Is it true that traditional banks are engaged in self-deception?

What is your opinion about why it's happens? Or maybe it's not? Please share your thoughts in comments...

The self-deception in traditional banks (by that I assume that you mean that these banks are also very large) that you so vividly describe is more a result of too many competing entities within a banks infrastructure than a policy of willful blindness or just simple neglect. The end result is the same though.

From my own experience some years ago, the product “owners” or business units, who were driven solely by the profit maximization imperative, wanted the very latest technology but had no idea of (and were not really interested in) the critical issues like the technology, the possibilities, the potential barriers and even what the customers really wanted.

To add insult to injury there was a huge overlap between the smaller corporate market and the larger SMEs who were serviced by two distinct business units who were more in competition with each other than with the rest of the industry. The internal technology unit, who was responsible for development and delivery, were more often than not overruled by the mythical pot of profits (gold) perceived to be at the end of the corporate rainbow.    

Despite all the UX issues in banking systems,

1. Financial services remains the most profitable sector in FORTUNE 500 (https://twitter.com/s_ketharaman/status/751030776981053441).
2. 3 out of 5 most profitable US companies are in Financials sector (https://twitter.com/s_ketharaman/status/751030776981053441).
3. Despite GFC, Legacy & Fintech, 7 out of 10 most profitable companies in the world are in financial services. (https://twitter.com/s_ketharaman/status/766205700225785857)
4. Closer to myself, I recently complained to my Relationship Manager that systems of his bank - a Top 3 private sector bank in India - have one of the worst UX of any bank. He turned around and told me that his bank has a higher market cap than global giants like Deutsche Bank, Barclays Bank, etc.

All this makes me question the role of UX in banking. Nokia was felled by an Apple. There's no Apple-equivalent for traditional banks in the horizon. 

This is a great and really interesting comment Stanley. Thank you! This explains a lot. The question is how banks can manage this in-house competition to make it more productive and benefit from it? What changes must happen in bank culture to switch on customer-centered approach in long term?

Thank you Ketharaman for entering this discussion. Yes, of course, banks have largest resources and power. And that makes them extremely inert. They believe that they are unsinkable because of their age, size and market share. Something similar will probably feel the captain of the Titanic. Why does Nokia did not notice the threat posed by Apple? Why Nokia was not so effective even after the release of the first iPhone? Maybe because it was a major player in its market, and did not expect that market could change itself. The same happened to Kodak, Blockbuster and many other leaders. Technology already changes financial  market, are banks willing to notice it?

For there to be a Kodak moment there has to be a Kodak, in the case of banks the market is more diverse and therefore presumably more resilient? People are also conservative when it comes to managing their money so less likely to shift their business quickly.

None of us can know what is going to happen, we can only guess based on the evidence available to us and on our personal beliefs and inclinations.

My personal take is that change will happen and that the pace of change is accelerating. My belief is that my grandson will never have to learn how to drive a car and will live in a world that is powered by renewable energy. His financial affairs will be managed by robo advisors that will optimise his investments and monitor his spending and saving habits to make sure his finances stay healthy. His generation won't know what a cheque is never mind having to write one, and neither will they ever handle banknotes and coins. They will have plenty to keep them busy as they will be dealing with the effects of global warming and with trying to make the world a more stable and equitable place to live in.

Who will be providing these financial services to the next generations? It will be those who can best cope with change, those who place the customer experience at the heart of what they do. In the same way as Ford is moving in to driverless cars alongside Google it will probably be a combination of existing banks (that after all have the resources as Ketharaman says above) and large tech companies such as Google or Amazon.

@AlexKreger:

I've been marketing and selling technology to the BFSI industry for nearly 3 decades. Then and now, banking contributes more revenues to IT services industry than any other industry. If there's one industry that understands how technology changes financial services and adapts to it, it's BFSI.

Blockbuster, Kodak and Nokia were all individual companies. Banking is an industry. No point in comparing them. You tell me one industry that was destroyed by technology and I'll tell you why that won't happen to banking for the forseeable future.

@AlexKreger:

On a side note, I was not talking about power and resources. I was talking about banks making highest profits of any industry. If one can be inert - as you claim banking is - and still be the most profitable industry in the world, well, I can bet that all other industries in the world will want to be like banks. That'd be the height of "work-life" balance, to put it mildly!

@Alex,

"The more direct control that a customer has to understand and handle its financial position, greater the confidence he will have in the bank holding its assets."

(From "The Bank of the Future" whitepaper.)

"What changes must happen...?"

The banks have to handle financial processes 'corporately' rather than dealing by 'Business Units' - segregating the business issues, from those of the technology.