Average Wall Street bonuses dropped 9 percent in 2015, according to the New York State Comptroller. More than half a million banking jobs have been eliminated around the world since the 2008 crisis. But it's not just about people losing their jobs or making less money; the contraction should be troubling for anyone concerned with how the finance industry can be an engine for economic growth when it's struggling even to delineate what a bank might look like in five years' time.
Fintech might be the major threat of the banking industry even though JPMorgan Chief Executive Officer Jamie Dimon asserted last week that banks are "pretty good at using digital technology to make it easier for customers," and that "it will be a challenge for anyone to be better, faster, cheaper than us."
Another threat is the effects of increased industry regulation which are paltry compared with the challenge posed by fintech, as Erste Group Bank CEO Andreas Treichl told Bloomberg Television last week: "We don’t need to be scared of the digital challenge because if we don’t manage to go digital, we’re gone anyway."
Speaking of regulators, officials in Europe are increasingly aware that their policies are hurting banks. Negative interest rates at the European Central Bank, paying for the privilege of having money there, this can't be passed onto customers for fear they'll take their deposits elsewhere. And for smaller lenders, increased regulation means more bureaucracy, which in turn takes away resources that might otherwise be helping the economy. That's the result of a consultation to assess the consequences of 40 new rules, European Union financial services chief Jonathan Hill said last week.
By now, the big banks probably wish they had been dismembered and broken up piecemeal by the regulators. Instead, they look as miserable as overweight gourmands on a diet of lettuce and water.
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