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Pascal Bouvier
For the past 6 years the financial services industry has undergone a transformation, attempting to shed its industrial age structures, rebuilding itself alongside new digital paradigms. The first transformative steps have focused the digitization of front end processes and systems. As we cycle through these first steps, we are made aware of the next steps the industry is or will undertake, digitizing middle office and back office processes and systems. Terms and technologies such as artificial intelligence, straight through processing, robotics, process automation, blockchain or distributed ledgers are all connected to a meta intent: to modernize and increase the industry’s productivity. Let’s label this “fact #2″.
Innovation is the process whereby technology is applied to human processes with the resulting outcome of increased productivity. In other words, innovation enables humans to do more with less. This has invariably led established industries to produce more with less labor, or die trying. Witness agriculture and manufacturing. Let’s label this “fact #3″.
Newly elected President Trump ran on a Make America Great Again platform which in part means the creation of domestic jobs, or the repatriation of offshored jobs to the US. Arguably this dialectic has focused mostly on the manufacturing, energy and extraction industries. Let’s label this “fact #4″.
We also know the Trump administration has made known its intent to free the US economy from its regulatory debt, which includes financial regulatory debt – which in and of itself is worthy exercise although the devil is in the details. I discussed the Executive Order regarding the US financial system here. The purpose of this intent is obviously to facilitate job creation. Let’s label this “fact #5″.
The US financial services industry has, much like its manufacturing brethren, engaged in offshoring. We need to unpack this statement though. Global banks (retail, commercial or i-banks) have offshored jobs, not the entire industry, and certainly not regional, community banks or domestic insurers. Further, global banks have offshored certain categories of jobs such as low level IT, risk management and compliance to locations with a lower cost of labor. Thusly the aggregate amount of US financial services jobs lost to offshoring is probably minimal. I would venture a guess of no more than 150k jobs lost to offshoring – arguably I might be completely off. Further, some of this “offshoring” might very well be grounded in sound business decisions such as the need to have global support operations in multiple time zones across the globe.
Additionally, it remains to be seen whether deregulation – or the lack of enforcement of current regulation – will help with financial services job creation per se. The demise of brick and mortar branches as the primary distribution channel for a financial product is not regulatory driven. It is borne out of societal changes enabled by new technologies. The slow unbundling and rebuilding of traditional financial services models is a byproduct of the internet age.
I cannot avoid concluding that any push to force large banks to repatriate jobs back to the US will not yield significant results and that any deregulation push as a basis for job creation is a weak proposition at best. Therefore the desired outcomes powering fact #4 & fact #5 are questionable, regardless of how well meaning the intent is.
On the other hand, financial institutions, under the assaults of innovative fintech startups, ravenous tech companies (Google, Amazon, Facebook, Apple, or GAFA) and the drastically different appetites and behaviors of younger generations compared to their predecessors, have no other choice but to complete their transformations towards greater productivity. Tomorrow’s banks will discharge their regulatory burden with but a fraction of the number of employees needed today. Tomorrow’s insurer will reach consumers with a digital brokerage workforce at odds with current prevalent distribution channels. Buy and Sell side institutions are today actively deploying advanced technologies that makes them brutally efficient at pre-trading, trading and post trading activities. Everyone is betting on conversational banking/insurance via mobile social media apps. I am not even attempting to draft a comprehensive list of transformational changes, yet readers will clearly decipher the inevitable conclusion, namely that the probability the financial services industry will employ fewer people in 5 to 10 years from now is much higher than the probability aggregate employment will remain unchanged or increase.
No amount of political nudging, deregulation, or trade re-engineering will prevent or reverse the consequences of technology innovation. We are left with attempting to decipher one unknown: How many jobs will the US financial services industry shed in the next 5 or 10 years, and how swift will the shedding occur? Fact #2 & #3 loom larger and stronger.
How will the impact of such dislocation be tackled? (8.8m workers is not a small number and, as the last US presidential election has proven, not paying attention to technology dislocation is unsustainable.) Do notice how certain European governments treat their domestic banks as “employment stabilizers” and do their utmost to ensure no material waves of redundancies occur. Will the US follow this path? If so will this further enable GAFA and fintech startups? More importantly, which will be the new demand curves created on the back of this dislocation?
I am sure the CEOs of most financial institutions have not failed to notice all technology companies have a much higher revenue per employee ratio than traditional banks or insurers. You have been warned – and make sure to check how the statistics behind fact #1 will behave going forward – it’s the technology, stupid!
As of December 2016, the Bureau of Labor Statistics shows the US financial services industry employing 8.4m people. This figure includes credit and non credit intermediation, securities and insurance activities. For good measure we may want to add payroll, collection agencies and credit bureau activities which increases the tally by an additional 400k for a grand total of 8.8m. Let’s label this “fact #1″.
For the past 6 years the financial services industry has undergone a transformation, attempting to shed its industrial age structures, rebuilding itself alongside new digital paradigms. The first transformative steps have focused the digitization of front end processes and systems. As we cycle through these first steps, we are made aware of the next steps the industry is or will undertake, digitizing middle office and back office processes and systems. Terms and technologies such as artificial intelligence, straight through processing, robotics, process automation, blockchain or distributed ledgers are all connected to a meta intent: to modernize and increase the industry’s productivity. Let’s label this “fact #2″.
Innovation is the process whereby technology is applied to human processes with the resulting outcome of increased productivity. In other words, innovation enables humans to do more with less. This has invariably led established industries to produce more with less labor, or die trying. Witness agriculture and manufacturing. Let’s label this “fact #3″.
Newly elected President Trump ran on a Make America Great Again platform which in part means the creation of domestic jobs, or the repatriation of offshored jobs to the US. Arguably this dialectic has focused mostly on the manufacturing, energy and extraction industries. Let’s label this “fact #4″.
We also know the Trump administration has made known its intent to free the US economy from its regulatory debt, which includes financial regulatory debt – which in and of itself is worthy exercise although the devil is in the details. I discussed the Executive Order regarding the US financial system here. The purpose of this intent is obviously to facilitate job creation. Let’s label this “fact #5″.
The US financial services industry has, much like its manufacturing brethren, engaged in offshoring. We need to unpack this statement though. Global banks (retail, commercial or i-banks) have offshored jobs, not the entire industry, and certainly not regional, community banks or domestic insurers. Further, global banks have offshored certain categories of jobs such as low level IT, risk management and compliance to locations with a lower cost of labor. Thusly the aggregate amount of US financial services jobs lost to offshoring is probably minimal. I would venture a guess of no more than 150k jobs lost to offshoring – arguably I might be completely off. Further, some of this “offshoring” might very well be grounded in sound business decisions such as the need to have global support operations in multiple time zones across the globe.
Additionally, it remains to be seen whether deregulation – or the lack of enforcement of current regulation – will help with financial services job creation per se. The demise of brick and mortar branches as the primary distribution channel for a financial product is not regulatory driven. It is borne out of societal changes enabled by new technologies. The slow unbundling and rebuilding of traditional financial services models is a byproduct of the internet age.
I cannot avoid concluding that any push to force large banks to repatriate jobs back to the US will not yield significant results and that any deregulation push as a basis for job creation is a weak proposition at best. Therefore the desired outcomes powering fact #4 & fact #5 are questionable, regardless of how well meaning the intent is.
On the other hand, financial institutions, under the assaults of innovative fintech startups, ravenous tech companies (Google, Amazon, Facebook, Apple, or GAFA) and the drastically different appetites and behaviors of younger generations compared to their predecessors, have no other choice but to complete their transformations towards greater productivity. Tomorrow’s banks will discharge their regulatory burden with but a fraction of the number of employees needed today. Tomorrow’s insurer will reach consumers with a digital brokerage workforce at odds with current prevalent distribution channels. Buy and Sell side institutions are today actively deploying advanced technologies that makes them brutally efficient at pre-trading, trading and post trading activities. Everyone is betting on conversational banking/insurance via mobile social media apps. I am not even attempting to draft a comprehensive list of transformational changes, yet readers will clearly decipher the inevitable conclusion, namely that the probability the financial services industry will employ fewer people in 5 to 10 years from now is much higher than the probability aggregate employment will remain unchanged or increase.
No amount of political nudging, deregulation, or trade re-engineering will prevent or reverse the consequences of technology innovation. We are left with attempting to decipher one unknown: How many jobs will the US financial services industry shed in the next 5 or 10 years, and how swift will the shedding occur? Fact #2 & #3 loom larger and stronger.
How will the impact of such dislocation be tackled? (8.8m workers is not a small number and, as the last US presidential election has proven, not paying attention to technology dislocation is unsustainable.) Do notice how certain European governments treat their domestic banks as “employment stabilizers” and do their utmost to ensure no material waves of redundancies occur. Will the US follow this path? If so will this further enable GAFA and fintech startups? More importantly, which will be the new demand curves created on the back of this dislocation?
I am sure the CEOs of most financial institutions have not failed to notice all technology companies have a much higher revenue per employee ratio than traditional banks or insurers. You have been warned – and make sure to check how the statistics behind fact #1 will behave going forward – it’s the technology, stupid!
Innovation is the process whereby technology is applied to human processes with the resulting outcome of increased productivity. In other words, innovation enables humans to do more with less. This has invariably led established industries to produce more with less labor, or die trying. Witness agriculture and manufacturing. Let’s label this “fact #3″.
Newly elected President Trump ran on a Make America Great Again platform which in part means the creation of domestic jobs, or the repatriation of offshored jobs to the US. Arguably this dialectic has focused mostly on the manufacturing, energy and extraction industries. Let’s label this “fact #4″.
We also know the Trump administration has made known its intent to free the US economy from its regulatory debt, which includes financial regulatory debt – which in and of itself is worthy exercise although the devil is in the details. I discussed the Executive Order regarding the US financial system here. The purpose of this intent is obviously to facilitate job creation. Let’s label this “fact #5″.
The US financial services industry has, much like its manufacturing brethren, engaged in offshoring. We need to unpack this statement though. Global banks (retail, commercial or i-banks) have offshored jobs, not the entire industry, and certainly not regional, community banks or domestic insurers. Further, global banks have offshored certain categories of jobs such as low level IT, risk management and compliance to locations with a lower cost of labor. Thusly the aggregate amount of US financial services jobs lost to offshoring is probably minimal. I would venture a guess of no more than 150k jobs lost to offshoring – arguably I might be completely off. Further, some of this “offshoring” might very well be grounded in sound business decisions such as the need to have global support operations in multiple time zones across the globe.
Additionally, it remains to be seen whether deregulation – or the lack of enforcement of current regulation – will help with financial services job creation per se. The demise of brick and mortar branches as the primary distribution channel for a financial product is not regulatory driven. It is borne out of societal changes enabled by new technologies. The slow unbundling and rebuilding of traditional financial services models is a byproduct of the internet age.
I cannot avoid concluding that any push to force large banks to repatriate jobs back to the US will not yield significant results and that any deregulation push as a basis for job creation is a weak proposition at best. Therefore the desired outcomes powering fact #4 & fact #5 are questionable, regardless of how well meaning the intent is.
On the other hand, financial institutions, under the assaults of innovative fintech startups, ravenous tech companies (Google, Amazon, Facebook, Apple, or GAFA) and the drastically different appetites and behaviors of younger generations compared to their predecessors, have no other choice but to complete their transformations towards greater productivity. Tomorrow’s banks will discharge their regulatory burden with but a fraction of the number of employees needed today. Tomorrow’s insurer will reach consumers with a digital brokerage workforce at odds with current prevalent distribution channels. Buy and Sell side institutions are today actively deploying advanced technologies that makes them brutally efficient at pre-trading, trading and post trading activities. Everyone is betting on conversational banking/insurance via mobile social media apps. I am not even attempting to draft a comprehensive list of transformational changes, yet readers will clearly decipher the inevitable conclusion, namely that the probability the financial services industry will employ fewer people in 5 to 10 years from now is much higher than the probability aggregate employment will remain unchanged or increase.
No amount of political nudging, deregulation, or trade re-engineering will prevent or reverse the consequences of technology innovation. We are left with attempting to decipher one unknown: How many jobs will the US financial services industry shed in the next 5 or 10 years, and how swift will the shedding occur? Fact #2 & #3 loom larger and stronger.
How will the impact of such dislocation be tackled? (8.8m workers is not a small number and, as the last US presidential election has proven, not paying attention to technology dislocation is unsustainable.) Do notice how certain European governments treat their domestic banks as “employment stabilizers” and do their utmost to ensure no material waves of redundancies occur. Will the US follow this path? If so will this further enable GAFA and fintech startups? More importantly, which will be the new demand curves created on the back of this dislocation?
I am sure the CEOs of most financial institutions have not failed to notice all technology companies have a much higher revenue per employee ratio than traditional banks or insurers. You have been warned – and make sure to check how the statistics behind fact #1 will behave going forward – it’s the technology, stupid!
As of December 2016, the Bureau of Labor Statistics shows the US financial services industry employing 8.4m people. This figure includes credit and non credit intermediation, securities and insurance activities. For good measure we may want to add payroll, collection agencies and credit bureau activities which increases the tally by an additional 400k for a grand total of 8.8m. Let’s label this “fact #1″.
For the past 6 years the financial services industry has undergone a transformation, attempting to shed its industrial age structures, rebuilding itself alongside new digital paradigms. The first transformative steps have focused the digitization of front end processes and systems. As we cycle through these first steps, we are made aware of the next steps the industry is or will undertake, digitizing middle office and back office processes and systems. Terms and technologies such as artificial intelligence, straight through processing, robotics, process automation, blockchain or distributed ledgers are all connected to a meta intent: to modernize and increase the industry’s productivity. Let’s label this “fact #2″.
Innovation is the process whereby technology is applied to human processes with the resulting outcome of increased productivity. In other words, innovation enables humans to do more with less. This has invariably led established industries to produce more with less labor, or die trying. Witness agriculture and manufacturing. Let’s label this “fact #3″.
Newly elected President Trump ran on a Make America Great Again platform which in part means the creation of domestic jobs, or the repatriation of offshored jobs to the US. Arguably this dialectic has focused mostly on the manufacturing, energy and extraction industries. Let’s label this “fact #4″.
We also know the Trump administration has made known its intent to free the US economy from its regulatory debt, which includes financial regulatory debt – which in and of itself is worthy exercise although the devil is in the details. I discussed the Executive Order regarding the US financial system here. The purpose of this intent is obviously to facilitate job creation. Let’s label this “fact #5″.
The US financial services industry has, much like its manufacturing brethren, engaged in offshoring. We need to unpack this statement though. Global banks (retail, commercial or i-banks) have offshored jobs, not the entire industry, and certainly not regional, community banks or domestic insurers. Further, global banks have offshored certain categories of jobs such as low level IT, risk management and compliance to locations with a lower cost of labor. Thusly the aggregate amount of US financial services jobs lost to offshoring is probably minimal. I would venture a guess of no more than 150k jobs lost to offshoring – arguably I might be completely off. Further, some of this “offshoring” might very well be grounded in sound business decisions such as the need to have global support operations in multiple time zones across the globe.
Additionally, it remains to be seen whether deregulation – or the lack of enforcement of current regulation – will help with financial services job creation per se. The demise of brick and mortar branches as the primary distribution channel for a financial product is not regulatory driven. It is borne out of societal changes enabled by new technologies. The slow unbundling and rebuilding of traditional financial services models is a byproduct of the internet age.
I cannot avoid concluding that any push to force large banks to repatriate jobs back to the US will not yield significant results and that any deregulation push as a basis for job creation is a weak proposition at best. Therefore the desired outcomes powering fact #4 & fact #5 are questionable, regardless of how well meaning the intent is.
On the other hand, financial institutions, under the assaults of innovative fintech startups, ravenous tech companies (Google, Amazon, Facebook, Apple, or GAFA) and the drastically different appetites and behaviors of younger generations compared to their predecessors, have no other choice but to complete their transformations towards greater productivity. Tomorrow’s banks will discharge their regulatory burden with but a fraction of the number of employees needed today. Tomorrow’s insurer will reach consumers with a digital brokerage workforce at odds with current prevalent distribution channels. Buy and Sell side institutions are today actively deploying advanced technologies that makes them brutally efficient at pre-trading, trading and post trading activities. Everyone is betting on conversational banking/insurance via mobile social media apps. I am not even attempting to draft a comprehensive list of transformational changes, yet readers will clearly decipher the inevitable conclusion, namely that the probability the financial services industry will employ fewer people in 5 to 10 years from now is much higher than the probability aggregate employment will remain unchanged or increase.
No amount of political nudging, deregulation, or trade re-engineering will prevent or reverse the consequences of technology innovation. We are left with attempting to decipher one unknown: How many jobs will the US financial services industry shed in the next 5 or 10 years, and how swift will the shedding occur? Fact #2 & #3 loom larger and stronger.
How will the impact of such dislocation be tackled? (8.8m workers is not a small number and, as the last US presidential election has proven, not paying attention to technology dislocation is unsustainable.) Do notice how certain European governments treat their domestic banks as “employment stabilizers” and do their utmost to ensure no material waves of redundancies occur. Will the US follow this path? If so will this further enable GAFA and fintech startups? More importantly, which will be the new demand curves created on the back of this dislocation?
I am sure the CEOs of most financial institutions have not failed to notice all technology companies have a much higher revenue per employee ratio than traditional banks or insurers. You have been warned – and make sure to check how the statistics behind fact #1 will behave going forward – it’s the technology, stupid!
Bio:
Life and work experiences have given Pascal an unmatched vantage point, seeing things as both venture capitalist and aspiring entrepreneur. He currently is a Venture Partner with Santander Innoventures – Santander Group’s Global Fintech fund. Previously he was General Partner with Route 66 Ventures where he built the firm’s venture arm into a top 20 global fintech investor. Pascal puts his experience to work managing early and late stage equity investments (VC/PE). This perspective and his knowledge of banking, financial services and software services have made Pascal a true innovator in the VC arena. His current focus is on emerging and high-growth FinServ and FinTech companies in consensus ledger technology (his term for blockchain and distributed ledger technology), digital banking and insurance in the U.S., Europe, and Asia.
Pascal launched his career as a commercial banker for Europe’s Banque Paribas, in Paris. During the late 1980s, he moved to managing investments at Dai Ichi Kangyo Bank, the world’s largest commercial bank based in Tokyo. Here, he built a diverse, $500+ million portfolio in senior, subordinated loans, and equity investments. Pascal moved to the U.S. in 1990, where he cemented his passion for operating early stage ventures and investing.
Life and work experiences have given Pascal an unmatched vantage point, seeing things as both venture capitalist and aspiring entrepreneur. He currently is a Venture Partner with Santander Innoventures – Santander Group’s Global Fintech fund. Previously he was General Partner with Route 66 Ventures where he built the firm’s venture arm into a top 20 global fintech investor. Pascal puts his experience to work managing early and late stage equity investments (VC/PE). This perspective and his knowledge of banking, financial services and software services have made Pascal a true innovator in the VC arena. His current focus is on emerging and high-growth FinServ and FinTech companies in consensus ledger technology (his term for blockchain and distributed ledger technology), digital banking and insurance in the U.S., Europe, and Asia.
Pascal launched his career as a commercial banker for Europe’s Banque Paribas, in Paris. During the late 1980s, he moved to managing investments at Dai Ichi Kangyo Bank, the world’s largest commercial bank based in Tokyo. Here, he built a diverse, $500+ million portfolio in senior, subordinated loans, and equity investments. Pascal moved to the U.S. in 1990, where he cemented his passion for operating early stage ventures and investing.
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