by Noriyuki Morimoto
A bank is defined to be a bank by accepting deposits. Without those deposits, banks cease to exist. The deposit function bundles payment and saving functions. When fintech causes the bundling of payment and commercial transactions, the functions of deposits and payment are unbundled. Left with the sole function of saving, deposits lose their basis of existence: they have no chance of beating other methods of asset formation such as investment trusts.
When deposits, thus banks, cease to exist, what would happen to bankers? The end of typewriters meant the end of typists. Bankers serving a role equivalent to that of typists have no way to survive. But IBM, which used to be a manufacturer of typewriters, stayed true to its mission of rationalizing business processes, and remains a global leader in information services to this day. The same can be said for bankers. Those who have been faithful to the mission of banking would easily find new, and probably more attractive, opportunities outside the conventional banking business.
There are people in retail finance who have prioritized the customers’ true benefit when offering investment trusts, insurance, mortgage loans, and other types of consumer loans. Once set free from their sales quota, these people would be hugely successful in asset-related businesses that show signs of strong growth.
In corporate finance, people who have been making proposals to improve management and procure funds not only by loans but through methods in the best interest of their clients?that is, people who have truly served as corporate finance consultants?are likely to find attractive positions in investment management and financial divisions of various industries.
People who have been working behind the scenes in financial infrastructure, such as bank administration and asset management procedures, shall come to the fore to play creative and innovative roles in the fast-growing fintech field, as well as independent businesses derived from the infrastructure built for financial administration.
In short, those who have been bound by strict and cumbersome rules, and forced to prioritize the banks’ profit over customers’ benefit against their will, would be given a new, free environment in which they can unleash their creativity and customer-oriented mindset. There is no more happiness than that. The end of banks and freedom for bankers should be something to celebrate.
Newly gained freedom is always a leap from the conventional, which requires determination. Such a determination is possible only when people readily accept that conventional banks are bound to die. To die a false death in order to truly live?that is the real message behind the statement “The way of the warrior is death” in Hagakure, an epitome of Japanese spiritual history.
Chief Executive Officer, HC Asset Management Co.,Ltd. Noriyuki Morimoto founded HC Asset Management in November 2002. As a pioneer investment consultant in Japan, he established the investment consulting business of Watson Wyatt K.K. (now Willis Towers Watson) in 1990.