Over the past decade, many traditional finance products — like peer-to-peer lending platforms and mobile wallets — have been reimagined by a wave of fintechs designed to meet the evolving needs of consumers and businesses in a digital world. To stay ahead of this innovation and remain competitive, traditional banks have had to start thinking and acting like tech companies. That’s easier said than done.
The limitations of traditional banks go deeper than legacy tech and outdated service models: they are cultural. Specifically, they're held back by a leadership profile which prioritises safe bets and familiar hierarchies over innovation, agility and inclusivity.
If bankers want to make it in fintech and run a successful business, they need to stop thinking like bankers and more like tech CEOs.
Here are five things wrong with the traditional banker mindset:
Bankers are pessimists
To be a great CEO, you need to have a vision — but that’s not enough on its own. You also need to communicate that vision to your board, your investors and your employees with positivity and optimism. If you can’t get your stakeholders to believe in your version of the future, you’ve already lost.
Banking is, by nature, a pessimistic and risk-averse industry. The upside in banking is always capped, but the downside is total — this creates a worldview focused on making money without risking loss. This risk aversion translates beyond money to a greater desire to prevent failure rather than achieve excellence. And while that’s a fine survival strategy in an inert market, it won’t hold up against the swelling wave of disruption tearing through the financial services sector.
Bankers don’t innovate
Banking is one of the most heavily regulated industries in the world, and innovation invariably invites a certain level of regulatory scrutiny. This means bankers prefer not to be at the vanguard and would rather wait until someone else has proven something works.
While there’s a lot to be said for second-mover advantage, it can take a long time to catch up to a first mover. Being a great CEO requires a willingness to be in front of the pack — taking risks and creating new markets, or disrupting existing ones. Waiting for tried-and-tested solutions to land in your lap is not an option in the tech world, and it’s fast becoming an obsolete strategy for banking as well.
Bankers should be willing to take risks in bringing new products to market. Doing so means stepping away from the tunnel vision of business-as-usual and investing most of their time in talking to customers and learning what people actually want — and then solving that.
Bankers think you can set culture with a policy
The average bank has thousands of pages of policies setting out standards for appropriate behaviour. In general, bankers think that any problem can be solved with a new policy. After all, if all you have is a hammer, everything starts to look like a nail.
But while policies can constrain and document the official rules governing a business, culture is ultimately determined by the human beings at a company and how they actually behave (particularly when no-one is looking). As scandals like Enron have shown us in the past, simply stating that integrity is a core value doesn't mean it actually reflects the company’s culture. Having a great culture is therefore driven first and foremost by who a business is willing to hire, fire and promote — and if it makes those decisions in line with the company’s values.
Very rarely do legacy banks emphasise culture-fit when hiring: you either have the right pedigree and experience, or you don’t. However, this can often attract employees from a limited demographic, and they are far more likely to fall prey to groupthink and ignore the impact of their actions on their co-workers and customers.
I have seen first hand when “culture fit” becomes synonymous with demographics and pub banter rather than how someone handles challenges and treats their coworkers, regardless of seniority.
When we founded Griffin, we made it a priority to outline our company values and create a framework for assessing culture fit for every new employee, whether they were joining the C-suite or just beginning their career. This consists of a 90-minute interview that assesses a candidate's approach to what really matters — how they collaborate, how they think about accountability and whether they’re kind and thoughtful. While this means a slightly longer process for the candidate, it helps us maintain our culture and emphasise its importance from the start.
Bankers are driven by hierarchy
Banking culture is steeped in hierarchy. These days, there is solid rationale behind that hierarchy — it exists to make accountability explicit. But that hierarchy has a downside, which is that it makes it harder for great talent that isn’t sitting at the top of the pyramid to get noticed.
A good CEO understands that everyone they hire potentially has something valuable to contribute, whether they’re straight out of university or have 30 years of experience. At Griffin, many of the highest-impact members of the team are only at the beginning of their careers, but by virtue of their willingness to go deep on critical projects they’re able to make a huge difference to the company.
It’s worth stating that it’s not enough just to hire smart, driven people — you have to make sure they have the context and the psychological safety to speak up if they see a missed opportunity or a looming iceberg. Part of being a good CEO means welcoming challenges and seeing it as an opportunity both to test whether something is the right choice and communicate the rationale behind strategy and vision to the rest of the company.
Bankers are in denial about the future of their industry
All banks are now technology companies, whether they like it or not. But the hard truth is that big players keep kicking the can down the road when it comes to tech. Decades of technical debt make it increasingly difficult for banks to know where data about customers sits within their infrastructure — we know of at least one bank that has more than 30 official “systems of record” as a result of various acquisitions that were never fully merged onto a single core stack. And that doesn’t even get into how much legacy infrastructure makes bringing new products to market expensive and slow.
Another bank — one of the largest in the UK — has attempted to address this by introducing a microservice model on top of the same mainframe they’ve been using for the last 50 years. These are, at best, temporary fixes rather than real solutions. As bank execs (and particularly CEOs) often think of their tenure in five-year terms, the risk of embarking on major shifts in tech strategy remain persistently out of reach for the organisation.
Even where you see major change programmes, they’re often approached as risky projects as opposed to iterative shifts. A normal tech company often has to rip out and change parts of its stack as it grows — but it usually goes about this by spinning up a new tech stack and beginning by just putting new traffic or customers on it, rather than moving everything over at once. This is a much smarter approach to managing the risk of big technical shifts compared to the sort of major changeover attempted by TSB in 2019, which led to chaos and multi-day service outages.
Change is rarely popular — it’s messy and disruptive. A good CEO knows how to push past discomfort and not only initiate and lead on massive change, but bring key stakeholders along as allies. If bankers don’t start embracing the tech CEO mindset, the traditional players will be left in the dust by challengers who are already leading the charge on faster, smarter, more resilient technology.