“At that point I said, you know what? I’m done with financial services. I don’t like the business model, I don’t like how they operate, I don’t like the fact that those who can least afford it always pay the most, I don’t like the risks that banks pose to global economies. Nothing has fundamentally changed.” —
Anthony Watson, Uphold CEO.
On Wednesday BI ran an interview with Anthony Watson, a former banking executive who’s jumped ship to join a fintech startup, Uphold.
Watson, who held board level positions at Barclays, Citi, and Wells Fargo, is one of the most outspoken former banking executives out there.
Most in the world of fintech (financial technology) talk about traditional banks in terms of inefficiencies and slow adoption. But Watson talks in terms of inequality, unfairness, and outrage at how the banks treat the poor.
Here’s more from Watson:
When I look at banks in particular, the biggest issue I have is that since the crash nothing’s changed. Banks are still fundamentally insecure, banks are charging outrageous fees grossly out of proportion to the cost of providing a service, and they charge those in our society who can least afford it the most.
The person who lives in Brixton will pay a very different interest rate to someone who lives in Knightsbridge. You can’t say you’re publicly discriminating against somebody but your postcode tells a lot about you. It talks about your demographic, your income. It’s not the rich white guy like me that pays the most, it’s the person who can least afford it.
Watson worked in technology at the banks, so maybe it was a bit easier for him to separate himself from the revenue-generating side of the business.
He said his thinking was influenced by protests like the Occupy Movement in the wake of the financial crisis.
That’s pretty incredible. It takes a good deal of calm reflection to listen to groups of angry people saying what you do is immoral and wrong.
Watson has two big gripes with banks, and more broadly the financial system. The first is the fact that the poorest in society pay the most, through things like higher interest fees and big remittance charges when sending money to family abroad.
Watson says: “You’re getting charged for the privilege of using your own money — what bureaucrat came up with that? It’s OK for us in the western world where we’ve got generally higher salaries — imagine that in India! It’s just disgusting.”
The second is that investment banks haven’t reigned in their risk taking as much as they should, nor are they any less fundamental to economies. That means they’re still “too big to fail.” On top of that retail banking operations haven’t yet been split from investment banks.
Watson says: “It goes back to my point about how nothing’s changed since 2008/9. Everybody’s still exposed to the same risks we were back then and no one has done anything about it.
“Our taxes went up 6% in the UK during the crisis — why should I have to pay for a banker to keep his job? It’s fundamentally wrong. The risks that banks propose to society and the costs are off the chart — what, for the privilege of using my own money? It’s just not fair.”
Watson can’t do much to force banks to be less risky or separate operations, but he hopes his new company, Uphold, can do something about the inequality within financial services.
The service doesn’t charge users for sending, receiving, exchanging, or holding money anywhere in the world. You can read more about his vision for the company here.