The twilight of the bankers

They nearly blew up the world with crazy exotic instruments called derivatives, conceived in an orgy of greed. They were bailed out by panicked governments who thought they were “too big to fail”. They were subjected to new rules because everyone knew that their much vaunted “risk models” didn’t work. And then they were challenged to cope with the weird world of near-zero interest rates.

They were exposed as criminally fraudulent in numerous countries. They stopped lending to small businesses and private individuals unless the risks were inconsequential. Yet they continued to pay themselves huge bonuses.

And all the while they could not see that their very raison d’être was being undermined by the relentless advance of technology. Their historic functions were being disrupted by the internet: in particular, crowdfunding, digital wallets and other advances in “Fintech”. Just as music downloads torpedoed the traditional music business, banks are now being hit by disruptive technology.


Schadenfreude is occasionally permissible. Bankers face a huge problem: banks’ return on capital is likely to remain below the cost of capital for banks for the foreseeable future. That spells their demise.

This is the twilight of the bankers as we have known and not loved them. But while a slice of the economy slides slowly into oblivion it’s time to flag up the Fintech winners who will profit from their demise. This essay is a game of two halves. First we’re going to a funeral. And then we’re going to a party!

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