Never Send an Engineer to Do a Banker's Job

At American Banker's recent Digital Banking 2016 conference, a technologist at Silicon Valley Bank called for replacing bankers with programmers. 

During a panel, Dan Kimerling, chief software engineer at SVB, told an audience of bankers: "the biggest problem banks have is that they're run by bankers, not software engineers."

Kimerling went on to cast a vision of banks staffed with programmers to make core systems open-source, to distribute application programming interfaces and to mine the transaction data for advertising revenue.

However, banks are built by bankers, and bankers and engineers are two different people. Software engineers are simply architects, craftsmen and couriers hired to design pretty branch offices (read: user interfaces), build stronger vaults (read: cybersecurity) and quickly transport gold (read: online transfers and interbank settlement).

Kimerling's fallacy invites an obvious question: what exactly is a banker?

A banker is primarily an entrepreneur with a keen understanding of risk.  Rather than replace bankers with engineers, bankers must return to their original role in the community: help entrepreneurs succeed through connecting capital with good ideas.

On a recent trip to the Jewish museum in Vienna, I stood before a portrait of Samuel Oppenheimer, banker to Emperor Leopold I in the late 1600s. Oppenheimer established a portfolio of businesses that generated cash. This cash formed the foundation upon which Oppenheimer built his banking house.  

In "Samuel Oppenheimer und sein Kreis" ("Samuel Oppenheimer and his circle"), the historian Max Grunwald described how Oppenheimer established his portfolio:

He obtained powder from Holland, Poland and Russia, saltpeter from Bohemia, Moravia, Silesia, and Hungary, arms from Steyr, Styria, Carinthia, and Krain, cloth from Holland, wool from Bohemia, cavalry boots from Kremsier, horses and rafts from Salzburg and Bavaria, cereal and flour from Transylvania and Hungary, hay from the Electoral Palatinate, oats from Franconia, spices from Hamburg, wine from the Rhine Neckar and Moselle, and spirits from Moravia. 

A banker builds a network of suppliers just as Oppenheimer did. A banker understands what customers need. A banker takes risks on human ideas. A banker works to connect capital with ideas.

Oppenheimer's tragedy is that his main banking customer — Emperor Leopold — refused to repay his loan after waging war against the Turks and losing. Ultimately, Oppenheimer's banking house fell due to his inability to pursue recompense through the courts. Oppenheimer's answer to the problem of banking may simply be: don't lend to Austrian emperors.

However, if Oppenheimer were alive today and presenting to that same hall full of bankers in New Orleans, I think he would say:

"Embrace the best technology available. You are bankers. You are the gatekeepers of capital. Your mission is to serve the entrepreneur and help them to succeed. Now go and bring about good ideas."

Aidan McIntosh is tax accountant for Elysium Accounting and Financial Solutions in Melbourne, Australia.