A Chinese bank executive at SIBOS told me that Chinese banks would win the [corporate] business because they understood the detail of banking processes where western bankers had lost the knowledge. He would innovate from a knowledge of the detail. It sounds confrontational when put into words like that but he said it in a friendly, matter-of-fact way during a conversation at the CashFac stand.
I’ve thought about this since returning from Toronto. It’s a simplification but most profound statements are and so it should not be dismissed. After all, westerners have been busy outsourcing the detail of manufacturing to the east which must lead to a loss of knowledge of how to make things.
I tried the notion out on Darrell Fielding, managing director of SEPA Consultancy, a man with deep knowledge of what makes a bank work from the ground up. Darrell gets calls for advice from all over Europe and the US. Darrell agreed with the gist of the argument but gave a different twist.
Banks in the west are outsourcing product development and operations to specialists who do have the detailed knowledge. As a consequence, corporate banking staff is increasingly generalist, although still expected to make the decisions on technical aspects of product, and still expected to connect the dots when it comes to selling complex product capability to corporate customers. And here is an interesting point that you might agree with – the generalist is shy of talking to the specialist, preferring a simplified presentation. So important dots get missed out when the product picture is drawn.
This made sense to me because that problem certainly exists in a virtual banking / complex cash management context. The banker’s corporate customer, especially the intensely regulated non-bank financial business [NBFI], has a complex cash model needing a complex solution. The bank’s customer is getting more specialized in order to compete while the banker is becoming more generalist.
Maybe the Chinese banker was right – western bankers are losing touch with the essential detail.
Paul Ormrod
