The art of banking

Banking is going through many changes.

A few years back pure-play, neo-bank, digital challengers had considerable media and industry influencer airtime.

They effectively coloured a new canvas, created a new game and invited everyone to join in. This was valid and warranted. The hand they played, the strokes they made were overdue. We all knew it.

Digital account and app-first banking transformations were initially ground-breaking, and became something of a baseline for the few, then the many.

How we bank, pay and buy is changing faster every few months than it used to every few years.

This is a good thing. The benefits are clear when managed well.

Tech-led disruption did ultimately though open a door to some old-school truths.

At one time, having a certain attitude, colour palette, card texture or loyalty points scheme was seen as more important than having a customer base you could actually grow and convert into sustainable profitability.

Then came a few big banks with big budgets playing more digitally for what was taking shape with pages pulled from yesterday's playbook. They moved competitively outside home markets, particularly in the UK with the likes of Chase .

Then came interest rates on the move, revealing surprises for some over how client deposits were invested, lent or packaged and sold elsewhere.

Then came bank collapses.

That tends to happen in cycles. Many were caught off guard. Hindsight is a precious thing.

There has been much turbulence and disruption and there will be more, particularly when seen through a technology lens and how it can – with or without artificial intelligence – drive the likes of net interest margin and loan-to-asset or loan-to-deposit ratios for those banks that take deposits and lend.

Not all banks need to do this though, and neither should they. ??

Dial it forward and we get to a place where European bank valuations have hit their highest level in nine years.

This comes too just four months after the Chancellor Jeremy Hunt MP called in Britain’s largest banks to discuss why they remain so poorly valued compared with global peers.

In the UK, the landscape of bank stocks casts multiple rays of light and shadow.

NatWest and Barclays ’ share prices have significantly surged over the past several months, Lloyds Banking Group and 汇丰 somewhat so, depending on where your starting pen is placed.

As we head into May, nearly 5,000 people have signed a petition hoping Nationwide Building Society – a business owned by its customers – will let them vote on its decision to buy Virgin Money in a proposed ￡2.9bn deal. The transaction, if completed, would help cement Nationwide’s position as the UK’s second-largest mortgage lender.

And amid all this swirl and pursuit of scale, we now read Spanish bank BBVA has approached TSB Bank owner and smaller peer Banco Sabadell about a potential deal to create a 70bn+ euro lender – and with that land one of the biggest European banking deals in years.

BBVA has a relatively limited presence in the UK, although it does own a stake in digital-only lender Atom bank .

Earlier today, The Basel Committee on Banking Supervision, the global standards setter for banking, published a consultation on new guidelines to update rules on how regulators manage counterparty credit risk.

“Exposure to private markets, also known as non-bank financial companies, has been identified as one of the key weaknesses in the current system,” says Kathryn Gaw , writing for Alternative Credit Investor .

Huw Jones at Reuters said this consultation move by banking’s top global watchdog is the latest sign of how regulators are scrutinising links between lenders and the vast ‘non-bank’ sector made up of private equity, insurers, investment funds and family investment offices.

To boldly go badly from Star Trek and paraphrase Ridley Scott’s Alien sci-fi cult classic from 1979: In banking no one can hear you deposit.

The evolving regulatory interest and banking consolidation activity comes on the same day too that HSBC CEO Noel Quinn unexpectedly said he would retire after nearly five years in the role, prompting Elaine Yu and Josh Mitchell at The Wall Street Journal to remark that this leaves one of the world’s largest banks and Europe’s largest bank without a clear successor as it navigates geopolitical tensions between the West and China.

Who you bank with and how your bank manages the business of banking is important.

Your money.

When and where you place it matters and what happens at every step of the way equally so.

“It matters too because how we bank and pay is becoming more digital by the day,” wrote The Bank of London ’s Nanna Bergmann in a viewpoint for The Financial Technologist published by Harrington Starr .

As an aside, I wrote a cheque recently and mailed it off.

A rare move in this digital day yes, but I had my reasons.

My digital bank’s fraud management team rang me and asked a few questions.

I was wary at first, then realised they were more surprised than me – it had been some years since they had seen my signature on a piece of paper!

Everything checked out except the one thing that defined me – my personal ink signature!

The art of safer banking.

I appreciated the call.