[AUDIENCE] We all know that banks are very powerful with access to resources.
They will not go down very easily. What will happen to banks in the next five to ten years?
They will fight it, won't they?
[ANDREAS] Sure. Although, you must realize that banks are not made of evil people.
There are a few people who fit this caricature.
These are institutional structures that have a certain amount of inertia.
You can have ten thousand good people and maybe one sociopath CEO, sometimes,
but mostly ten thousand good people, working just to pay their mortgages and feed their children.
They make minute decisions every day that add up to a giant evil empire which racially profiles homeowners,
illegally forecloses on them, and takes enormous risks knowing that regulators will back them up...
and bail them out if they fail.
They can privatize the profits, socialize the losses all on the taxpayer, and rob pensioners.
It is pretty evil stuff, but it is not done by evil people. It is done by good people inside institutional inertia.
When faced with an existential crisis, these organizations are very slow to respond.
They are unable to quickly shift direction. The architecture and assumptions...
of that business model are embedded so deeply in the culture that it is almost impossible to change.
They will be badly affected by this [disruptive technology],
just like the newspapers, TV, and movie industry [were by the internet].
When I attend conferences with bankers, they ask me, "Should we hire a blockchain consultant?" I say, "No."
"Hire a former newspaper editor who was fired because the internet ate his / her business."
Ask them, "When did you first know that the internet was about to eat your industry?"
"What did you do to prevent software from eating your industry?"
"Now that you know you failed, what would you have done differently? Tell us, please."
"Because software is coming to eat our industry. For the first time in a hundred years, [we are being disrupted]."
It will be difficult, but in the end, the banks will still be here. They will just be very different.
They will have less power. They will offer [useful] services.
Fractional lending is something that blockchains don't do, by design. That is okay.
Maybe that is a purpose for banks. There are many things that banks can [handle, such as]...
rpersonal relationships with their depositors, which they call a "lost business" because it is not profitable.
Not as profitable as engineering financial instruments to underwrite loans for wars or dictators.
Maybe they can reform their operations and focus on customer service again. I don't know. I don't care.
Do you know why?
In the end, there isn't a right to maintain a business model.
There is no guarantee of profit. If banks are terrified of competing in a free market,
something seriously wrong has happened to banking.
If you work in a bank and the most terrifying thing in the world is unbridled capitalism...
I was on a panel where one of the bankers said,
"We don't need to do anything. The government won't allow this to happen."
If your last resort is a government decree that prevents competition in the free market, you have already lost.
Banks will do fine, as long as their business model is built on...
productive relationships that serve a community, a society.
If their business is vampire-squid financing of war [mongers] and dictators around the world,
they [should] fail. Good riddance. I am not really concerned [about them].
Dinosaurs ignored the mammals, and then they looked at the bright shiny [ball of fire] in the sky...
that was coming for them.
They probably wondered, 'What will happen to the dinosaurs?'
They are still here. I had one of their eggs for breakfast. Dinosaurs turned into chickens.
They are the closest descendant of those once mighty beasts.
We are the descendants of the furry things they crushed underfoot. Let history repeat itself.
I will enjoy it. Thank you so much.