Technology as a Potential Value Destroyer


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Technology is ubiquitous. It dangles many advantages such as costs, speed, fewer human interventions etc. Technology is taking over the CEO’s thinking, and influencing him/her.

Take for example, bank CEOs. However, in adopting technology, they should not forget that they are first and foremost bankers and not technologists; that they should not be lured by technology to think technology first, but must think of banking, customers, partners, delivery chains and society first. Stakeholders and banking must come over technology. Fundamental thinking is important. i.e., a focus on banking. Then technology becomes a slave and not the driver of their banking business. Technology can become a value destroyer when CEOs think they are running technology companies. This thinking has to be avoided, and banking traditional thinking must endure, using technology as a tool.

Bill Winters, CEO of Standard Chartered says that technology is delivering more products and that they have to be sure to understand the product is a banking product and not technology. If CEOs do not understand the banking product, technology cannot deliver the right solution.

Technology has become a business disruptor, giving rise to opportunities for many banks and start-ups. Artificial intelligence is also becoming a core function of technology, all potential value creators. Using Fintech and 3rd party software is often attractive for banks for apps, products etc. Blockchains, biometrics, cloud banking, chatbots and zero trust systems, are all being used now.

Technology inputs are dependent on human intervention, and often these technological wizards do not understand banking, customers, context etc. For example, my neighbourhood club requires a very complex login password, and I wonder why? Are the family jewels at risk? But the designer is not concerned, and has put in a most difficult to crack criterion when not needed. Or he decides your phone number cannot be used for more than 3 or 4 services, requiring you to get a second phone!

Focusing on your core areas and zero trust may be a starting point for managing technology.

Unfortunately, today, people are forgetting that products are meant for customers, and that the customer focus is more important than the product focus and definitely more than the technology focus.

Bill Winters focuses on customer convenience more than all the other factors a customer may value such as the product and understanding it and its cost, the relationship, the feeling of safety and not being taken for a ride.

Customers may not care for technology, unless the technology creates value for them, other than just a do-it-yourself solution. Very often net banking is much more cumbersome than paying cash, But paying cash requires people to get the cash, and keep it safely, and these trade-offs must be understood. On the other hand, paying of bills automatically, getting on line services for entering nominations, to transferring funds, for understanding financial products to using them are useful results of technology.
Value disruption with technology can include

  • Technology and Service Interruptions. These include service interruptions physically for customers visiting banks
  • Security and Identity theft Concerns. …
  • Limitations on Deposits.
  • Convenient but Not Always Faster. …
  • Lack of Personal Banker Relationship.

The scope of service is limited to what is on the menu and nothing else.

I deal with the State Bank of India and love the human interaction, and whenever there is something on the online systems I do not understand or do not work I get help from them. I have the best of both worlds! Unfortunately, two days ago at the Friends Colony Branch in Delhi I had an unpleasant experience, because technology was not working, and I needed human intervention which was so surly and reluctant. The combination of bad service and poor technology is the worst!

Big Technology is asking regulators for a level playing field with traditional banks, a level playing field required for fintechs, big technology and banks. Sure, big technology can improve efficiency and come up with new ideas. (source, Bill Skinner’s blog)

The full Regulator’s report can be found here, with the key takeaways being:

The introduction of the report begins: 

Technology firms such as Alibaba, Amazon, Facebook, Google and Tencent have grown rapidly over the last two decades. The business model of these “big techs” rests on enabling direct interactions among a large number of users. An essential by-product of their business is the large stock of user data which are utilised as input to offer a range of services that exploit natural network effects, generating further user activity. Increased user activity then completes the circle, as it generates yet more data.

Building on the advantages of the reinforcing nature of the data-network-activities loop, some big techs have ventured into financial services, including payments, money management, insurance and lending. As yet, financial services are only a small part of their business globally. But given their size and customer reach, big techs’ entry into finance has the potential to spark rapid change in the industry. It offers many potential benefits. Big techs’ low-cost structure business can easily be scaled up to provide basic financial services, especially in places where a large part of the population remains unbanked. Using big data and analysis of the network structure in their established platforms, big techs can assess the riskiness of borrowers, reducing the need for collateral to assure repayment. As such, big techs stand to enhance the efficiency of financial services provision, promote financial inclusion and allow associated gains in economic activity.

At the same time, big techs’ entry into finance introduces new elements in the risk-benefit balance. Some are old issues of financial stability and consumer protection in new settings. In some settings, such as the payment system, big techs have the potential to loom large very quickly as systemically relevant financial institutions. Given the importance of the financial system as an essential public infrastructure, the activities of big techs are a matter of broader public interest that goes beyond the immediate circle of their users and stakeholders.

There are also important new and unfamiliar challenges that extend beyond the realm of financial regulation as traditionally conceived. Big techs have the potential to become dominant through the advantages afforded by the data-network-activities loop, raising competition and data privacy issues. Public policy needs to build on a more comprehensive approach that draws on financial regulation, competition policy and data privacy regulation. The aim should be to respond to big techs’ entry into financial services so as to benefit from the gains while limiting the risks. As the operations of big techs straddle regulatory perimeters and geographical borders, coordination among authorities – national and international – is crucial.

And ends with a call to change how firms are regulated.
Traditionally, financial regulation is aimed at ensuring the solvency of individual financial institutions and the soundness of the financial system as a whole. It also incorporates consumer protection goals. The policy instruments used to achieve these goals are well understood, ranging from capital and liquidity requirements in the case of banks to the regulation of conduct for consumer protection. When big techs’ activity falls squarely within the scope of traditional financial regulation, the same principles should apply to them.
However, two additional features make the formulation of the policy response more challenging for big techs. First, big techs’ activity in finance may warrant a more comprehensive approach that encompasses not only financial regulation but also competition and data privacy objectives. Second, even when the policy goals are well articulated, the specific policy tools should actually be shown to promote those objectives. This link between ends and means should not be taken for granted. This is because the mapping between policy tools and the ultimate welfare outcomes is more complex in the case of big techs. In particular, the policy tools that are aimed at traditional financial regulation objectives may also impinge on competition and data privacy objectives, and vice versa. These interactions introduce potentially complex trade-offs that do not figure in traditional financial regulation.

You decide if technology is a value creator or a value destroyer for banks.

On another note, where value creation for one can be value destruction for another:

Putin must think his aggression in Ukraine has value creation potential for him and Russia, but it is a value destroyer for Ukraine, its people and the rest of the world.

Read more at:

Republished with author's permission from original post.

Gautam Mahajan
Gautam Mahajan, President of Customer Value Foundation is the leading global leader in Customer Value Management. Mr Mahajan worked for a Fortune 50 company in the USA for 17 years and had hand-on experience in consulting, training of leaders, professionals, managers and CEOs from numerous MNCs and local conglomerates like Tata, Birla and Godrej groups. He is also the author of widely acclaimed books "Customer Value Investment: Formula for Sustained Business Success" and "Total Customer Value Management: Transforming Business Thinking." He is Founder Editor of the Journal of Creating Value ( and runs the global conference on Creating Value (


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