Jack Uldrich
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The Exponential Banker

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I have two young children. As a way of imparting financial wisdom on them at an early age, I asked both of them after they lost their first tooth which they would rather receive from the tooth fairy: $1 per tooth or a penny for their first tooth and then double the amount for each successive tooth. After I informed them that all children have 20 baby teeth, they both readily opted for the $20 option.

It was a costly mistake because their twentieth tooth would have been worth $5242.88! Such is the power of exponential growth.

The lesson, which is a familiar one to many in the banking industry, is more relevant than ever because society is poised to enter what I call the “exponential economy.” There are a number of technological forces, including computer semiconductors, Internet bandwidth, data storage capacity, genomics and advances in nanotechnology, which are doubling anywhere from every 6 to 12 months. Moreover, they are expected to continue doubling for at least the next decade.

Another interesting fact about exponential growth is that anything that doubles just ten times is a thousand times bigger than it was at the beginning.

This recognition requires today’s banking executives to become what I call “Exponential Executives.” That is leaders who understand that as impressive as past technological advances have been—the ATM, online banking and mobile banking, etc—they are just the beginning.

Banking interactions will continue to evolve as customers’ physical and virtual worlds become intertwined, and social networks and mobile platforms will transform customers’ banking experiences and expectations. Still other advances will create an environment where a premium is placed on unconventional thinking and risk-taking.

As we enter the exponential economy there are five skills which will help the Exponential Banking Executive navigate through these turbulent and uncharted waters.

#1 Partnering: The first doubling in exponential growth is always from 1 to 2. The same principal is at work for the Exponential Executive as they head out into a future that seems almost unknowable. Yet if one thinks about this idea of “going out into the unknown” it is not much different than what the famed American explorers Lewis and Clark experienced 200 years as they began their exploration of the American West.

Think about it for a moment. How do you prepare for a journey in which you have no idea of what you might encounter; how long you will be gone; or even what skills you will need?

Not surprisingly, the first decision Meriwether Lewis made was to invite William Clark to become his co-leader.

Tomorrow’s banking environment is going to be equally complex and to survive it may be essential to bring on a co-equal who has skills and expertise in areas where you are less strong. This model of co-leadership is one CO-CEO’s John Addison and Rich Williams have applied at Primerica Financial Services for years.

#2 Jump the Curve: In 1996, Reed Hastings wanted to start a new business that sent movie videos through the mail. At the time, his business model didn’t work because VHS cassettes were prone to breaking and too heavy to send through the mail at an economical cost. Hastings, however, understood something his peers didn’t. He knew data storage was doubling every six months and that by 1999 the movie industry was likely to convert all movie rentals to a DVD format. In essence, Hastings looked at where the curve of technology was headed and began planning his move years in advance.

If one applies this same insight to many of today’s accelerating technologies, such as biotechnology, genomics, stem cell research and nanotechnology, it is clear that most demographers’ life expectancy predictions will be well off the mark. Barring a major disaster, I fully expect life expectancies will soon reach 80 and shortly thereafter 90—and, perhaps, even higher. The Exponential Banking Executive’ should be “jumping the curve” and preparing for this contingency today by developing products, services and tools that will serve this growing population.

#3 Embrace Ambiguity. There is the old saying that if something looks like a duck and quacks like a duck then it must be a duck.  The picture below is a duck, correct? Look again. When viewed from a different perspective it is also a rabbit.


The future must be viewed through the same lens of ambiguity. There is no question that the banking industry is in the midst of a severe crisis. But just as the Chinese character for the word “crisis” is comprised of the symbols for “danger” and “opportunity” so too is this present crisis also an opportunity.

The Exponential Executive faces the same reality as his or her peers, the difference is that he or she uses the situation to revisit old assumptions and fundamentally rethink how to do business in order to best serve their customers.

#4 Unlearn: Among the many trends that are doubling perhaps none is quite as astounding as the fact that scientific and technical knowledge is doubling every seven years. In other words, as impressive as everything we know today is, this knowledge will only equal half of what we will know in seven years—and just 25% of what we will know in 14 years!

From this perspective, it makes sense to think of today’s knowledge as the tip of the iceberg. Future knowledge is the equivalent of that portion of the iceberg that is presently underwater. As this new knowledge emerges over the coming years, one of the more difficult realities to accept is that it will make some existing knowledge obsolete. To prosper in the future then the Exponential Banking Executive must understand that unlearning will be just as critical as learning.

For example, as new wireless and virtual realities technologies become more prevalent how many branch offices will really be needed?  And, if people are living significantly longer, are 15 and 30 year mortgages the most appropriate terms? Change is never easy but if one embraces “unlearning” the rationale for change becomes easier to accept.

#5 Believe in Doing the Impossible: Just over one hundred years ago the idea of human flight was dismissed as the pipedream of a small group of fringe scientists and hobbyists. Fifty years the idea of a “test-tube baby” was similarly deemed impossible. And just ten years ago the idea that people working for free could design and write an encyclopedia which was as accurate as the Encyclopedia Britannica but be twice the size (and doubling every year) and available in a 140 different languages would have been dismissed as implausible. Wikipedia, of course, is a reality today.

If the future teaches us anything it is that the impossible has a way of becoming possible. The Exponential Banking Executive understands this reality and by partnering, jumping the curve, embracing ambiguity and unlearning, they are willing to accept that the path into the future will always be murky; but they also know they possess the tools and flexibility to help shape and create their own future.

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