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Thank you so much for having me.
I have been sitting here all morning listening to the talks, to the conversations, and thinking I'm gonna be bringing the mood right down when I get on that stage.
Because the, the reality is for those of us who've been in this industry, in this game a long time, and I have, I was saying last night, I got a Veterans Award recently, which is a very polite way of saying, what are you still doing here, you old person? But I have been doing transformation and tech supplantation in financial services for 20 years.
We didn't call it digital FinTech, that wasn't part of the language, but the whole engagement with our technology, aging, with new pressures, with new things, having to come in and find a home inside our organizations has been the mainstay of my career.
I'm guessing the mainstay of most of your careers.
I don't think there's anyone who has been in finance that hasn't dealt with that.
So as far as I'm concerned, it's been a hard day's night, every bloody day and every night it has been an uphill struggle.
And so what I wanna do today is take a bit of time to talk about why that is.
Why has it been so hard?
Because in my time doing this work, we've pointed largely to two things.
The first is regulators.
Oh, the regulators won't permit what we wanna do.
The pressure is intense for globally operating entities.
The tension between regulatory regimes, the fact that regulators talk, but the details don't align.
If you try to do open banking across multiple geographies, you know that it's all great, that we're talking about open finance, but actually the messaging standards and API endpoints are not the same.
So you have to rebuild your system for Australia, for the U.K., for here.
So yeah, the regulator’s difficult, but the reality is, in every organization I have worked regulatory change is actually how we got headspace and budget to innovate.
So it's not the regulator. So what is it?
Well, it's the technology. There's so much of it.
And that is true, right? There's so much of it coming at us.
I remember talking to one of my CEOs a few years back going, do I need to learn this? This human question, Real question. The answer was, well, you don't, but the organization does.
Because by the time you retire, we'll be late.
But then there's the next thing and the next thing and the next thing.
There's so much out there.
But that hasn't been the reason either.
cause if I look back over the last 20 years actually, financial services entities, even the behemoths have been pretty good at adopting new technology.
It's been of a bit of a chacha; few steps forward, a few steps backwards.
Some things we've been better at adopting than others.
Sometimes we went down rabbit holes.
Everyone remember the Citibank Metaverse report? Yeah.
But the reality is we've been good at doing the new stuff, but still it has been extremely hard and it has not been the regulator making it so, and it has not been the technology making it.
So what I wanna do is spend a little bit of time on why it is so hard and why we might be able to do something about it.
And you have my, my book in front of you, which actually has a lot of how to, if you actually wanna make some of those changes.
But the reality is the job has been hard for reasons that are not very exciting.
And the first one is we've had a pretty good run for a really long time and not very much changed for a really long time.
There's that exciting time when financial services entities as we know them today, were created in this very country of yours.
Entrepreneurial opportunists really.
I mean, we don't call it that when we're inside the organization, but 200, 250 years ago, the financial instruments that we have come to consider standard, were creative interventions to what the economy needed.
And some of the biggest financial institutions globally today have been around for a really, really long time.
We have this joke when I worked at BNY Mellon that our, our founder, Alexander Hamilton left the building and said, don't touch anything before I come back.
And he went off and died in a duel. And we have not.
And it was a, it was a funny story because at the time, one Wall Street, we actually had his desk with his ink blotter and a glass of water that had water until it dried out in it.
But the reality was not that we were resistant to change, it was that change wasn't needed in the industry for a long time.
Change was incremental, agreed, comfortable.
Even when the regulator came in and made some of the sort of more outrageous things the banks used to do impossible, it was still at a pace that felt comfortable and aligned with what we were doing.
So the institutions around us carried on existing, carried on developing, carried on growing, and created the best possible structures to carry on with the work.
And that involved a lot of operational decisions, hierarchical organizational setups, partly because that's how everyone operated.
And partly because it was a pre-digital era.
So you needed a bit of a command and control situation.
So today, when we're trying to make changes and decisions, we do so in the context of some of those hierarchical setups that have predated the digital era and are part of what we know we have to change.
But there's so much we have to change and we don't often get to it.
So I remember once many years ago, many, many, many years ago, I was in charge of a lot of our experimentation with emergent technology for the bank.
And I had discretionary budget sign offs to the tune of $50,000, which at the time was a lot of money.
But I wasn't, I wasn't that senior.
So actually it showed that the bank was committed to the process of change and the bank trusted me and my judgment, this is important for the story that's coming because this was in the pre zoom days.
You remember those when you're on the phone all day and you get a crank in your neck.
So I decided I wanted a Madonna headset.
I wanted one of those so I could walk around a bit and not be like that all day.
But that was non-standard infrastructure.
So I had to go through a process that took quite a lot of my time and it needed two levels of sign off for $170 plus VAT. I had a budget of 50,000, but this was not part of what my budget was allowed for.
So my little Madonna headset requisition had to go up two layers of management, which meant it had to go to the president of the bank, had to go to the president of BNY Mellon at the time, 34 trillion a day being moved to sign off on my $170 plus VAT.
She did, by the way, she did it super quickly.
It was not a problem other than when you stopped and realized that was the most expensive headset in the world.
The opportunity cost the interruption to my day, to her day, the time we spend.
Why am I telling you this? I'm telling you this because that is something that is happening in every single one of your offices every single day, several times a day, particularly when people are trying to do new things, different things or old things differently.
And our need to focus on getting over the line within budget within timeframe is so intense that when we come up against the policy that goes, oh my God, we just go through the motions.
We acquire the most expensive headset in the world because there's so much else we need to change that we can't take everything all at once.
But that is why the work is hard, because actually we have an AI pilot over here and a policy for approving expenses from 80 years ago over there.
So frankly, I don't care about your AI pilot.
I care about the hierarchical policy, procedural organizational hangups that will forever make the job an uphill struggle no matter how intelligent you get about AI.
So why is the job heart stability that has meant that we have all of those hierarchies, policies, procedures, which is an extra reason why the job is hard and because of that stability and the hierarchy and the fact that when you try to get one thing over the line, you actually sort of sidestep a lot of problems 'cause you're not gonna fix everything today.
The third reason why the job is hard is that we've all ended up with something like this.
And I was speaking to a, a fairly young bank recently and they were like, oh, not us.
We have no legacy. We're six years old.
Honey, everyone who's older than six months has legacy either because you really didn't wanna have the conversation with Dave from the other team or because you didn't have the time or because you were running outta money and you needed to cut some corners or because you didn't think that a new thing would come down the pipe.
But the main reason why the job is hard inside any organization that has existed long enough to have clients and credibility and legacy is that something is lurking in the basement.
That the guy who built it has left.
That's how I got my first break in banking.
By the way, this guy, Dave– real person, his stories in the book– left Deutsche Bank, leaving a whole host of macros that were used for price verification for all their middle office functions that nobody could decipher.
So we had to reverse engineer the spreadsheet. Yay!
I could have followed Dave around for the rest of his career and mine and never not had work.
But I don't care about your API AI pilot 'cause I know that this is what your estate looks like.
I have a client who did a chat GPT plugin for a mainframe. Need I say more? Which is why I don't care about your AI pilot.
And it's not just that it is foolish and criminal to do a chat GPT plugin for mainframes.
Please don't do that. It's the fact that every time you try to make a decision to bring a new thing in or to do an old thing differently, every single thing in there is screaming for your attention because everything you ever build needs, love and money and maintenance. Which means it needs headspace, which means that your decision makeer’s attention is constantly fragmented.
Managing those diverse operational risk footprints, working out how to bring co engineers out of retirement so that they can do a patch for whatever it is you're still doing through your mainframes, which is most things in in in quite a lot of large consumer banks.
So the work is hard because we need to keep everything that we have running at the same time as doing the new things.
So when people come up to me and and talk about their strategy and they are so excited to talk about their AI pilot, they're so excited to talk about the things they're doing differently.
I don't care to hear it because my question is what happens underneath?
What is your operational setup? What is your risk footprint?
What is your technology landscape?
How do you make decisions? Does someone who has sign off authority on your AI pilot, have to take hours of creative time outta the organization to get their bloody headset signed off?
The answer is probably yes.
So I would argue that no matter how good your AI pilot is, you are not fighting fit.
Whoa, I dunno about that. So let's unpack it, right?
And it's impossible to not talk about AI.
So let's do it through the medium lens of AI.
I have a lot of clients who are doing AI pilots.
In fact, every one of my clients is doing an AI pilot.
They're mostly really boring, but I'm okay with that.
I like boring. Boring is good if it goes into your sort of operational work and it allows you to get a little bit better, a little bit smarter, that's good.
But the thing that has really changed the conversation is the fact that we have started seeing, and I'm sure you see it in your own organizations, deep fake K-Y-C-N-A-M-L challenges.
And I was working with a particular client not so long ago who found in a sort of audit look back that they had 10 instances of new accounts open for their consumer bank That all came from the same IP address.
As they started looking into it, they realized that actually it had been a set of animated deep fakes on using identity assets like a passport that had passed liveness checks for both humans and machines and jailbreak tests.
Terrifying. What was even more terrifying is that they knew that those 10 had gotten through, but they didn't know how many more had gotten through.
This is why I don't care about your AI pilot because the reality is when you start looking at how the world outside is outstripping us in terms of creativity and pace, what you need to do is go back into your own organization and go, if I were to fight fire with fire, if I were to protect myself in the best way using this technology, what do I need to do?
And what you discover very quickly is that you have an estate that doesn't have the resilience and a data governance setup that has some dark patches.
So it's 100% a data problem whether you can participate in this era.
It is a case of do you have the right quality data?
Does the data you have have an expiry date?
Don't answer that. I know the answer, it doesn't, but it should.
Do you have timely access or is everything rear view mirrored?
Don't answer that either. I know the answer.
Do you have the right access or is it like the most expensive headset in the world?
So although it's all a data problem, it's actually all a leadership problem.
And it's the same when we look at the more creative end when we say, okay, don't just look at the scary stuff.
Look at how this new era, this new paradigm in our financial services lives can create value.
It's like, okay, let's do that. Let's do that.
What does it look like if I as a consumer can use an AI tool to release me from ever speaking to any of us again, that I can actually say what I care about is pricing and my green footprint or ethical investments?
Do you inside your organization know how to face into that?
So do you know how to find what your customer cares about today?
Arguably with open banking, you could, you know the answer to that.
The only right one is, well my, my customer's multi banked, I can't know everything.
Well now, now with open finance, you can if you choose to, but do you know how to ingest that information in a way that allows to strip away all the things we love to do, like client touchpoints and client portals and and really leverage the data.
You have to work out what your customers will want tomorrow and a way to service them that turns down the noise.
No, why not?
It's a data problem and it is the same data problem, just a different manifestation of it.
And it is a leadership problem because it's a known data problem. We're facing into AI now, but when we first put the, you remember when we put the first API wrappers around our ancient creaking technology, we knew we had this very data problem then and we didn't solve it.
Why? Because it's also an operational problem because the most expensive headset in the world is a funny story, but it is also quite emblematic of how decisions are made, how fragmented some of the decision making is inside our organizations and how we struggle to get through the day to get the project over the line, to actually get to where we need to go with a particular thing.
And we can't do everything.
So quite a lot of the things that hold us back from being fighting fit hold us back from being able to face into some of the changes we have known and have carried for most of our existence in those organizations.
And maybe we didn't know they were a problem when we put them in place.
Nobody sets out to be in the way.
But we have known these things have been a problem.
And it's easier to be like, what are we gonna do about AI rather than to say, we're going to have to rewire everything, which brings us down to the last reason why this is hard.
And that is you and me.
And if you don't know what the red stapler is, it means you have not seen office space.
And it is my gift to you that you can now go and watch and I know what you meant.
So office space, remember the tagline of the movie: work sucks.
A lot of the things we do to ourselves actually make work suck.
But also a lot of the things we do to ourselves create these self perpetuating behaviors.
So part of the reason why we can't get out of our own way is because we're so used to working the way we are.
We know how to sidestep things.
We know who to call to get from A to B.
We know that some problems we can just live with.
We know that nobody's bonus will go up if you fix a particular thing, whereas it will go up if you fix the other thing. We know we have not fixed things that we knew were broken 'cause we spent our time elsewhere.
So we are part of the problem. Why has it been so hard?
It is not AI's fault and it's not the regulator's fault.
It is a leadership issue. So how do we become unstuck?
How do we move away from where we are without leading a revolution, without upsetting the boat, without falling short of our own responsibilities to our shareholders, to the communities we serve and to each other?
And the first thing I want to say, and if there are no West Wing fans in the room, I don't wanna be your friend.
But there is that scene, um, towards the end of the Bartlet administration where they know that they're done, right?
They know that the second term is coming to an end.
There's about 150 days left on the clock and Leo says, we have more reach in this building in a day than most people have in a lifetime.
Well, so do we.
Given what you guys do for a living and who you do it for, every day of our lives we have more reach in our organizations, more ability to impact people's lives for better or worse than most people have in a lifetime.
And yet I have been doing this work for over 20 years.
And what I hear from boards and what I hear from CEOs is all the reasons why they can't.
And this learned helplessness is exactly that learned.
It's just endemic and common.
And the guy next to you says the same thing and the gal next to you says the same thing.
So we carry on. So how do we become unstuck?
We accept that we have this reach and we start becoming accountable for it.
AI won't do that for us.
But when we start leaning into everything we've heard today and everything I've talked about, you realize that actually there's a ton of decisions to be made no matter where you sit in your organization.
20 years of sustained digitization, we're only at the beginning.
What is coming next is gonna be faster and more aggressive, particularly because our regulators are getting much smarter than the industry, faster than us.
So the pace of change is only gonna get worse.
So as a decision maker, yeah, you have to align your product better to a changing world and a much more sophisticated set of consumers.
You also have to look at your tech and organizational inventory and make some hard decisions, switch off the mainframe, maybe change the procurement rules from like 1925.
It might not feel like the most important thing.
But cumulatively carrying all this dead weight, all this complexity, all these things that are just not fit for purpose is diluting your head space and your budget in a way you can't afford.
And that's the next thing.
The thing that we haven't really talked about and and like it's a whole keynote and workshop in its own right, by allowing all the inefficiencies I've talked about, we're not doing our shareholders any favors and we're not doing our customers any favors.
We're doing things and carrying things that make our work more expensive.
'cause that's what wasted effort does.
That's what a really complicated tech estate does.
And then we have the choice to either take a hit on our profit, not a good idea, or pass that cost onto our consumers.
Also not a very good idea.
And you might get away with it for a bit, but the reality is all of those decisions need to be made right now by you because of all of the generations of decision makers who pass the buck.
Sorry to say. Now there's some good news here because we have allowed digital services to mature quite a bit over the last 20 years.
And the industry has learned a lot.
The regulation has matured and the economy around us has digitized fully.
You don't need to make really scary decisions.
We heard a lot about risk earlier.
The vast majority of the things that you need to do, directionally we know what they are now.
Like whether you play around with every new technology the minute it comes on or not, we know that directionally we live in a connected world.
Real time accurate information is not going to go away as a requirement.
So as you look at your tech estate and your operations, anything that gets in the way of you delivering against that is a problem.
It means that some difficult decisions need to be made around investments in infrastructure, around where you're gonna spend your time and your headspace.
And I would argue that actually Headspace is harder to come by than money.
So actually be mindful of the things that you do and don't do that.
Don't set you on the journey of the things we know are inevitable.
Because even though you don't need to innovate here, you don't, you know exactly what you need to do.
It's been happening around us for a long time.
The reality is everything now needs to be done at scale.
And that's complicated and it's expensive.
And there will be specific decisions inside your organization about what you do first and where you prioritize and what you can carry for a little bit longer.
And what can be the next guy's problem.
But directionally, the risk of decision making isn't what it used to be.
The innovation culture isn't what we need here.
Nobody needs to invent. Nobody needs to create.
We just need to accelerate the path we're already on.
There will be things that come at us that are brand new and frankly, I'm okay if we're second, third, late movers.
What I'm not okay with is the way we have engaged with new technology up until today.
I told you I was gonna bring the mood down because the reality is we have allowed a combination of, we've always done it this way, been here before, done it like this before.
I know how to look after my career. This is too much.
I can find a workaround.
We have allowed that to get so big that it has become the default way of how we make decisions inside our meeting rooms, our boardrooms, our executive committee sessions.
It is a default. We accept that this is how we work.
And that is a leadership choice.
It is a leadership choice that is difficult to go against because we're so used to it.
But the reality is none of what is left for us to do is technically complicated.
It's scary and it could be expensive depending how much stuff you're carrying.
But the, the direction is set, the decisions need to be made.
What is missing is that sense of responsibility, that sense of accountability, that thing that says not only am I going to change the operational assumptions because there are pain and I don't like working here.
Every time I have to deal with procurement or with some of our antiquated processes or every time I have to do a change request, I will change them because I appreciate that, in a very fundamental sense, we're a service industry.
No matter what you do in finance, you are actually a step in a process that has nothing to do with you.
If people could buy a home without a mortgage, they would.
If people could transact internationally without FX fees, they would.
So when we actually appreciate that every time we have a a corner cut, time wasted decisions that are actually made with a shrug and we are not just falling short when it comes to our own shareholders.
We're falling short in a really, really fundamental way.
We fail to be of service.
And if we start leaning into the decisions we have to make in terms of the fact that yeah, we passed the buck down, the party's over there are operating reasons, risk reasons, cost reasons.
But fundamentally there is a moral imperative that says if you do this, whatever this is a systems change, an operational change, a procedure change, and it doesn't help your customer and it doesn't help your colleague and it doesn't even make you money.
Aren't you a little bit ashamed of just being in the way?
Isn't that enough to make us make some pretty fundamental changes to the way we work?
Small changes every day. Today it's AI.
Next year will be here and it will be something else.
And you'll have to keep doing all the other things.
AI and the thing that comes next.
Fundamentally, the building blocks will be what they are.
It will be data, it'll be resilience, it will be governance.
It'll be how you bring your creative resources together to work well.
But the single most important decision that is left to us every day is, if I do or don't do this, am I in the way, in the way of my customers, in the way of my business?
And the answer is very often yes.
And that is up to us to change.
It's not a technology decision, it's a people decision.
It's up to you. I really look forward to seeing what you might do differently between now and next time we meet.
Thank you so much for your attention.
The Digital Transformation of Financial Services
As the financial services industry evolves, we are facing and having to adapt to new obstacles. Understanding your customers with the data already at hand will help you overcome the challenges created by today's digital transformation.
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Transcript
I have been sitting here all morning listening to the talks, to the conversations, and thinking I'm gonna be bringing the mood right down when I get on that stage.
Because the, the reality is for those of us who've been in this industry, in this game a long time, and I have, I was saying last night, I got a Veterans Award recently, which is a very polite way of saying, what are you still doing here, you old person? But I have been doing transformation and tech supplantation in financial services for 20 years.
We didn't call it digital FinTech, that wasn't part of the language, but the whole engagement with our technology, aging, with new pressures, with new things, having to come in and find a home inside our organizations has been the mainstay of my career.
I'm guessing the mainstay of most of your careers.
I don't think there's anyone who has been in finance that hasn't dealt with that.
So as far as I'm concerned, it's been a hard day's night, every bloody day and every night it has been an uphill struggle.
And so what I wanna do today is take a bit of time to talk about why that is.
Why has it been so hard?
Because in my time doing this work, we've pointed largely to two things.
The first is regulators.
Oh, the regulators won't permit what we wanna do.
The pressure is intense for globally operating entities.
The tension between regulatory regimes, the fact that regulators talk, but the details don't align.
If you try to do open banking across multiple geographies, you know that it's all great, that we're talking about open finance, but actually the messaging standards and API endpoints are not the same.
So you have to rebuild your system for Australia, for the U.K., for here.
So yeah, the regulator’s difficult, but the reality is, in every organization I have worked regulatory change is actually how we got headspace and budget to innovate.
So it's not the regulator. So what is it?
Well, it's the technology. There's so much of it.
And that is true, right? There's so much of it coming at us.
I remember talking to one of my CEOs a few years back going, do I need to learn this? This human question, Real question. The answer was, well, you don't, but the organization does.
Because by the time you retire, we'll be late.
But then there's the next thing and the next thing and the next thing.
There's so much out there.
But that hasn't been the reason either.
cause if I look back over the last 20 years actually, financial services entities, even the behemoths have been pretty good at adopting new technology.
It's been of a bit of a chacha; few steps forward, a few steps backwards.
Some things we've been better at adopting than others.
Sometimes we went down rabbit holes.
Everyone remember the Citibank Metaverse report? Yeah.
But the reality is we've been good at doing the new stuff, but still it has been extremely hard and it has not been the regulator making it so, and it has not been the technology making it.
So what I wanna do is spend a little bit of time on why it is so hard and why we might be able to do something about it.
And you have my, my book in front of you, which actually has a lot of how to, if you actually wanna make some of those changes.
But the reality is the job has been hard for reasons that are not very exciting.
And the first one is we've had a pretty good run for a really long time and not very much changed for a really long time.
There's that exciting time when financial services entities as we know them today, were created in this very country of yours.
Entrepreneurial opportunists really.
I mean, we don't call it that when we're inside the organization, but 200, 250 years ago, the financial instruments that we have come to consider standard, were creative interventions to what the economy needed.
And some of the biggest financial institutions globally today have been around for a really, really long time.
We have this joke when I worked at BNY Mellon that our, our founder, Alexander Hamilton left the building and said, don't touch anything before I come back.
And he went off and died in a duel. And we have not.
And it was a, it was a funny story because at the time, one Wall Street, we actually had his desk with his ink blotter and a glass of water that had water until it dried out in it.
But the reality was not that we were resistant to change, it was that change wasn't needed in the industry for a long time.
Change was incremental, agreed, comfortable.
Even when the regulator came in and made some of the sort of more outrageous things the banks used to do impossible, it was still at a pace that felt comfortable and aligned with what we were doing.
So the institutions around us carried on existing, carried on developing, carried on growing, and created the best possible structures to carry on with the work.
And that involved a lot of operational decisions, hierarchical organizational setups, partly because that's how everyone operated.
And partly because it was a pre-digital era.
So you needed a bit of a command and control situation.
So today, when we're trying to make changes and decisions, we do so in the context of some of those hierarchical setups that have predated the digital era and are part of what we know we have to change.
But there's so much we have to change and we don't often get to it.
So I remember once many years ago, many, many, many years ago, I was in charge of a lot of our experimentation with emergent technology for the bank.
And I had discretionary budget sign offs to the tune of $50,000, which at the time was a lot of money.
But I wasn't, I wasn't that senior.
So actually it showed that the bank was committed to the process of change and the bank trusted me and my judgment, this is important for the story that's coming because this was in the pre zoom days.
You remember those when you're on the phone all day and you get a crank in your neck.
So I decided I wanted a Madonna headset.
I wanted one of those so I could walk around a bit and not be like that all day.
But that was non-standard infrastructure.
So I had to go through a process that took quite a lot of my time and it needed two levels of sign off for $170 plus VAT. I had a budget of 50,000, but this was not part of what my budget was allowed for.
So my little Madonna headset requisition had to go up two layers of management, which meant it had to go to the president of the bank, had to go to the president of BNY Mellon at the time, 34 trillion a day being moved to sign off on my $170 plus VAT.
She did, by the way, she did it super quickly.
It was not a problem other than when you stopped and realized that was the most expensive headset in the world.
The opportunity cost the interruption to my day, to her day, the time we spend.
Why am I telling you this? I'm telling you this because that is something that is happening in every single one of your offices every single day, several times a day, particularly when people are trying to do new things, different things or old things differently.
And our need to focus on getting over the line within budget within timeframe is so intense that when we come up against the policy that goes, oh my God, we just go through the motions.
We acquire the most expensive headset in the world because there's so much else we need to change that we can't take everything all at once.
But that is why the work is hard, because actually we have an AI pilot over here and a policy for approving expenses from 80 years ago over there.
So frankly, I don't care about your AI pilot.
I care about the hierarchical policy, procedural organizational hangups that will forever make the job an uphill struggle no matter how intelligent you get about AI.
So why is the job heart stability that has meant that we have all of those hierarchies, policies, procedures, which is an extra reason why the job is hard and because of that stability and the hierarchy and the fact that when you try to get one thing over the line, you actually sort of sidestep a lot of problems 'cause you're not gonna fix everything today.
The third reason why the job is hard is that we've all ended up with something like this.
And I was speaking to a, a fairly young bank recently and they were like, oh, not us.
We have no legacy. We're six years old.
Honey, everyone who's older than six months has legacy either because you really didn't wanna have the conversation with Dave from the other team or because you didn't have the time or because you were running outta money and you needed to cut some corners or because you didn't think that a new thing would come down the pipe.
But the main reason why the job is hard inside any organization that has existed long enough to have clients and credibility and legacy is that something is lurking in the basement.
That the guy who built it has left.
That's how I got my first break in banking.
By the way, this guy, Dave– real person, his stories in the book– left Deutsche Bank, leaving a whole host of macros that were used for price verification for all their middle office functions that nobody could decipher.
So we had to reverse engineer the spreadsheet. Yay!
I could have followed Dave around for the rest of his career and mine and never not had work.
But I don't care about your API AI pilot 'cause I know that this is what your estate looks like.
I have a client who did a chat GPT plugin for a mainframe. Need I say more? Which is why I don't care about your AI pilot.
And it's not just that it is foolish and criminal to do a chat GPT plugin for mainframes.
Please don't do that. It's the fact that every time you try to make a decision to bring a new thing in or to do an old thing differently, every single thing in there is screaming for your attention because everything you ever build needs, love and money and maintenance. Which means it needs headspace, which means that your decision makeer’s attention is constantly fragmented.
Managing those diverse operational risk footprints, working out how to bring co engineers out of retirement so that they can do a patch for whatever it is you're still doing through your mainframes, which is most things in in in quite a lot of large consumer banks.
So the work is hard because we need to keep everything that we have running at the same time as doing the new things.
So when people come up to me and and talk about their strategy and they are so excited to talk about their AI pilot, they're so excited to talk about the things they're doing differently.
I don't care to hear it because my question is what happens underneath?
What is your operational setup? What is your risk footprint?
What is your technology landscape?
How do you make decisions? Does someone who has sign off authority on your AI pilot, have to take hours of creative time outta the organization to get their bloody headset signed off?
The answer is probably yes.
So I would argue that no matter how good your AI pilot is, you are not fighting fit.
Whoa, I dunno about that. So let's unpack it, right?
And it's impossible to not talk about AI.
So let's do it through the medium lens of AI.
I have a lot of clients who are doing AI pilots.
In fact, every one of my clients is doing an AI pilot.
They're mostly really boring, but I'm okay with that.
I like boring. Boring is good if it goes into your sort of operational work and it allows you to get a little bit better, a little bit smarter, that's good.
But the thing that has really changed the conversation is the fact that we have started seeing, and I'm sure you see it in your own organizations, deep fake K-Y-C-N-A-M-L challenges.
And I was working with a particular client not so long ago who found in a sort of audit look back that they had 10 instances of new accounts open for their consumer bank That all came from the same IP address.
As they started looking into it, they realized that actually it had been a set of animated deep fakes on using identity assets like a passport that had passed liveness checks for both humans and machines and jailbreak tests.
Terrifying. What was even more terrifying is that they knew that those 10 had gotten through, but they didn't know how many more had gotten through.
This is why I don't care about your AI pilot because the reality is when you start looking at how the world outside is outstripping us in terms of creativity and pace, what you need to do is go back into your own organization and go, if I were to fight fire with fire, if I were to protect myself in the best way using this technology, what do I need to do?
And what you discover very quickly is that you have an estate that doesn't have the resilience and a data governance setup that has some dark patches.
So it's 100% a data problem whether you can participate in this era.
It is a case of do you have the right quality data?
Does the data you have have an expiry date?
Don't answer that. I know the answer, it doesn't, but it should.
Do you have timely access or is everything rear view mirrored?
Don't answer that either. I know the answer.
Do you have the right access or is it like the most expensive headset in the world?
So although it's all a data problem, it's actually all a leadership problem.
And it's the same when we look at the more creative end when we say, okay, don't just look at the scary stuff.
Look at how this new era, this new paradigm in our financial services lives can create value.
It's like, okay, let's do that. Let's do that.
What does it look like if I as a consumer can use an AI tool to release me from ever speaking to any of us again, that I can actually say what I care about is pricing and my green footprint or ethical investments?
Do you inside your organization know how to face into that?
So do you know how to find what your customer cares about today?
Arguably with open banking, you could, you know the answer to that.
The only right one is, well my, my customer's multi banked, I can't know everything.
Well now, now with open finance, you can if you choose to, but do you know how to ingest that information in a way that allows to strip away all the things we love to do, like client touchpoints and client portals and and really leverage the data.
You have to work out what your customers will want tomorrow and a way to service them that turns down the noise.
No, why not?
It's a data problem and it is the same data problem, just a different manifestation of it.
And it is a leadership problem because it's a known data problem. We're facing into AI now, but when we first put the, you remember when we put the first API wrappers around our ancient creaking technology, we knew we had this very data problem then and we didn't solve it.
Why? Because it's also an operational problem because the most expensive headset in the world is a funny story, but it is also quite emblematic of how decisions are made, how fragmented some of the decision making is inside our organizations and how we struggle to get through the day to get the project over the line, to actually get to where we need to go with a particular thing.
And we can't do everything.
So quite a lot of the things that hold us back from being fighting fit hold us back from being able to face into some of the changes we have known and have carried for most of our existence in those organizations.
And maybe we didn't know they were a problem when we put them in place.
Nobody sets out to be in the way.
But we have known these things have been a problem.
And it's easier to be like, what are we gonna do about AI rather than to say, we're going to have to rewire everything, which brings us down to the last reason why this is hard.
And that is you and me.
And if you don't know what the red stapler is, it means you have not seen office space.
And it is my gift to you that you can now go and watch and I know what you meant.
So office space, remember the tagline of the movie: work sucks.
A lot of the things we do to ourselves actually make work suck.
But also a lot of the things we do to ourselves create these self perpetuating behaviors.
So part of the reason why we can't get out of our own way is because we're so used to working the way we are.
We know how to sidestep things.
We know who to call to get from A to B.
We know that some problems we can just live with.
We know that nobody's bonus will go up if you fix a particular thing, whereas it will go up if you fix the other thing. We know we have not fixed things that we knew were broken 'cause we spent our time elsewhere.
So we are part of the problem. Why has it been so hard?
It is not AI's fault and it's not the regulator's fault.
It is a leadership issue. So how do we become unstuck?
How do we move away from where we are without leading a revolution, without upsetting the boat, without falling short of our own responsibilities to our shareholders, to the communities we serve and to each other?
And the first thing I want to say, and if there are no West Wing fans in the room, I don't wanna be your friend.
But there is that scene, um, towards the end of the Bartlet administration where they know that they're done, right?
They know that the second term is coming to an end.
There's about 150 days left on the clock and Leo says, we have more reach in this building in a day than most people have in a lifetime.
Well, so do we.
Given what you guys do for a living and who you do it for, every day of our lives we have more reach in our organizations, more ability to impact people's lives for better or worse than most people have in a lifetime.
And yet I have been doing this work for over 20 years.
And what I hear from boards and what I hear from CEOs is all the reasons why they can't.
And this learned helplessness is exactly that learned.
It's just endemic and common.
And the guy next to you says the same thing and the gal next to you says the same thing.
So we carry on. So how do we become unstuck?
We accept that we have this reach and we start becoming accountable for it.
AI won't do that for us.
But when we start leaning into everything we've heard today and everything I've talked about, you realize that actually there's a ton of decisions to be made no matter where you sit in your organization.
20 years of sustained digitization, we're only at the beginning.
What is coming next is gonna be faster and more aggressive, particularly because our regulators are getting much smarter than the industry, faster than us.
So the pace of change is only gonna get worse.
So as a decision maker, yeah, you have to align your product better to a changing world and a much more sophisticated set of consumers.
You also have to look at your tech and organizational inventory and make some hard decisions, switch off the mainframe, maybe change the procurement rules from like 1925.
It might not feel like the most important thing.
But cumulatively carrying all this dead weight, all this complexity, all these things that are just not fit for purpose is diluting your head space and your budget in a way you can't afford.
And that's the next thing.
The thing that we haven't really talked about and and like it's a whole keynote and workshop in its own right, by allowing all the inefficiencies I've talked about, we're not doing our shareholders any favors and we're not doing our customers any favors.
We're doing things and carrying things that make our work more expensive.
'cause that's what wasted effort does.
That's what a really complicated tech estate does.
And then we have the choice to either take a hit on our profit, not a good idea, or pass that cost onto our consumers.
Also not a very good idea.
And you might get away with it for a bit, but the reality is all of those decisions need to be made right now by you because of all of the generations of decision makers who pass the buck.
Sorry to say. Now there's some good news here because we have allowed digital services to mature quite a bit over the last 20 years.
And the industry has learned a lot.
The regulation has matured and the economy around us has digitized fully.
You don't need to make really scary decisions.
We heard a lot about risk earlier.
The vast majority of the things that you need to do, directionally we know what they are now.
Like whether you play around with every new technology the minute it comes on or not, we know that directionally we live in a connected world.
Real time accurate information is not going to go away as a requirement.
So as you look at your tech estate and your operations, anything that gets in the way of you delivering against that is a problem.
It means that some difficult decisions need to be made around investments in infrastructure, around where you're gonna spend your time and your headspace.
And I would argue that actually Headspace is harder to come by than money.
So actually be mindful of the things that you do and don't do that.
Don't set you on the journey of the things we know are inevitable.
Because even though you don't need to innovate here, you don't, you know exactly what you need to do.
It's been happening around us for a long time.
The reality is everything now needs to be done at scale.
And that's complicated and it's expensive.
And there will be specific decisions inside your organization about what you do first and where you prioritize and what you can carry for a little bit longer.
And what can be the next guy's problem.
But directionally, the risk of decision making isn't what it used to be.
The innovation culture isn't what we need here.
Nobody needs to invent. Nobody needs to create.
We just need to accelerate the path we're already on.
There will be things that come at us that are brand new and frankly, I'm okay if we're second, third, late movers.
What I'm not okay with is the way we have engaged with new technology up until today.
I told you I was gonna bring the mood down because the reality is we have allowed a combination of, we've always done it this way, been here before, done it like this before.
I know how to look after my career. This is too much.
I can find a workaround.
We have allowed that to get so big that it has become the default way of how we make decisions inside our meeting rooms, our boardrooms, our executive committee sessions.
It is a default. We accept that this is how we work.
And that is a leadership choice.
It is a leadership choice that is difficult to go against because we're so used to it.
But the reality is none of what is left for us to do is technically complicated.
It's scary and it could be expensive depending how much stuff you're carrying.
But the, the direction is set, the decisions need to be made.
What is missing is that sense of responsibility, that sense of accountability, that thing that says not only am I going to change the operational assumptions because there are pain and I don't like working here.
Every time I have to deal with procurement or with some of our antiquated processes or every time I have to do a change request, I will change them because I appreciate that, in a very fundamental sense, we're a service industry.
No matter what you do in finance, you are actually a step in a process that has nothing to do with you.
If people could buy a home without a mortgage, they would.
If people could transact internationally without FX fees, they would.
So when we actually appreciate that every time we have a a corner cut, time wasted decisions that are actually made with a shrug and we are not just falling short when it comes to our own shareholders.
We're falling short in a really, really fundamental way.
We fail to be of service.
And if we start leaning into the decisions we have to make in terms of the fact that yeah, we passed the buck down, the party's over there are operating reasons, risk reasons, cost reasons.
But fundamentally there is a moral imperative that says if you do this, whatever this is a systems change, an operational change, a procedure change, and it doesn't help your customer and it doesn't help your colleague and it doesn't even make you money.
Aren't you a little bit ashamed of just being in the way?
Isn't that enough to make us make some pretty fundamental changes to the way we work?
Small changes every day. Today it's AI.
Next year will be here and it will be something else.
And you'll have to keep doing all the other things.
AI and the thing that comes next.
Fundamentally, the building blocks will be what they are.
It will be data, it'll be resilience, it will be governance.
It'll be how you bring your creative resources together to work well.
But the single most important decision that is left to us every day is, if I do or don't do this, am I in the way, in the way of my customers, in the way of my business?
And the answer is very often yes.
And that is up to us to change.
It's not a technology decision, it's a people decision.
It's up to you. I really look forward to seeing what you might do differently between now and next time we meet.
Thank you so much for your attention.
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