In Financial Services, playing it safe is the real risk
13 Feb 2019
Banks. If there’s one thing they truly relearned after the financial crash, it was to be super risk averse. After losing billions in their handling of poor, sub-prime mortgages and gambling on Credit Default Swaps in the most catastrophic way possible, the financial services industry retreated into a cosy, low-risk space of just delivering banking services and making sure no apple carts were upset in the making.
And at the same time, the world’s major accountancy firms also saw an opportunity to capitalise on this contraction. With a renewed desire to play it safe, take few risks and hide from the headlines, who better to help the banks navigate out of the darkness than accountants? Ok, to some degree, it’s creative accounting that led us to the world of sub-prime mortgages but there’s always safety in numbers. So, in an almost overnight switch, your big-name accountant became big-name consultants and cosied up to their bank friends to help them resurface and gain some credibility.
But if there was another by-product of the financial crash, it was the desire of the regulators and competition commissioners to try and make sure there was real challenge in the market for the big banks – in spite of the fact that the crash led to mass consolidation. Spurred by a tech sector that barely felt an itch from the financial crash and a more welcoming regulatory environment, there was an explosion of financial technology (FinTech) startups – out to eat the banks’ lunch. Well, nibble at the hors d’oeuvres at least!
“Crap!” said the banks. “Everyone hates us” (trust in the banking sector is at an all time low) “and now money and favour are sending piranhas our way – we need to get ahead of this”. So, why is it that, as we enter 2019, it doesn’t feel like the big banks are really innovating? Why are the headlines reserved for Monzo, Starling and Revolut? It comes down to a culture of risk aversion. One that the banks probably thought they were buying out of when they instinctively hired the consulting arms of their favourite accountants.
Banks know they are risk averse. There is a certain element of (deserved) pride in that. But when you are up against a nimble startup that has zero legacy and no brand tarnish, a traditional view cannot be taken. Sadly, when you engage with an accountancy firm that has convinced you they’re now a digital transformation agency, you’re still dealing with an accountancy mindset. This idea that “You’re big, so we are. You’re risk averse, so we are. We can all feel safe” is not the solution. Especially, when, scarred with the risk taking in the past, people will not want to take risks again. It feels easier to get someone reputable from a big name to tell you not to do things so you will feel you got advice from specialists when in reality they you wanted to feel better about standing still.
Rather, it’s about breaking down your big problems and your big risks into smaller ones. Rather than trying to reinvent an entire bank, reinvent a process, a platform, a customer experience. Similarly, it’s about taking what you might have done with a big, cuddly financial consultancy and doing it with a smaller, nimble digital specialist. Because, these are not financial challenges the banks are facing (history has already proven they will be fine). Rather, it’s a technological, digital challenge. And an agency like ours, one that has twenty years of pure digital experience behind us but works with over 60% of the UK’s leading bank brands, there’s all the digital smarts that’s required along with enough sense to know how to navigate compliance, financial promotions etc. True digital agencies are the masters of breaking down problems into manageable chunks, into rapid prototyping ways of fixing problems, reinventing solutions and cutting out the crap. And with a history built on writing code and solving problems, everything a digitally native agency like ours does is agile, rapid and, of course, accountable.
We won’t pretend that we’re here to reinvent banking. Actually, banks know what they want, what they aspire to. Rather, we’re here to deliver the paths to achieving those goals, bit by bit. Banks are the experts at being banks, we’re experts at digital transformation. We’re not chartered accountants that masquerade as one. But we know what needs to happen to make the accountants happy. And that’s deliver real change in financial services that drives bottom line performance.
So, if you want to join Santander, CYBG, Lloyds and other brave, smart financial brands in an agency that delivers transformative digital strategies in every realm of financial services, don’t call your accountant, call us.