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Into the Grey Zone: what tech-driven banking really means

The link between hyped-up technology (e.g. APIs) and concrete business benefits is not always clear to bank CEOs. Through this series of posts, join me on a journey into the grey zone which lies neglected between the high-level business model fluff and the low-level tech-geek gibberish.

On the flight back from the excellent APIDays 2016 (#APIdaysGlobal) conference in London, I felt the same thing I feel every time I attend events that strive to build bridges between technology and business.

While I had no trouble understanding the various "open banking" business models (which were presented about 20 times by the 20 or so mainstage speakers), I felt I was unable to grasp many finer technology-related points which, I suspect, may have pretty big business implications for banks trying to hitch a ride on the digital banking bandwagon.

Maybe it's because I'm a bit thick. Perhaps it's because I'm too old to absorb millennial stuff (yep, I'm a late-Gen X Mamil). But, for my ego's sake, I prefer to think it's simply because I'm not a tech geek; I don't have a formal education in IT, and using internet and a smartphone in my everyday life hasn't turned me into a technologist.

It's frustrating to feel like this considering I've already spent 6 years of my working life in the banking IT systems industry, during 2 of which I've had unrestrained access to some of the most brilliant and experienced technologists in the field.

I suspect that senior business decision-makers in banks feel the same way even though they usually have access to at least a couple of competent technologists, either within their bank (toiling away in the IT corner) or working for the bank's systems vendor(s). But rarely are these technologists trained or properly incentivized to educate the rest of the bank, to explain in concise layman's terms how specific technological elements can concretely help the enterprise become a competitive digital bank.

So, sitting in that airplane back from London, I really felt for those CEOs and other business leaders who are under pressure to make big business decisions underpinned by a technological shift they don't understand well enough (are you concerned that you feel concerned now? ;o). It must be, I imagine, a bit like skydiving out of an airplane with a parachute that's been folded by someone else... who maybe doesn't like you very much.

My suspicion was pretty much confirmed by a figure presented at the APIDays event by Mark Boyd (@mgboydcom): in banks, corporate culture remains the biggest impediment to developing API-based* technology initiatives – cited by 69% of survey respondents. Meanwhile, technology itself is the least-cited impediment of all – cited by a mere 21% of respondents.

I think the message here is quite clear: the biggest problem today isn't that banks don't understand the various tech-driven business models available to them. Nor do banks question that a lot of the technology required to drive these business models is already largely available. The problem seems to be that senior business decision-makers in banks aren't able to build sufficiently clear mental links between the high-level business model hype and the low-level tech geektalk around digital banking.

I would summarize my thoughts like this: "Culture is one thing and varnish is another" (per a famous American poet I must admit I've never read). I would imagine that, from a bank CEO's view, there is (1) way too much focus on the varnish right now, and (2) a dearth of properly-calibrated education. I wouldn't be surprised that bank decision-makers all too often feign an understanding of what is going on, and secretly fear they don't have a good enough grasp of what is going on. And the reason this is a really big problem is, of course, that organizational culture trickles down from the top.

So, what I hope to achieve in this blog is to bring you on a journey down into the "grey zone" between the high-level business model hype and the low-level techgeek hype. Hopefully, it will give you the right level of understanding to make intelligent business decisions as you (try to) transform your banking enterprises into competitive digital banks.

[Footnote] * "API-based" is tech gibberish which, essentially, refers to technology that lets the bank open up its business systems to third-parties e.g. letting a third-party digital banking app access and use some of the bank's data; or giving customers better access to, and more control over, their own banking data.

Have any thoughts, questions, hate/lovemail? Feel free to comment below!

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