Community

"The market’s verdict is clear: these profits are viewed not as the start of a sustainable upswing, but as a temporary peak".

LOL no. The verdict is something else: Banking is boring and lacks meme value. 

In the 20+ years that I've been tracking banking, the industry has almost always been the most profitable - and almost never the most valuable - industry in FORTUNE GLOBAL 500. 

In fact, when Finsurgents used to say Banking will be disrupted by Big Tech entering Banking, I used to say, Big Tech earns much higher valuation multiples than banking, it would be foolish to enter Banking. That's exactly what has happened. 

Now Finsurgents are saying AI Big Tech will disrupt Banking, I'm once again sure nothing like that will happen.   

For a traded commodity like valuation, true value = market value. If you try to buy OpenAI at $1B, good luck finding anybody willing to sell it to you at that price, however much you can justify that it's only worth $1B. Market Value has meaning only until something is traded, after that "ticker is god", and market value estimation is academic exercise.

This is one of those things that have not changed in my 40 years of selling B2B technology across various industries including banking, financial services, and fintech. It's not that customers don't ask questions around "Detailed scope documentation", "expertise", and "dramatically lower estimates" but that they often lack the know-how required to evaluate the answers given by vendors. The problem is exacerbated by the fact that even the most solid vendor will not give guarantees on performance, timelines and other critical KPIs (because they can't - since these KPIs depend on too many variables that are outside the control of the vendor).

The one way I've come across to work around this problem is to appoint third party consulting firms to do the scoping, evaluate vendors' expertise and validate estimates given by vendors. But that's often a costly exercise and therefore restricted to large customers. We see the same problem going through rinse-repeat cycle among SMB customers.