privileged position that allows them to lend their money many times over simultaneously and always balancing the books with other banks in the central system.

He was CEO for 3 years.

I think he probably does know what he's talking about.

Scary!

Share this post


Link to post
Share on other sites

Challenger banks/financing/saving isn't like Uber - capital positions/ratings going to be important. If not now, then later.

Some of us will remember Stuart Lee's 2008/09 stage-show (was on YT but has since been pulled) where he joked about how millions of people, before crunch, had thought it was a great idea to bank deposits via internet with Icelandic online bank with no branch presence in UK.

Some of the stresses on main banks positions are real,but challenger banks don't have it all their own way into recession/contraction/hpc. Even this outlook provides a challenge to wider markets/prices/velocity on business and house prices.

“The number of branches and people employed in the financial services sector may decline by as much as 50% over the next 10 years, and even in a less harsh scenario I predict they will decline by at least 20%,” said Jenkins, in a speech at Chatham House, reported by Reuters. [......]“If banks want to really compete for talent successfully, they are going to have to make themselves interesting places to work. It can’t just be about the money, because frankly the money isn’t going to be there the way it was before 2008.

Share this post


Link to post
Share on other sites

Makes sense....like many things banking is changing fast, always wondered why so many high St branches still exist....noticed some only open part of the week, then close altogether.

Share this post


Link to post
Share on other sites

Don't you believe. If you asked Hornby, Lord Dennis Stevenson or James Crosby how the money system worked and its inter relationship with the economy you would have got a laughable answer as you would have from most ceo's of the time.

Jenkins is a career retail banker and will know exactly how banking balance sheets work. He was head of the retail banking operations for years before taking over as CEO. He will certainly know more about the nuts and bolts of banking than a non banker who has seen a few YouTube videos.

Jenkins is also knows his stuff on technology and oversaw the introduction of a lot of the digital banking platforms at barclays.

Share this post


Link to post
Share on other sites

What would make things interesting is if a tech giant lime Google or Amazon got a banking license, or if they funded very generously (with cash and tech) a startup in this area. Could turn the whole market upside down.

Share this post


Link to post
Share on other sites

Interesting stuff. I've worked for a major Investment Bank on Canary Wharf and now a 'Fintech' electronic trading firm/brokerage in the City, writing software to trade in the markets and going out and pitching/selling the algorithms to hedge fund/asset management clients. Obviously I can only comment on the investment banking side, but here's my two cents:

In the secondary capital markets, finance and technology are converging at an exponential rate. Every year more traders lose their jobs and are replaced by programmers, had a beer with a recruiter today in fact who said he "doesn't touch traders now because the market is like that *hand going down motion*". First to go electronic was the simple fungible stuff like foreign exchange or equities (NYSE volume traded electronically estimated in the 80-90% region), but now (past 2 years or so) I've personally seen the banks making a huge push for the more illiquid/exotic stuff: bonds, derivatives etc. to be traded electronically. The truth is that their trading floors are making less and less money each year (various reasons) and they're desperate to bring return on equity up for shareholders: technology cuts costs and executes trades tens of thousands of times faster than human brokers. So as Jenkins rightly points out: frankly, the money isn't there anymore (despite media perceptions I've never seen so many disappointed faces as bonus day at the bank I worked for!)

The problem for the banks is that they're huge bureaucratic juggernaughts (one of the greatest myths about Wall Street careers is that they're entrepreneurial) and they're bound by post-crisis regulation. As such they don't lend themselves well to the 'agile' software development style of a startup, I know there are a few contractors who have worked in the big banks on this forum who will testify that things take an age to get done. Therefore it's not hard to see how these guys could be 'undercut'/outpaced by genuinely disruptive innovations.

The next 10 years will be very interesting. But I will say however, it's worth noting that if you're Goldman Sachs or J P Morgan, a huge bank, then regardless of technological trends, you have something very powerful: franchise client flow. So many clients trade with you because of your brand so you being able to find the most liquidity almost becomes a self fulfilling prophecy and therefore you almost ARE the market ... hard to see how that could be taken away.

Share this post


Link to post
Share on other sites

He's likely right in some sense. Everyone in the digital start-up field is sniffing around the finance sector as they sense huge money to be made from slow incumbents.

I see it as like piranhas feeding on a blue whale. It is going a long time to eat that thing, but you can cause it a lot of damage in essential (high profit) areas very quickly. The big banks, however, are so embedded in the system they might be able to move quicker and with a greater chance of changing law maker's minds than a taxi cab firm.

Share this post


Link to post
Share on other sites

He most certainly knows how banking works, but I also think he's wrong on this point for the moment at any rate. Most of the Fintech startups (and plays by established tech firms) are in very small niches because they can't, or refuse, to get banking licenses. There's very little incentive for most people to use Google Wallet or Apple Pay etc. when it appears to cost them nothing to use their cards or apps from their own banks. Whilst banks make their money by paying little or no interest on deposits and raping people for overdrafts, late fees etc. they will happily continue to provide payment and transactional services 'for free'. Unless they're forced to unbundle services, the only way for a new entrant to compete with that would be for them to pay people to use it - not exactly an attractive business model.

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
Sign in to follow this  

  • Recently Browsing   0 members

    No registered users viewing this page.

  • Next General Election   92 members have voted

    1. 1. When do you predict the next general election will be held?


      • 2019
      • 2020
      • 2021
      • 2022

    Please sign in or register to vote in this poll. View topic


×

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.