Banks’ risk management technology spending to reach $74bn by 2015 [bobsguide.com]


How much less would have to be spent upon IT and Regulation IF banks were “punished” for abandoning Governance, became more transparent and the apparent flaws of the current model were addressed once and for all?

I can’t help but think that this is an obscene amount. So much of it will only be “necessary” as a result of the operational complexity created in an effort to mask activities intended to extract every last penny of value for the bank.  Perhaps, paying some attention to the thoughts of Andy Haldane (see link below) and Sir Mervyn King, on the lessons we can learn from nature, can deliver better value to customers…whether at individual or sovereign levels.

Technology investments in risk management infrastructure by banks will reach $74 billion by 2015, a report has revealed.

A study by IDC Financial Insights showed that growth in risk management spending will be faster than the total amount of investment in technology within the financial services sector.

In 2012, risk management will account for more than 15 per cent of IT spending within the industry, the report revealed…

via Banks’ risk management technology spending to reach $74bn by 2015 – bobsguide.com.

Haldane & May: Systemic risk in banking


socio complexityNot news, unless you have been living in a cave…in which case I could probably recommend some more appropriate reading!

Assuming (dear reader) that you have some interest in the topic(s) this is a very interesting piece. It can be found/downloaded here.

Andy Haldane (Director at Bank of England), Mervyn King and Lord May have been on this “tack” for at least 2 years – I have come speeches, papers or presentations on the subject if anyone is interested – and I have referred to their views in various blog articles over that period.

However, I did want to share this section from the conclusion. Because, these gents have recognised that there is a great deal that we can learn, about, both, cause and solution, from Nature. However, as they point out, due to the Political processes that will, inevitably, affect Bank of England, it is unlikely that solutions will be implemented quickly!

Read more of this post

Mervyn King: Banks putting profits before customers


It is only right that the statement from Mervyn King should make news although the headline isn’t news to anyone! It should probably read “Banks putting profits before everything and everyone except each other”.

I have been amazed at how often, over the last couple of years, intelligent and informed people have “celebrated” the gradual return of banks that WE own, to profitability!

Their return and the bonuses that are taken as a result, are only possible because of the money (our money) that they lost.

So we gave them more…that they committed to invest in UK business. But haven’t. Where is there any basis to restore trust!?

Now, through interest rates that reflect an economy of their making, rather than the current B of E, rate we are AGAIN funding their recovery.

Debt for generations of individuals and families is the long term cost. Misery for entire communities suffering through the loss of Public services and businesses that face a daily battle for survival. The “feedback loop” is completed when failing businesses and crumbling social and cultural infrastructure illustrate the price that Political and Financial elites are prepared to inflict to maintain institutions that are victims of the excessive complexity they have created over years of “mismanagement”.

“…complexity breeds complexity, and is subject to diminishing  returns. Eventually the costs of increased complexity exceed the benefits” Prof John Kay

History and recent events in other countries tell us that this is unsustainable…but, then again, we have known this for some considerable time!

The governor said that, over the past two decades, too many people in financial services had thought “if it’s possible to make money out of gullible or unsuspecting customers, that’s perfectly acceptable”.

He said: “Why do banks in general want to pay bonuses? It’s because they live in a ‘too big to fail’ world in which the state will bail them out on the downside.

“We’ve not yet solved the ‘too big to fail’ or, as I prefer to call it, the ‘too important to fail’ problem.

“The concept of being too important to fail should have no place in a market economy.”

via BBC News – Mervyn King: Banks putting profits before customers.

Complexity lessons from nature for a better economic future…


Here is a very brief snippet from a recent article in ft.com. The writers, who form an, apparently, unlikely combination, are Andy Haldane, Executive Director for financial stability at the Bank of England, and Robert May, Professor of Zoology at Oxford University and former British chief scientific adviser.

You shouldn’t really be too surprised because, increasingly in “Corporate America” the realisation is that, rather than environmentalists and others who push a “Sustainability agenda” being the enemy, they have learned through their own performance that embracing Strategy for Sustainability IS transforming their results. And not just because “green washing” was so costly or that their “educated” customers are spending more but because it is genuinely better for their business, stakeholders and the environment.

Nor is this the first time that these unlikely bed-fellows have attempted to communicate a message so important that it is cultivating increasingly inter-disciplinary approaches – joined-up thinking. This is familiar territory for Ontonix. It highlights why Complexity Theory and systems-thinking are THE point at which a new understanding can be applied to begin the process of recovery…this quote may help your understanding of why complexity is so important:

”Imagine assessing the robustness of the electricity grid with data on power stations but not on the power lines connecting them”

.”..The present situation in banking is in many respects perverse. The magic of diversification, when assumed into banks’ risk models, means that large, complex banks often hold less capital than their smaller, simpler brethren. The rocket-scientists building models tell us this makes sense. But the rocket-scientists building rockets tell us it is nonsense. This error has cost the world dear. Through this year, the Financial Stability Board is leading the charge to boost loss-absorbing capital for the largest, systemically important institutions to correct this error. It is right to do so.”

Fund Strategy Magazine: Complexity lessons from nature for a better economic future… In case you thought that “complexity management” is just more mumbo jumbo from the financial sector I suggest that you read the following piece and any of my previous blogs on the subject of complexity. Complexity analysis, mapping and management is available NOW and, if a business leader is intent upon gaining a greater insight into their operations, making more informed decisions, managing more effectively, gaining competitive advantage and “st … Read More

via Get “fit for randomness” [with Ontonix UK]

Fund Strategy Magazine: Complexity lessons from nature…revisited


Some cynics may say that I am re-visiting this blog item because it is coming up for the anniversary of its publication. WRONG.

Others could speculate that I have (finally) run out of things to say – you don’t know me very well! WRONG.

It is because it says what needs to be said, read and understood in order for some to avoid certain extinction and for others as a template from which to build a successful business in the future.


Fund Strategy Magazine: Complexity lessons from nature for a better economic future…
In case you thought that “complexity management” is just more mumbo jumbo from the financial sector I suggest that you read the following piece and any of my previous blogs on the subject of complexity. Complexity analysis, mapping and management is available NOW and, if a business leader is intent upon gaining a greater insight into their operations, making more informed decisions, managing more effectively, gaining competitive advantage and “st … Read More

via Get “fit for randomness” [with Ontonix UK]