The Future of the Banking Industry

Alain de Botton considers how the relationship between capital and contentment can be a difficult one: What do banks know about the psychology of money?

If you asked an average customer-oriented bank what they were in the business of doing, they’d look at you rather strangely, as if you were asking them something so obvious that you might be taking them for fools. Evidently, banks exist to keep money safe, to make it grow and to deliver it swiftly to their customers when they need it. In highly competitive times banks will do their hardest to demonstrate prowess in these three areas. They will let the world know that they are a safe haven, that they are extremely adept at making portfolios grow and that they respond with unparalleled rapidity to customer demands. Some are even open 24 hours a day. One could, in a generous moment, even feel rather sorry for banks given the sweat they must expend competing in these areas. It is extremely hard to grow a portfolio more than 4.5 per cent per annum, never more so than when markets are relentlessly saggy or volatile.

It’s only when we insist on the original question that the founding assumptions behind modern banking reveal some of their strangeness. What do we really want from banks? And then the real enquiry: what do we want from money? It is probably not clever to be overly sophisticated here, at least not initially: we simply want to be happy. We want money not to cause us anxiety and to be responsible for increasing our sense of well-being. But this is where the issues start, for happiness around money is no simple matter. The modern assumption is rather immodest and blatant: we insist that all we need to be happy with money is to have more and more of it. This represents the sum total of the complexity we (or rather, classical economics) generally allow into the topic.

Even banks filled with people with advanced qualifications and armies of computers tend not to question these assumptions. There may be immense intelligence within banks but it is solely directed towards the big bold agenda: making money grow. Yet the subject of money and happiness is – evidently – just a little more complicated than this orientation would assume. To reach happiness around money is to embark on a journey full of unexpected currents and hidden whirlpools.

We can quickly summon up just a few of the complexities:
– How happy our money makes us isn’t just a question of the amount we have; it partly depends on how we have made it. The more pleasurable the process of accumulation, the less substantial the overall sum might need to be (and vice versa).

– We want to earn money to provide for our families, on the assumption that money is what they need, but providing them with more than a certain amount seems to have odd side-effects. Giving people we love too much money can land them in clinics.

– It’s nice to give money away and goodness knows people need help: but where – really – does money make a difference? And what causes feel close to our own hearts?

– How much money we feel we need is a decision highly dependent on what others in the immediate vicinity – our reference points – are making. Feeling comfortably-off relies on measuring ourselves against targets which lie outside our control and upon which we generally reflect very little. There are perhaps two ways to feel richer: to make more money or to change our friends.

– It’s hard to know what to spend money on in order to be genuinely satisfied. We’re provided with constant temptations and encouragements to invest in this or that, but which of these really work for us? We have to understand ourselves quite well to know how to spend. Shopping is an oddly serious matter.

– Anxiety is a constant: we worry about everything. A lot of this anxiety gets channelled, of course, towards money. If only we reach a certain goal then, at last, we will be stable and secure. But how skilled is money at answering the expectations we have placed in it? We are exhausting ourselves in search of money: how accurate are we being in our hopes for it?

The bank of the future will certainly keep money safe, and do its best to make it grow. But it will also understand that its job is really to open up pathways to contentment around money, and that this depends on far more than a 4.5 per cent annual increase in portfolios. It will therefore seek to act as a forum in which customers can learn what role money plays in their lives and what their options might really be. The idea of a bank stands ready to be reinvented, no longer an institution that has a secure safe-deposit box and a commitment to fruitful investment, but an organisation that tackles the underlying issues which banking straddles – the profound questions of how we can live well around money, however much or little we may have. The ambitious banks of the future will be experts in finance, of course, but they will also know a lot about something equally critical but as yet too often ignored by the financial world: the psychology of money.

This is an excerpt from issue 21 of Port, out now. To buy or subscribe click here.

Port Issue 21

The latest issue of Port is out now, featuring our interview with the inimitable Steve Buscemi, a focus on the Royal Gold medal winning architect Neave Brown, and much more…

“He kicks ass, man. His range is incredible”, so remarked Jeff Bridges to Port recently. And it’s true: Steve Buscemi does kick ass. But he also knows how to walk the line between multiple different guises. He’s an industry grandee, with cult status; an arthouse movie darling, and a blockbuster powerhouse. When Port met one of the most nuanced actors of his generation in a quiet bar in Brooklyn, we received a masterclass in maintaining a successful yet steady life.

Hollywood action hero, TV mobster and art-house loser Steve Buscemi sits down with award-winning author Charles Bock to discuss playing Nikita Khrushchev in the upcoming The Death of Stalin, his addiction to watching classic movies on TCM, the vanity of the movie business, and his newfound passion for yoga.

Over in the Style section, our Miami Noir editorial – styled by Dan May and shot by Greg Lotus – features a sharp selection of menswear from Emporio Armani, while a series styled by Will Johns features a range of Hermès accessories elegantly interspersed with scenes from a Sussex village. Elsewhere, we offer our take on the hottest men’s outerwear of the season, and mingle casual menswear with dramatic botanical images.

In the features section, sailor Alex Thomson reflects on his experience of the Vendée Globe, a grueling, round-the-world solo yacht race, and the most demanding of its kind on the planet. Will Wiles reflects on the career of one of the last surviving proponents of brutalist architecture, Neave Brown, who was recently awarded the highly coveted Royal Gold Medal; and photographer Elliott Verdier travels to the remote central Asian republic of Kyrgyzstan to capture an ex-Soviet state struggling to find a national identity in a globalised world.

Acclaimed novelist and playwright Hanif Kureishi explores the connection between drugs and countercultural movements, while Alain de Botton muses on that million dollar-question: what is the relationship between capital and contentment, and what can banks tell us about the psychology of money? Conflict photographer Giles Duley unravels the ethics of photography in documenting a violent world, while Steven Johnson considers the ramifications of communication with life beyond Earth.

Highlights from the Porter include 108 Garage chef Chris Denney’s celebration of the versatile Japanese seaweed kombu; a focus on the life and work of Soviet Constructivist Vavara Stepanova; and a conversation between Mozambican author Mia Couto and his protégé, Brazilian author and translator Julián Fuks.

To buy a single issue or to subscribe, click here