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Banks must embrace the hybrid society’s
multi-cultural dynamics and face the
seismic shift in the traditional power that
once existed between companies and

Published in: Business, Economy & Finance
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  2. 2. The end - is The beginning ‘Bank on Design’ (BOND) poinT oF arrival - resoluTion By Frederik Paul Halsted, MSc BA (Hons) bank nouveau - Think ouTside The bank A research project submitted in partial fulfillment of the requirements for the degree: Certificate of Advanced Studies (CAS) FaciliTy Corporate Design and Visual Identity = oppporTuniTy Department of Design, Department of Cultural Analysis banking anno domini 2010 Design2context - quo vadis? Zurich University of the Arts, ZHdK 2010 The bank - concepTual pedigree poinT oF deparTure - absTracT and concreTizaTionTypeface: Georgia Supporting typeface: Bosis
  3. 3. absTracT problem space meThodology hh poinT oF deparTure_ _ _ _ absTracT and concreTizaTionThe practice of banking has been built on As the credit paralysis stretches. ‘Bank on Design’ (BOND), is concerned _one of the human basic needs: Safety. The crisis has moved beyond the collapse with the Western banking sector per se- of mortgage securities, and is now eating and a particular focus on commecial retailBanks’ critical mass and core lever are into the bedrock of banking- and identity banking. Ultimately, private and invest-therefore regarded as trust and reliance. capital. ment banking will be touched upon as wellStatus quo is that the symbolic power of as other financial institutions cannot be ne-bank identities has been out-weighted by Money supply is created artificially by glected.our need to understand the gloomy realities political confidence only, and bank usersof excessive risk-taking and performance are contemplating putting extra cash under Furthermore, it needs to be mentioned thatagainst (brand) promise. the proverbial mattress in anticipation of a BOND is an independent research project potential double-dip and even more rainy and therefore completely unbiased andTrust is a very complex notion to assert days to come. non-case specific. In this respect, the fol-regionally as well as trans-nationally due to lowing visual essay content is of visionaryfragmented perceptions of what we put our We live in a creative economy where design and imaginative origin. Think about it asconfidence in. Our beliefs and emotions is the only sustainable form of leadership. a ‘what-if’ solution applied to a real worlddiffer, and are considered to be conflicting This leadership should be directed to scenario.realities. promote a stronger triple bottom line (peo- ple, profit, planet), where banks will haveFor this reason, it is critical for banks to to change and ultimately shift the intersec- raTionaleattune and demonstrate commitment to tion of money and meaning through their _societal diversity to future-proof their foot- fundamental and visceral outfits by beinghold as trustworthy entities. more open, experimental and more hands When banking is no longer respectful, we on! loose interest...Banks must embrace the hybrid society’smulti-cultural dynamics and face theseismic shift in the traditional power thatonce existed between companies andcustomers.
  4. 4. aFFecTion a chair_ _ A chair is a raised surface used to sit on, commonly use for one person. Chairs often have the seat raised above floor level, supported by four legs. The chair is of extreme antiquity and simplicity, although for many thousands of years it was an article of state and dignity rather than an article or ordinary use. Extensively used as an emblem of authority in many various settings. Committees, boards and departments as such all have a ‘chairman’, and the most endowed positions are simply referred to as chairs. The chair is figurative for authority.
  5. 5. dramaTic TwisT The chair_ _ Richard Severin Fuld, Junior - Chairman & Chief Executive Offier Lehman Bros. (1994-2008) Dick Fuld is the name of the chair who was in charge of the first corporate collapse in 2008. An incident which quickly proved to be of contagious and fatal danger to the everyman.
  6. 6. release real(i)Ty_ _ The decline of one chair led to cause a domino effect which resulted in many people worldwide unexpectedly fell of their own chairs, so to speak! For the remaining part, the economic paralysis literally had us sitting on the edge of our ... seat. And street ...
  7. 7. ramiFicaTion economical wiTh The TruTh_ _ Close none had prepared for incidents of this rather inconvenient calibre. A collective panic set in and commenced global, local and personal anxiety for the future and what to become of it. In this respect, and under such disproportionate All banks are hoax! circumstances, people immediately start to look for immediate answers to their questions. Establishing a culprit was an easy taks. The cradle of money flow itself, the bank - in fact all banks!
  8. 8. consequenTly percepTion_ _ We (the banks) possess your monetary assets and do with them what we like and frankly, there is nothing you can do as an account holder. {
  9. 9. mass panic Fairbanks, alaska (usa)_ _ So, the hunt is on! Finding an appropriate bank that wouldn’t do you and your beloved any harm instantly became the quest. As money - especially your money - is a truly special and extremely personal thing, the vast majortiy of people quickly came to realise that finding fair banks is a place in Alaska ... quite literally.
  10. 10. whaT is Fair? Faired banking_ _ ... except from those self annonced banks claiming to be fair. There is a few of them around, who’s concentrated message has been communi- cated through their tagline BC (before crisis) and AC (after crisis). However, claiming to behave in a fair manner, you may start to ask yourself: what is fair?
  11. 11. boTTom line diy_ _ On the people side of things, the reaction to this mass anxiety attack translated itself into a high- b nk ly fragmented behaviour of doing and handling things in different and alternative ways. With one common objective though: to be more independent and free from banking the way we have been familiar with for so long. The total sum of sums became a total loss of trust towards financial institutions in general and banks in particular - no matter what they claim.
  12. 12. Fyi main quesTion_ _ How can banks re-establish trust through design??
  13. 13. The bank back in The day_ _concepTual pedigree_ Back in the day, banking and management of Hammurabi is best known for the promulgation wealth and finance was dancing to another tune. of a new code of Babylonic law: Equally important and desired. Wealth at its Codex Hammurabi (1790 BC (Before Christ)). best came in conveniently practical and com- pressed from of e.g. gold, which brought at least A notable effort is made in the Codex to better one rather obvious disadavantage along: if not the position of the debtor and to protect him well hidden, it is easily stolen! against the cruelty of his creditor. Yet it assumes that the debtor is criminally liable, even though In early civilisations, temples were regarded the a criminal intent is absent, and that he could be safest refuge of all: a firm and stable building, seized and punished for falling to meet his obli- constantly attended, with a sacred character, gations. which itself discouraged thieves and hudlooms. Treating money-lending as perfectly legal, the However, this idle use of safe-kept valuables be- Codex specifies the interest rates in some cas- came apparent when the trading communities es. Sibtu, a word meaning ‘growth’, stands both were desparate. In Babylon, under rule of Ham- for interest and profit which was largely treated murabi, there are records of loans made by the equivalently. priests of the temple. The concept of banking was born. No coined money was known in the Babylonic Empire. Loans were made in weights of silver, Hammurabi was the first dynasty king of the barley , wheat, sesame other popular cereals. city state of Babylon (present day Iraq).
  14. 14. hammurabi codex changing The changers_ _ (90) “IF A TRADER HAS LENT SILVER AT (117) IF A MAN CONTRACTS A DEBT AND INTEREST, THEN FOR EACH SHEKEL OF GIVES HIS SON, DAUGHTER OR WIFE SILVER HE SHALL TAKE A SIXTH PART OF “FOR SILVER OR FOR LABOUR,” THEY A SHEKEL PLUS SIX GRAINS OF INTEREST. MUST WORK ThREE YEARS AND THEN BE FREE. BUT IF SUCH PERSON GI- Further down the line, following to Jesus’ suc- cessful effort in ejecting, the back then so-called, VEN OVER TO A CREDITOR BE A SLA- ‘money changers’ out of the church and temples, the church also officially prohibited usury (the (92) “IF A TRADER HAS LENT BARLEY OR VE, THEN THERE IS NO FURTHER CLAIM practice of lending money at unreasonably high SILVER AND HAS DELIVERED TEH SIL- ON HIS RELEASE, ACCORDING TO TO rates of interest), which re-affirmed the view that it was a sin of biblical proportions to charge interest. VER IN LIGHT WEIGHT OR THE CORN IN THE NEXT SECTION OF THE CODE. This forced the financiers to take there business LIGHT MEASURE; OR IF WHEN HE COL- and activity elsewhere. Going from the epiphany LECTS THE DEBT HE TAKES THE SILVER of safety - the temple - money changers installed themselves in the market among other mortal OVERWEIGHT OR THE CORN OVER-MEA- (152) A DEBT IS INCURRED BOTH businesses and trades. SURE; THEN THAT TRADER SHALL LOSE BY A MAN AND HIS WIFE, UNLESS THE WHOLE AMOUNT THAT HE HAS LENT” SHE STIPULATES, BEFORE HER MAR- RIAGE, THAT HER HUSBOND SHALL NOT “ASSIGN HER TO A CREDITOR”
  15. 15. Fiduciary conTroversy consecraTion_ _ In God we trust All others pay cash * 1) n. Latin meaning ‘trust’. Refers to a business or person who may act for another with total trust, good faith, and honesty who has the complete con- fidence and trust of that person. 2) adj. A relationship or situation where someone acts as a fiduciary for another Controversial since we started counting the days. Interessentingly enough, the super complexion of the temple and the bank is still present in the Fiduciary* controversy has been around since day iconography of banks. one in dealing, trading and safekeeping value. Perhaps the most widespread and recognised rep- An evolution that up until today’s times include resentation for a bank remains the temple shape. changes of commodities from squirrel skins and precious metals to digitalised information.
  16. 16. Temple oF boom, doom & gloom bench-warming_ _ Coming back to where it all started - somewhere conveniently located in the furniture department. The etymology of banks are most accurately close to being a desk, which make sense in respect of being in the area of the bank and business environment as we know it today, namely as a piece of furniture with a writing/working surface. The bench however may have the same function, though it implies a different way and approach to dealing with the presumably same business and users. We know the bench as a long seat for more than one person. A kind of a collective chair you want ... Now ask yourself: does form follow function or vice versa?
  17. 17. The shape originally known as bank banking anno domini 2010_ _ quo vadis? _
  18. 18. 2day wiTh Few excepTions_ _ Ever since 2008 when the economy took a world- Users’ essential need of banking also remain un- wide sucker punch, a lot a things yet remain un- changed. Businesses and individuals need servic- changed. es and accounts which enable them make transac- tions and hold cash - safely, of course. Most banks that were active in business back then still are. And the fundamentals and raison d’être Customers need the ability to access credit if and- of banking remains more or less untouched. when needed, from humongous corporate loans to microcredit installments for enabling invest- Banks’ ‘centre ground’ is simillar to back in the ment and economic progress. Customers also temple days: to provide safety, security and refu- need to protect themselves against a broad variety gee for the savings of businesses as well as individ- of risks, consequences and ramifications on per- uals. Banks support productive human endeavour sonal as on business level. Wealth creation and and economic growth by effectively and efficiently savings vehicles are therefore required for invest- distribute and allocate funds. Furthermore, banks ments of customers’ beholdings, to which interval aim to align and bridge divergent maturity needs advice and financial temperatures are appropri- of short-term depositors and long-term borrow- ate to keep up-to-date. ers such that what goes in and out corresponds. Lastly, the very core organisational capabilities Should the worldwide credit paralysis have prov- on which banks rely in pursuing their customers en anything, an educated guess is the continuing needs and requirements are statically remaining and fundamental value of mentioned services to the same. society at large.
  19. 19. banks anno 2010 more in one_ _ UNIVERSAL Todays banks are ‘universal diversified groups’ As a financial business conglomerate it is pre- categorised as financial companies and engaged sumably more managable to cut-through the in an extensive variety of service and product markets, and to reach customer better if through activities. use of a single name. A monolithic brand name offers a broad vari- dive rsif ied Serving both corporations, institutions, private ety of services and products horizontally related individuals and companies with insurance and conventional banking. mortgage brokerage over to corporate finance A kind of financial mega mixing. gop r us and wealth management, the predominant part As an explicit part of the dubbing ‘universal of the big banks are plutocratically organised diversified groups’, we are talking mastodonic under a monolithic single brand name. sizes that consist of lots of companies, people, products and services.
  20. 20. oFFerings horizonTal and verTical inTegraTion_ _ ts ns n ns inG ou oa oa ds nk cc l 1) l ar ba ce ta Ge al G G s it c tin an kin ion Ga te en on G The services and products on offer from banks are ur vin iva es rt rr an ed ns rs inv ins mo cr cu sa Pr eb Pe Pe great examples of innovation in economic and fi- nancial modellling. If we take a look at an average offering to individuals with personal finance bank accounts, the general supply is extensive. 1) The horizontally integrated bank may be diver- sified in product and service offering, but is hori- zontal in it’s mixed offerings as everything sup- loans plied is from A-Z in finance. accounts insurance 2) Secondly, an illustative example of vertical of- fering is depicted in order to give an idea of what savinGs e.g. hyper markets are currently domiciling. credit cards A godzillary grouping of offerings and services. t en n ics nm tio inG ies s on inG tai ibu om inG 2) en r Gy l r ce th e ter ct ec tr rd nk av er o o ele tel dis ba Ga Gr en en tr cl
  21. 21. holders accounT holder & shareholder_ _ The most important ones are the ones that make the whole menagerie possible, namely the finan- cial backers! The financial backers behind the banks’ business is in layman terms consisting of two non-related parties: Account holders and Shareholders. These two bodies represent the outright owner- ship of the bank. The Shareholder because they have invested in a direct stake of the venture and is awarded full- figured dividends. Account holder Shareholder The Account holder has put his or hers money at stake as capital for the bank to administrate and is awarded pennies.
  22. 22. The Three c’s proTecT, collecT, wasTe_ _ Users of aforementioned personal finance pro- bank on a general (almost mandatory) basis. ducts and services can be split even further into The customer uses the bank as a means of admi- three different subcategories: nistration and therefore the take-away profitable is in terms of interests only. ‘Customer’ comes 1) from the being a collector of customs. Clients, Customers and Consumers. 3) The onsumer. 1) The lient. Is someone who buy products and services for Is someone who uses the bank as a brokerage personal use. A consumer usually makes the de- and usually requires a more proffessional rese- cision whether or not to purchase an item at the arch and advice. As it is more business related bank, and is also someone who is easily influen- (bigger money), the client usually make a good ced by marketing. The consumer is a spender earning dealing with the bank, and vice versa. and doesn’t leave the bank any richer than upon 2) entering. The predominant part of people are The original meaning of ‘client’ means seeking consumers with the common trait of spending protection or influence of someone powerful. more than the saving! 2) The ustomer. Is the most common and someone who The origninally meaning of the word ‘consumer’ purchases products or services produced by the means one who squanders or wastes 3)
  23. 23. money making inFormaTion is power_ _ Besides from selling to- and servicing account holders, banks are in business to make a a bang out of your buck. But how do they actually do that? Well, banks’ core business is the concept of what is known as ‘asymmetric value information’. Assymetric value information is simply put: the value of knowing more than someone else. Handling money as a means of information, ban- ks can manage the money logistics between A, B and C. Who has what, and who needs what is the rudi- mentary basics of making-money-with-money!
  24. 24. biz model a bipolariTy!_ _ A bank is an entity that ensures people against uncertainty for cash - pretty much similar to a car insurer not knowing whether your car is broken when selling you an insurance! Fundamentally, a bank consists of two rather oxymoronic sides: 1) The Asset Side. Where the bank act as a delegated monitor, whos job it is to bridge the information gap between potential lenders and borrowers. 2) The Liability Side. This side deals with the collection of deposits and the impossibility of being able to pay account holders their money back - if asked for simultane- ously.
  25. 25. FracTional reserve banking musical chairs_ _ Put it this way: if a bank wouldn’t be vulnerable to a run - it wouldn’t be a bank! This is the evidence for the reason behind the fact that a bank will always be impossible to repay cus- tomers back if everybody asked for their money at the same time. Because banks only keep a fraction of their depo- sits in reserve and lend out the remainder, while maintaining the simutaneous obligation to rede- em all the deposits upon demand. This is called fractional reserve banking and is metaphorically similar to a game of musical chairs! As long as the music is playing everybody is happy...
  26. 26. more is more Think_ _ All coming together, the essential platform of banking is built upon the multiplier effect, which is the information load coming together with the fractional reserve concept. Banks have a significant greater flux, compared to influx, of money!
  27. 27. why people bank saFeTy in numbers_ _ Banks are the heart of the economy. They pump the financial resources on which productive human enterprise depends. Rationally, there is no trust in any bank per se! 5 473 4 Distrust is important and rational. Because it is important to understand that people don’t trust something they don’t know or understand - e.g. people don’t trust black boxes. Nor should you vice versa distrust because other 1 distrust. Safety in numbers is the applicable phenomenon here is the notion that being part of a large group or mass, an individual is proportionally less likely to be victim of mishaps. Just like a shoal of fish! That is unless you are a white collar 45-year-old, who are the typical holder of uninsured money (+CHF100,000)
  28. 28. banks and markeTs banking beasTs_ _ Banks identify markets and trends using technical analysis based on frameworks, which characterises market trends as price response of Bullish the market at levels of price support and price resistance varying over time. A bull market is asscociated with increasing inves- tor confidence, and increased investment in an- ticipation of future capital gains. A bullish trend $ in the market often commence before the general economy shows clear signs of recovery. A win-win situation for investors. bAnk A bear market is a general decline in the stock market over a period of time. It is a transition from high investor optimism to widespread in- vestor fear and pessimism. Typically, banks are pro-cyclical but aim for - and communicate - a somewhat more conservative Bearish profile.