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Who would want to be the CEO of a major UK bank?  Listening to Ross McEwan of RBS speak at a recent dinner, you could only imagine that he is looking forward to handing over the reins to the next masochist who puts his hand up.  If it’s not capital adequacy, then its more rules and regulations. If it’s not operational footprint (“we employ a small village of 92000 people”) then it’s rogue behaviour and culture.  If not legacy IT issues, then it’s fighting off the digital nerd infestation.  And so on.


It drives even great men like Mr McEwan to madness “we are the true challenger bank” he said in a newspaper article last week, pointing to the improvement in their policies about bonuses and teaser rates.  He said the same thing at the dinner I was at recently and when I asked why “moral improvement” meant RBS was now a real challenger, he had no answer.


The reality is that the major banks have a massive problem and it is nothing to do with the fintech fiesta.  We are just the torch that shines the light on their broken model.  They are just not structured to deliver a customer-first proposition.  Their legacy operational and IT footprint is too bulky, old and busted to allow it.  Instead they try to deliver the best they can for customers, but limited by what their environment allows.  It is a Dr Bankenstein’s Monster, banged together from old parts and new stuff to a perfection blueprint from which they can only ever create an ugly, dysfunctional creature that is an awful parody of reality.


Because of the difficulty in replicating the minute parts of the human body, Victor makes the Creature large, about eight feet tall. As a result, the beautiful creation of his dreams is instead hideous, with yellow eyes and skin that barely conceals the muscle tissue and blood vessels underneath.


Sound familiar?


These Monsters are now being glued together in the labs at the Big Banks, working from blueprints  copied from fintech, banking and God Knows What Else.  It is a process that has actually been going on for years (hence the COBOL mainframes with Mobile apps sitting on top and (the ultimate Bankenstein creation at HSBC) facial recognition and biometric software for “added security”.  We wait nervously for the next Chapter called “Inserting the Open APIs”.  Just as in the novel, we don’t quite know how it will end, but we do know it won’t be pretty!


The answer is of course that the Banks are stuck.  They need to change and I think they are doing their best to do so.  But their change strategy in most cases (take a bow BBVA, Santander and few others who really get the need to re-think) is analogue. 


Bankensteins are not the future; the future is new build, new business models, new companies, neo-banks.  The sooner the Banks draw a line in the sand with their broken business models, broken “worldclass” IT and broken operations, the better for customers.  They need to throw away their Gothic parodies and work hand in hand with neo-banks whose structure allows customers to be first, and a model for the future to be both beautiful and human.


Alex Letts is The Unbanker and Founder of Ffrees.


Monster alert in Canary Wharf

Comments: (4)

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 26 February, 2016, 11:10Be the first to give this comment the thumbs up 0 likes

You think PayPal, one of the few successful fintechs, has a great business model where it arbitrarily freezes merchant accounts, provides pathetic support and runs small businesses aground? Just asking...

Alex Letts
Alex Letts - U - Sheffield 26 February, 2016, 11:251 like 1 like

Hi Ketharaman welcome back! :)

My thesis is more that building new on old is really very difficult.  A bit like retro fitting a jet engine on a bi-plane.

Also I share your concern that the fintech fiesta is not actually going to save the planet!

I believe that the future of banking is about harnmessing this massive release of creativity (and inexperience, I agree) and combining it with the muscle of the banks.  I see the current banks as the engine room (almost wholesalers) with smart brands running off clean new fintech for their future customers.

In most paradigms (look at the internet and tech booms) the hybrid is the most likely evolution for mkost.  Their will also of course be slow and long-term change in the established players and just a few stand out unicorns

We are all in this together not on opposite sides.  Thanks for reading my blog and commenting.  I use hyperbole invitably to engage.


João Bohner
João Bohner - Independent Consultant - Carapicuiba 26 February, 2016, 18:371 like 1 like

Alex & Ketharaman,

"Bankensteins are not the future".

This is clear like crystal!

I am an enthusiast of the best strategy for Digital Banking transformation.

I'm working, for more than 40 years, on the 'hard' side of banking business which is in the back office side.

And you can believe me, the only way to achieve the "full" Digital Banking transformation, is to transform the way in which financial processes are treated in the back office.

Instead of handling processes by “line-of-business”, have to manage processes ‘corporately’.

Any other attempt to improve current processes in the back office, will be to replace six per half dozen.

I’ll try to explain:

1. The financial processes, nowadays, are handled by “line-of-business”.

Obviously, each “line-of-business” will generate its ‘silo’, which in turn will feed other 'silos' such as accounting, compliance, treasury, central bank, customers, and others.

2. By managing the processes ‘corporately’, you will generate only one “silo” – a single source of corporate knowledge.

This alone, already generates a tremendous simplification!
And, as a consequence, the integration happens (think in omnichannel!), as well as extreme agility in managing processes.

Also not to mention, the tremendous reduction in the processes and data storage…
(and beware of Unions, because of the people reduction!).

As the result of my quest "The Bank of the Future" was born.
The BotF is an Holistic Enterprise Architecture which handles processes 'corporately', breaking the today's paradigm of performing processes by line-of-business.

The quest, now, is how to put it to work, mainly in between the "the fintech fiesta" and "Banks race to beat the patent trolls—and Silicon Valley." (

Who should be the owner of all the patents of the several 'Holy Grails' of the "Bank of the Future" Architecture?
The ICT company or the first Bank to adopt them? (My idea is to sell the intellectual property of the Architecture to an ICT or to a Bank).

Comments and ideas are willkommen!

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 26 February, 2016, 19:36Be the first to give this comment the thumbs up 0 likes


The pleasure is mine! Someone once said, "if I dramatize a bit, it's only to drive home a point". Since I believe in that motto, I see where you're coming from:)

In my experience, sluggishness, head in the sand and all those negative things ascribed to banks are not bank problems - they happen to all companies once they cross a certain size. Just today I was commenting to someone that India's leading cab aggregator has become so big in 5 years that it no longer behaves like a startup e.g. it has totally tuned out customers' complaints about its drivers not reaching pickup locations without 2-3 telephone calls.

At least in India, banks have woken up from deep slumber and retaliate with their own offerings that beat fintech's offerings fairly regularly e.g. HDFC Bank's PayZapp Ends My Bill Payment Woes.