Historically, disruption is extremely rare. Only 23 of the 568 companies included in the Fortune 500 since 1997 were under 15 years old when they entered. But right now, there are three forces converging that might transform finance and other industries. The first is the explosive growth of AI. The second is a massive migration of tech talent from big finance to big tech. The third is an increased appetite by big tech companies to enter industries like big finance. Leaders in finance should take the following three steps: 1) accept that culture transformation is essential to digital transformation, 2) not settle for AI optics, and 3) assume the disruptive threat is real and be proactive.
If you were to walk around one of the investment banks that occupy the skyscrapers of Manhattan at midnight, you would see an industry that hasn’t changed very much in the last 25 years. A room full of smart, hardworking 24 to 34 year olds with advanced degrees from top universities would likely be staring into computers, searching for data in a PDF file, pasting the data into an Excel model, and transferring the charts from these Excel models into a PowerPoint deck. The next morning their managers will use these decks to persuade a company to hire the bank to help them find a buyer or a target.