Are Bankers Necessary?

The start of this series will evoke some visceral responses—my apologies as we begin. This series is designed to question our foundations—in an age of disruptive innovation, are bankers necessary? We can see this taking place in the real estate markets where increasingly digitalization and automation are challenging the “necessity” of traditional commissions estimated to be over $75 billion per year—or approximately .30% of U.S. GDP.

We can witness this in the once tightly linked corporate bond market where in one investment bank shed 99% of their staff—due to innovation, data, process, and technology automation.Additionally, there is #Gartner which has been quoted that “Most banks will be made irrelevant by 2030” with “80% of financial firms” out of business or competitively swallowed—about 1.3 million out of the 2.05 million people now employed will be out of work. Others believe that across all of finance—of which banks comprise just a segment—over 6 million workers will be displaced by 2025. Where will these workers fit in now that algorithms have replaced their job description?

Yet, there is another school of thought. Others believe that the very technology putting people out of work and forcing them to seek alternative employment will boost job markets. Even as these workers struggle for skill relevancy and face rising personal costs for reskilling, the disparity of what #FSBO (financial services and banking organization) leadership should be doing when it comes to innovation, reskilling of work forces, and products and services offered to customers, span alternatives across diametric poles.

That is the idea behind this series—to explore the challenges bankers face. Not to say bankers don’t matter—but to understand what DOES matter—to the customer, to the economy, and to the bankers. Is it not better to ask the questions ourselves then to react to market changes?

As consumers move 100% digital, as neobanks which have no physical footprint gain market share in an age of financial commoditization, as branch closures accelerate due to uncompromising legacy investments and strategy, should banks which have the intellect and experience be leading the disruptive transformation? Or, are we going to wait and watch institutional numbers dwindle to “irrelevancy” (i.e., the decades long trend of losing 200 to 250 banks every year)?

All this begs a “few” questions regarding financial innovation. First, does innovation create banking strategy or does banking strategy drive innovation? Secondly, as global populations move to near 100% subscription to online banking products by 2030 (under 50% now), will governments step in to enact greater personal security for transactions and identities? Thirdly, will banks emerge, a reformulation if you will, as data science and analytic enterprises feeding retail, transportation and even educational institutions?

Indeed, there is much to contemplate, debate, cajole, and scream about as we ask, “Are Bankers Necessary?”