Incumbent bank shareholders don’t get the digital shift

I just read an interesting post from Chris Skinner on how investment markets are viewing digital transformation among some incumbent banks. This is an important and so far overlooked issue and I have a few reflections of my own:

The investment market, analysts and financial media are screaming for faster horses in a world where incumbent banks must fight for their lives to adapt to the digital paradigm.

There is (rightfully) a lot of talk about the importance of tech knowledge in board rooms and among C-level management, but very little about the fact that shareholders/main owners don’t seem to really get the digital logic.

Instead their short-term perspective is mostly focused on traditional financial KPIs. If they occasionally are paying attention to digital transformation, it’s almost always entirely about increasing productivity of traditional models. Never about visualizing new business opportunities and meta values emerging beyond the paradigm shift.

This is a classical example of “the Innovator’s Dilemma” but is nevertheless an underestimated problem. The lack of understanding among investors tends to get in the way of rapid innovation and cultural change. Why is this? I would blame the absence of clear visions among the incumbent banks themselves. You could hardly expect shareholders, customers, employees or any other stakeholder to be patient unless you can produce a credible and exciting image of where you are going. So far we haven’t seen much of this.

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