Leda Glyptis: A Year of Violent Change
At the start of the year Chris Hopwood, our MD, interviewed Leda Glyptis PhD. In January, Leda was on the verge of releasing her book ‘Bankers Like Us’ (the original interview can be found here).
For those unfamiliar with the book, the premise is that economies are digitising faster than the banks. The reason for this?
The book explains why banking is slow to transform and offers solutions for making innovation easier and more effective. As the year comes to a close, Chris and Leda met again to discuss the current trends in fintech and the reception of her book.
Let’s start with the State of Fintech. It’s been a very difficult year for the industry, what’s your view on where we are right now?
It’s obviously been tough as the funding environment has been arid. People have been cutting jobs and often cutting them indiscriminately. I’ve been saying that the fintech world is due for a correction for quite a long time because there have been a lot of copycat ideas. A lot of money has been pumped into ventures, and hiring has lacked focus.
So, in terms of getting to a place that is healthier, more robust, more aligned with the realities of the market, then we were due for a correction. There has been a lot of stupid money pouring into zombie businesses that were never going to grow, never going to scale, and they didn’t have an effective product. But they somehow limped on.
The difficulty is that when a correction comes, as violently as this one did, and mostly driven by a whole host of external events, you lose the baby and the bathwater.
What do you make of what’s happening at the moment and how are people reacting?
Although the correction was needed, it’s not affecting the people who needed a bit of a reality check. It’s affecting everyone indiscriminately.
So, if you were a company that had a long-term build horizon, you’re expanding, you’re building an expensive platform, and you have just raised a Series C at a considerable valuation. Suddenly, you’re in trouble. You’re in trouble because valuations are disappearing, money’s drying up, long-term horizons are contracting.
It doesn’t matter that you made it clear to your investors when you started. The world has shifted. I’m speaking to a lot of people I know who are in pension funds and there is a growing sentiment to diversify away from fintech for now.
How do you think the industry will adapt?
It’s a challenging time, but I do believe that we will come through this. Overall, it might lead us to a place where we ask more sensible questions of each other and move away from the “growth at all costs mentality,” which is a terrible idea.
Measuring how quickly you’re spending your investment and how many people you hired in the last quarter doesn’t tell you that you hired the right people. It doesn’t tell you that you shipped a product that is fit to use or that you understand the segment you’re serving.
We’re entering a place where we’re more sensible in the things we look for and more sensible in the things we do.
So what is your prediction? What are the big trends that will be affecting institutions in financial services over the medium to long-term? What do they need to focus on?
I’m going to be a bit dull, but I think it’s so important.
Every person I speak to wants to talk to me about either Generative AI or Central Bank Digital Currencies (CBDCs). I absolutely think people should be educating themselves in these important areas.
However, I think the biggest thing any bank of any size can start doing immediately is start understanding its cost footprint in terms of technology estate. If I look back at the last 10 to 15 years, our engagement with innovation and fintech has been additive. We’ve bought things, we’ve built things, we’ve tweaked things, but it is very, very rare that a system will be completely grandfathered or switched off.
This means that every bank, even the very small ones, has technical estates of such complexity, such variety in terms of the languages used that they need immense technical expertise to maintain it. This means they are all operating with a heavier cost footprint and greater operational risks.
As we start to look at new technology that will really transform the industry, you can’t be dragging a mainframe from the ’70s with you.
What do decision makers need to do?
So, although the banks will want to talk about Generative AI and all the fashionable stuff, I think the thing they need to talk about is the cost footprint, associated costs to serve and operational risks. They need to start switching things off.
To reap the benefits of digital technology, you can’t precariously balance it on infrastructure from a different era. Which, unfortunately, is what banks have done.
This goes back to the premise of your book, which explains why banking is slow to transform. You present solutions for making innovation easier but why are large financial institutions so slow to transform?
It begins with the fact that banks tend to hire an overwhelmingly uniform demographic, and I don’t just mean visually. Even when there is some diversity, behaviour is aligned, either because it’s ingrained or because the same way of working perpetuates itself.
This creates structures that are quite rigid. Add in the bureaucracy and hierarchy, and the combined mix creates something that looks immovable.
In the book, I’ve tried to break this down and define a pathway to success. The first institution that cracks it will be well-positioned for the future.
What has been your experience talking to people who have read your book?
The feedback I’ve received, particularly offline, is that people find it powerful to see the things employees have been thinking quietly, now said publicly in a credible way. And I think it’s the credible positioning that makes the difference.
I didn’t discover gunpowder or create the internet! What I describe are all lived experiences for those working inside the industry. However, I think it’s a combination of having the language to describe them and the willingness to take the risk that has been helpful for those willing to drive change.
When you point out that the emperor is naked, you don’t know how the industry will react. I think one of the most impactful things it has had for individuals in the industry is seeing that there is a roadmap for changing very ingrained behaviour.
As I keep saying, the first bank that cracks it will be in a very strong position for the future. All of this is fixable.
Are you seeing a change in the culture and the industry?
I think it’s fair to say that if you ask me whether things are changing on any given day, I’ll give you a different answer.
If you force me to look back at how things have changed in the last 20 years, then indeed, things have really changed. Have they been at the right pace to keep up with the economy, with the right mindset, to not alienate our workforce? No, absolutely not.
It’s been an uphill struggle of resistance, but things have changed.
We need to continue changing, and we need to accelerate, and we need to do it without burning all the goodwill of our people. It is vitally important.
And finally, for you personally, how has it been listening to people talk about the book?
A lot of people have either reached out to me separately, or put it out on social media, and they use language to describe the book that is really humbling.
I’m sure that there are people who have read it and didn’t like it. They haven’t been in touch to tell me directly, but I’m sure they exist!
So, all the reviews that have been visible seem to have engaged with the ideas and found it helpful.
We’ve recommended Leda’s book to many of our clients. The concepts are relevant outside of banking and people within Insurance, Asset Management, or any financial institution will find it just as insightful.
If you’re interested, you can order it here