Many big banks boast that they have more tech staff than the so-called ‘big techs’. But is that something to be proud of, or is it just empire-building?
I recently saw an interesting article about the head of technology at a major bank, that will remain anonymous for the purpose of this article, which began by saying this person “commands a budget of $10bn and a team of 40,000 technologists”.
To put this into perspective, $10bn is about half the total amount invested in European fintech start-ups, while 40,000 people is the typical size of a football ground audience (in the good old days when people were allowed into the ground).
Having worked in such companies, I’ve seen many that liked building empires of people. At one point, I myself had hundreds of people working for me. On reflection, it was a status thing: I didn’t need hundreds of people, but it did feel like the more people you had working for you, the more powerful you were.
But having 40,000 technologists under a bank’s head of technology? I hear the same story about many big banks, such as JPMorgan Chase, where there are more developers than found in Twitter and Facebook combined; or HSBC, which has more engineers at work than in all of Microsoft.
Not a numbers game
Is this meant to prove that banks are more technology-oriented than technology companies? Or that big banks have more developers than ‘big tech’? Fundamentally, it doesn’t matter. It’s about quality, not quantity, and I seriously question how effective all of the developers, technologists and engineers who work for a bank really are.
How much empowerment do they have? Can they control their bit of the development chain? Or is it all signed off by a manager, who reports to a senior manager, who reports to a vice-president, who reports to a senior vice-president, who reports to a head of technology, who reports to a chief information officer, who reports to the chief executive, who reports to the chairman and the board?
The bottom line is that any bank that boasts about having tens of thousands of developers, technologists and engineers should first be asked the question: why is this a good thing?
Many times I’ve heard people say that more can be done with $1m and a few good people than a bank could ever achieve with $100m and 1,000 people. It is for this reason: the bank is structured to ensure nothing happens fast or easily; whereas the start-up is completely focused on making things happen quickly and smoothly.
Of course, the start-up has the luxury of being new, but that is not the only point. Just because a bank is old does not mean that it needs thousands of developers and a budget of billions; this issue is much more related to inertia and the lack of cleansing and consolidation.
Time to spring clean
I liken it to my office, which continually gathers dust. I clean it regularly and try to make sure that it’s tidy and organised, but it’s a constant battle. If I take my eye off the ball for a week or so, the papers pile up, mess gathers and things need reorganising to get them in order again.
How often do you clean your office? I don’t mean your personal, physical office or study, but your company’s office. Former chief executive and chairman of General Electric, Jack Welch, took delight in forcing the company to get rid of at least 10% of its staff every year no matter what. It’s a brutal idea, but the notion was that you should spring clean the office every year to generate new ideas, new thinking and new blood. When was the last time you spring cleaned your office?
The bottom line is that any bank that boasts about having tens of thousands of developers, technologists and engineers should first be asked the question: why is this a good thing?
I don’t know why any bank today needs such a huge IT department. With application programming interfaces, open banking, cloud computing and more, a bank could probably run with just 10. You heard me: a bank could run with just 10 engineers.
Therefore, if I were CEO of the aforementioned anonymous bank, I would fire my head of technology for boasting they had 40,000 technologists. Then I would hire the person who can work with just 10.
Chris Skinner is an independent financial commentator and chairman of the London-based Financial Services Club.
