Have you ever heard something like this uttered in a meeting with business executives?
“Of course, the technology is the easy bit..”
Maybe it was something your CEO said in the press or during a TV interview. But invariably at some point in your career, you probably were told (or it was inferred) that what you do for a living is “easy”.
I heard much the same refrain during a trip to Toronto recently. Though I interviewed many developers and managers during my three days there, this one quote stuck with me:
“They say the bank is like a tech company,
but why don’t we treat it like a tech company?”
That was from an IT Director about his employer, one of the top banks in Canada. It was a sentiment shared across IT leaders, developer managers, and developers during my trip.
Company executives want to be agile and innovative and drive transformation to deliver superior customer experiences. They realize their ability to complete depends on it. The reality though is a lot less rosy than the press releases and company videos portend to be.
A look at the top ten companies by market cap this year paints an interesting picture:
How many banks do you see? If you go back to 2010, there were at least four banks in the top ten are JPMorgan Chase, Wells Fargo, ICBC, and China Construction Bank. Only JPMorgan Chase remains. In that same span, tech companies have bullied everyone else off the list.
The biggest riser recently has been Amazon. The company that once sold books online now owns a grocery chain, has the biggest cloud offering on the planet, has a growing catalog of self-produced content, and has upended the retail economy. Oh, and they just brought an online pharmacy.
Taken together, the top seven companies are approaching $5 trillion in market value. That is a lot of heft to enter new markets and fund innovative experiments. And that is exactly what tech companies are doing. Alphabet is leading AI research, Microsoft is deepening its ties to developers, Alibaba is making strides in financial products.
They can do this because they don’t treat developers as a cost center or a fungible commodity. Developers are treated well, paid well, and valued as key contributors to revenue and marketshare growth. These organizations understand that differentiation comes in execution, and technology is both the backbone and the leading force driving innovative products.
As Mark Raskino asks, is technology inherently easier than legal or sales or strategy or HR or any other corporate functions? They certainly have their complexities and contribute to value creation, but is that where breakthrough innovation really emerges from these days?
For banks to be innovative, they have to reinvent themselves to a much greater degree than undergoing a “digital transformation”. That’s simply a band aid. What is stopping banks has little to do with regulatory concerns or organizational complexity or legacy baggage. It has everything to do with culture and incentives.
Today the highest paid employees at banks are the bankers. This made sense when most banking was relationship driven, transactions were in person within ornate settings, and transferring funds between banks involved tossing bundles of checks across trucks.
Money is digital now. Transactions occur via networks. Money management is driven by algorithms. Bankers are still necessary, but technology is playing a much greater role by making more decisions or enhancing the ability for humans to make those decisions.
If banks really want to be tech companies, pay developers more than the bankers. Give developers the status and recognition they would get at an actual tech company. Provide them work environments and support that enables developers to do their best work.
If you are a bank executive and you want to know how to build a developer friendly culture, I invite you to chat with us. We can share what the best tech cultures are doing that enables them to out-innovate banks and achieve much faster time to market. I also recommend you visit these companies yourself to see and experience a great engineering culture with your own eyes.
Change the culture, change the incentives, and you have the formula for real transformation. Then you will become a bank exec that gets developers.
How is your organization changing the culture to become more developer friendly? Do your executives embrace and understand developers?
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We help IT leaders in enterprises solve the cultural challenges involved in digital transformation and move towards a community based culture that delivers innovation and customer value faster. Learn more about our work here.