The mythology of emergent tech: confusing reality with preference

“Banking is a tech business”

I am a firm believer that within a few short years, the commonly heard admission “I am not technical” will carry the same weight of implausibility and colossal impracticality as the admission of illiteracy in the boardroom. Illiterate execs just don’t happen.

By the same token, you don’t get to be non-technical in banking. How you got away with it so long remains a mystery but the party is over. Money doesn’t sit around in neat brown sacks with dollar signs stencilled on them. Money is bits and bytes. Our products only exist as abstract mathematics and legal documentation; and our services are either entirely delivered via tech means or are delivered by humans who are equipped with digital toolkits in order to serve.

Banking is a tech business.

That doesn’t mean either that banks are tech companies or that banking tech needs to or will essentially be cutting edge.

What it does mean, however, is you’ve been going about figuring all this disruption malarkey out the wrong way.

Looking for answers among the unicorns: models, standards and the size of your appetite 

Using new tech is not new to banking. We’ve talked about this before.

What is new, is new techies, who don’t meekly do as they are told but leverage new tech to power new business models.

What is also new is the conspiracy of regulators, entrepreneurs and customers to enable, design and consume alternatives to the monopolistic product-set we have long become accustomed to.

So yes. Something has emerged.

Emergent tech has become a catch-all umbrella term to describe all technology that is either new, new to banking or being used in new ways that change the way we do business. Which means that regulation can make known, emotionally safe tech feel like emergent tech (enter left: open banking).

And how do we react to all this emergence?

We seek the silver bullet.

We theorise, looking for the best “model” for “engagement”.

We talk about industry standards and best practice processes.

We are looking for risk-free bets, we are looking for guarantees that when the time comes we won’t have to eat our vegetables if we don’t want to. We are looking for questions to distract from the big ones: in this changing world, how big is our appetite? For growth, for risk, for change?

The only wrong answer to this question is silence. And right now the silence across the industry is deafening.

We spent a lot of time, time we will never get back, in meetings debating whether (insert as appropriate) “blockchain is real”, APIs are secure, the “logic” of decisioning software can be reverse-engineered for compliance. The assumptions in those conversations are: in the beginning there was compliance, then there was my business, then came the door to door salesman of tech solutions who I indulge but he needs to be grateful.

All. Wrong.

Compliance is a relational discipline.

You can only be compliant to something and that something is changing, so compliance will need to change soon, not just the what, but the how.

And your business?

That’s changing too. And that won’t stop by making the techies’ lives difficult.

The people coming to sell you software shouldn’t have to jump through ridiculous hoops proving that things that are commercially available are “real” or solutions infinitely more robust than your current core banking system are “scalable”. They shouldn’t have to give you a ‘world primer’ before getting to their pitch. Your education is your job.

And they shouldn’t have to tell you how their product will make you new money without upsetting the way your old money is made. Your business is your job, too.

Software vendors and tech entrepreneurs should have to explain their product not teach you how to defend your business. Believe me, you have not “accrued” for that price tag. What their product does, is their job to explain. How/if that will serve your strategy, is your responsibility to work out. Forget that you shouldn’t expect others to do this work for you: you shouldn’t want others to do this work for you.

You’ve been looking for magic formulae and silver bullets so long, we all forgot to remind you ‘this is not normal’. You got to set the parameters of reality so long, we forgot to chuckle.

But enough.

The conversation around emergent tech is creating an unhelpful mythology. It creates the assumption that as things emerge they are fragile and may not survive which then may make them somehow not real. This is both false and unhelpful because even in the things that fail there is a learning and germination of future success. You dismiss that as “not real” at your own peril.

But even after proven to be real, this mythology does not allow tech to be. It nurtures the impression that new tech needs to grow, behind glass and at arms length if needs be, until it is big enough to be robust.

Needless to say that is utter nonsense and yet we all act like we believe it.

Software, unlike children, does not follow biological growth cycles and with enough stress testing you will be amazed how fast things can grow. One caveat though. You have to use it.

Think of usage, in a production environment, in real life, as the software equivalent of feeding your children.

Speaking of which, ‘children’ is what comes to mind when organisations collectively managing trillions of other people’s money spend so much time and effort in trying to deny the reality and relevance of commercially available technology to deflect away from the real question of: can you use this to make money, can your competitors do it even if you can’t and can you understand enough to even answer the questions?

As my mother says: I don’t care what everyone else did. What did you do?

Apologies to my regular readers for repeating myself but I am old enough to have had day long meetings with Risk at tier 1 banks about open source being a threat, not real, not stable. Whatever.

Over the the years I’ve had the same discussions about DLT, APIs, machine learning, matching algorithms, machine inference. Oh and on one glorious occasion Twitter as a systemic risk.

The question is always “prove its real, prove it won’t go away”. Then we may start thinking about whether it is useful. But probably won’t. Probably we will look surreptitiously around us, notice our peers are going to conferences and joining task forces; setting up R&D labs and penning white papers, debating whether it’s all “real real”, having realised it’s real. So we may do the same. Or wait. Wait for it all to go away.

Wasting all the time we could have spent understanding whether all this new tech is actually useful to us and our business.

We spend time answering questions that are already answered (is it real? Well yes if it’s live it’s real), questions that have no answer (is it the best? The best at what, for what and for how long?), or questions that have no value (‘is that the full landscape?’, overviews and benchmarking studies laughing in the face of the black swan paradox as white swans become endlessly amassed on company PowerPoint). And of course we spend time asking the “do I really need to bother” question (“what is everyone else doing with it?”, do they look like they may have cracked it? The answer here, of course, is never you mind. Everyone else isn’t you. Everyone else isn’t running your business).

Emergent tech is a comforting term, it has all the excitement of a new frontier, it makes us feel pioneering. But it also feels safely under control. It gives us time to work things out, to act on the basis of our preferences which are largely to not change our organisation’s risk appetite or compliance methodology, to continue making all the money we currently make and maybe make some new money.

And we’ve managed to somehow convince each other collectively as an industry that adjudicating on the reality of new tech is somehow our role and privilege. We will take our time understanding, we will decide on the reality of this technology depending on our preferences and if it doesn’t suit, it wasn’t real.

Which would be half way ok, if the assessments were business driven and not risk-checklist-driven whereby by being new you ipso facto fail against every criterion.

Still half way ok wouldn’t cut it, even if we managed this major step. Because the market isn’t waiting for us. Real technology finds its way into the hands of real users. Funny, that. Consumer expectations change, new businesses emerge and the regulator (unlike your compliance department) is happy to say that if evidence suggests tech to be real, robust, efficient and desirable then compromising on efficiency or the customer experience because of the incumbents’ preferences is simply not on.

Emergent tech has emerged. Emergent regulators have also risen.

And they are asking “forget what everyone else has been doing all this time. What did you do?”. The question will be asked of each and every institution eventually. In my head that is all playing out, predictably, in my mother’s voice.

Let me suggest that when you are asked for facts and actions, stating a preference will not cut it with my mum, the regulator or your customers. Questioning the tech is not what you were asked to do in the fist place. All we want your opinion on is the future of your business.

That’s the bad news, the good he’s is there is still time. So.

Time to shift from emergent tech to emergent business opportunities, from silver bullets and abstract models to the hard graft of trial, error and market validation.

This is where you stop testing other people’s world for “reality”, “fitness for purpose” and “suitability” and start testing your mettle where the stakes are high and the only preference that matters is that of your client. If you want “real”: start there. Word to the wise though: this will get technical.

By Leda Glyptis

Leda Glyptis is FinTech Futures’ new resident thought provocateur – she leads, writes on, lives and breathes transformation and digital disruption.

Leda is a lapsed academic and long-term resident of the banking ecosystem, inhabiting both start-ups and banks over the years. She is a roaming banker and all-weather geek.

All opinions are her own. You can’t have them – but you are welcome to debate and comment!

Follow Leda on Twitter @LedaGlyptis and LinkedIn.