Fishburn Hedges

03.11.2010

Last week’s Sibos conference in Amsterdam saw 9,000 bankers and technology vendors come together – to sell things to each other, yes, but also to discuss the future direction of their industry.

I said bankers, but these days that demands further definition. Sibos is the leading global event for transaction bankers – think payments, trade finance and settlement – not investment bankers. Since the collapse of Lehman Brothers just over two years ago, transaction banking has shrugged off its image as the Cinderella of global finance and found favour within banks and governments as “real banking”. So these days there is less interest in cleverly structured financial products, and more in the plumbing of global finance.

The conference, which is organised by the financial messaging and standards co-operative SWIFT, ended with a talk by Paul Saffo of Stanford University on “long finance”, which he defined as focusing on objectives that outlive people. He gave the example of Switzerland’s Gotthard Base Tunnel, at 57km the world’s longest. Many of the people who voted for the project in 1992 will not be alive when the first trains start running in 2017.

Saffo defined the question as “how to become a good ancestor to others”, a quote from Dr Jonas Salt, who invented the polio vaccine. That approach has become received wisdom – if not practice – in terms of how we treat the environment, but how often is the same long-term thinking demonstrated in finance, whether in terms of financial regulation or banking structures?

We generally agree that we want to leave our grandchildren a world with gorillas, whales and tigers, but a legacy of banking structures to which they entrust their money, if more prosaic, will probably have more immediate impact on their own lives. That sounds like a job for the plumbers.