In Arthur Miller’s Pulitzer Prize winning play we are introduced to the main character Willy Loman. Willy is aging, unstable, insecure, and self-deluded. Willy tends to re-imagine events from the past and no longer understands the world he lives in. Willy is in many ways like the current state of leadership in the financial services industry.
Like Willy they view the changing environment through the prism of the past and do not understand that they are about swept away in a revolution as profound as the first industrial revolution. They look at the blockchain and see something they might be able to use within their business. What they do not see is that the blockchain is in fact an existential threat to every Bank, Insurance Company, Investment Fund and Advisor around today.
All of the things that the Financial Giants of today have seen as their strengths the Blockchain, Big data and AI are about to turn on its head.
Financial service firms have built their business on constructing huge monolithic corporations because they believe that size equates to trust. But what happens when the de facto trust standard becomes a contract built on the Ethereum blockchain that will execute without any human intervention? Would you rather trust unalterable code or a claims examiner who is rewarded for finding ways not to pay out claims?
Some of the most well paid people around are those working within Financial Services. They justify this because they have specialised knowledge which saves their clients from even higher costs if they operated without that expertise. But in an era where big data and artificial intelligence are becoming prevalent the expert is no longer the person who has acquired years of experience. It is now the program which runs more permutations for any given problem in a day than the expert is likely to see in a lifetime.
There has always been the possibility of arranging your own mortgage or investing your own money but the amount of extra work involved has traditionally made it much less of a headache to just deal with an intermediary who will deal with all the details and charge you a fee for doing so. But we are entering a new era of disintermediation where technology makes it possible for you to individually invest in someone’s mortgage or crowd source sentiment to get investment recommendations all from an app on your smartphone.
The Financial Services sector is on the cusp of profound change. There has never been a better time to be in Financial Services.