What’s next for global banks – Is it a tent and some dodgy headgear?


Here is some commentary from McKinsey on a topic that is “dear to our hearts”…of course dear may be the most appropriate word (depending upon your interpretation of the the word) and how you carry your wallet!

What has happened to the Global economy in recent times is a matter of record and a great number of, apparently, robust organisations and reputations were laid waste. There can be little doubt about the excessive risk taking and greed but has everyone forgotten what provided a “platform” for this culture?

What gave the industry license for such recklessness, made them so “cock sure” of themselves, dazzled, beguiled and blinded Politicians, Regulators and investors???

The Crystal Ball: An essential tool of Consultants & QuantsThat’s right it was blind faith in financial models that were flawed but given kudos (at great expense) by rating agencies whose reliability, if not objectivity (or worse) must warrant greater scrutiny. SO IMAGINE MY SURPRISE WHEN I READ THIS:

To arrive at a perspective on these fundamental changes, we turned to scenarios that the McKinsey Global Institute (MGI) developed to help model uncertainty about economic recovery and growth. We adapted these scenarios to include the particular forces that most influence banking returns: inflation and the shape of the yield curve, as well as uncertainties about state intervention, including new capital requirements, consumer protection measures, new rules on risk management, pay caps, and the extension of regulation to the “shadow” banking system.

“Uncertainty” is THE key word and there is even reference to markets remaining “severely dysfunctional” but it STILL hasn’t prevented this exercise that can only be down to job creation. You can read the full article here.

You could decide to check your Horoscope OR pick a horse for the Grand National – here is a tip: last years result nor an individual horse’s performance in other races are not necessarily a guide to this years race. But I guess you already knew that.

BUT, if you are really stuck for something to read get your head around the fact that irrespective of the intellect, experience and technology at our disposal we/they cannot predict the future even in times of relative stability. What we know about the past, from our experience, is no longer adequate for an inter-connected world.

If you are interested enough to read to this point you may just be keen to explore some thoughts on why and, more importantly, how we need to prepare for the future you may be interested in this previous post. If you want yet more please drop me an email: david@ontonix.com

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