Evidence-Based Banking

 

Banks

 

Even if you have been asleep at your desk over the last few years you have noticed the huge number of fines and "settlements" imposed on the banking industry; over $100 Billion since the most recent financial crisis. Clearly there have been a few management issues here and there. Martin Walker had a closer look at the evidence and assumptions behind some of the decision making in banking and did not like what he saw. He therefore started the Evidence-Based Banking Forum on LinkedIn.

So what is this new initiative trying to achieve? and who is Martin Walker? To find out we had a chat with him.

 

Martin, who are you and what is your experience with the banking industry?

Today I work as an independent banking consultant mostly looking at business process, organizational structure, system architecture and Management Information.

 

Many years ago I grew up in a part of East London where it seemed the main career choices were becoming a clerk in the City of London or working in the local car factory. Having a low boredom threshold and no manual dexterity ruled out those careers so I made a short and unsuccessful attempt at being an Economist. After that I ended up working in IT interspersed with more spells of studying (Psychology and then Computing Science).

 

At the age of 31, I felt the need for a little more money to support my wife and two children. So I became one of the oldest “junior” business analysts in the IT Department of a large investment bank. After a few promotions and changes of employer, I ended up in management; responsible for a bunch of trading systems. Investment banking IT was fascinating, often fun and frequently terribly stressful.

 

Rolling out new systems, new processes and being involved in organisation changes, meant I learnt a great deal about how a large organisation makes (and loses) money, manages risk and grows in complexity. I also had to work through two major financial crises, the bursting of the Dot-Com bubble and the recent financial crash. Most people are able to switch off to the noises of financial crisis, unless you lose your job or savings. However if there are billions of dollars of toxic waste sitting in your systems you have to help clean up the mess.

 

Eventually I decided to move out of front office IT and spend more time looking at organizational structures and business processes.  While doing a review of a large IT department at a major bank I started thinking more about the evidence based approach to management.

 

What made you to decide to set up the Evidence-Based Banking Forum?

Well it’s been a long time coming. First came the realization that the bitter ideological debates between my IT colleagues about how to write software, were not because there were “good guys” and “bad guys”. It was simply because there was little evidence to prove what actually worked best. Recognizing the lack of science in computer science was bad enough but around 2008 I first read about Evidence-Based medicine. I’m sure everyone reading this newsletter is familiar with the story and the birth of evidence-based practice but I was shocked.

 

When I started being involved in managing and reviewing other managers, I still had the example of medicine in mind. So I questioned the underlying assumptions of those decisions. Too often they were solely based on the strongly held opinions of Management Gurus or copying what “smarter” organisations were doing. “If only there could be a field of Evidence-Based Management?” I daydreamed.

 

evidence-based bankingA little over a year ago, a series of random web searches lead me to an extraordinary looking professor called Rob Briner, who wrote and lectured about “Evidence-Based Management”. Rob responded to my email and I met him and equally interesting Dutch gentleman called Eric Barends. Together we got a little pilot of EBMt off the ground in a major bank.

 

The pilot has turned up some very interesting results. In software engineering one of the seminal papers is called “There is no silver bullet”. There are many people who make a great deal of money selling ineffective silver bullets to the banks. In fact I have seen the same ideas tried and failed in multiple banks. I saw three of my employers in a row, attempt to use the same flawed technology. None of learned from each other’s mistakes even though I saw the same consultants turn up in each bank in turn. Based on the experience of the pilot and ever growing set of challenges for the banks (particularly the investment banks), I thought a forum to help spread the ideas of EBMgt  may hold up a “silver mirror” to help us understand what are our real problems and what might actually work.   

 

What does the Evidence-Based Banking Forum do? What kind of activities does it undertake?

The primary activity of the forum (which is still in the early stages) is simply to encourage networking between people interested in improving the banks, experts in Evidence-Based Management and the plain curious. All forms of Evidence-Based practice are fundamentally about asking the right questions. It is very difficult to get the courage to ask those questions (or even to ask those questions in the right way) if you feel you are alone.

 

So far we just have the Evidence Based Banking Forum on LinkedIn (please join if you are interested) but starting in New Year we will be organizing networking events in the City of London and Canary Wharf. We will also be doing general promotional work via social media and hopefully conventional media, if we can get their interest.

 

Martin Walker IIWhat are you hoping to achieve with this initiative?

Some small steps towards building better banks and hopefully a new source of supporters, funds, publicity and even some evidence about management, for CEBMa.

 

Who should join the Forum?

Anyone interesting in making banking better, whether bankers, academics, consultants, regulators, students and let’s not forget the plain curious.