What’s troubling our banks? It’s not a lack of creativity, it’s Stockholm Syndrome

Abhi Agrawal
3 min readSep 13, 2016


I attended Finovate last week and was amazed. There are so many interesting innovations being deployed in our industry:

Throughout the presentations, I kept thinking about @BrettKing’s article: The Death of Bank Products has Been Greatly Under-exaggerated. The TL;DR version:

“The future of product design isn’t products at all, it’s experiences”.

Two questions repeatedly came up:

  • Why are these experiences being delivered by the startups above, and not by established banks?
  • Why do “outsiders” continue to develop new approaches when insiders have data and relationship advantages with their customers?

I think the answer is simple: insiders have worked with older, complicated systems for so long that it’s hard to imagine a life free from constraints. That becomes a needless distraction from the job at hand.

In other words, perhaps it’s not that Fintech’s are more visionary than employees of XYZ Big Bank; it’s simply that XYZ’s employees are just in love with their constraints.

It’s almost like we have the banking version of Stockholm Syndrome.

A Brief (!) Overview of Stockholm Syndrome

Stockholm Syndrome is a term created by a Swedish psychiatrist in the 1970s to describe a psychological phenomena where hostages would develop sympathetic feelings toward their captors. If you’ve ever seen the film Dog Day Afternoon, then you remember the attitude of the hostages toward Pacino over the course of the movie. That’s Stockholm Syndrome.

From Wiki:

Several symptoms of Stockholm Syndrome have been identified: positive feelings toward the controller, negative feelings toward the rescuers…

If you replace the words “controller” with “old systems” and “rescuers” with “new technologies”, doesn’t it sound familiar?

The Impact and the Answer

Bad analogies aside, the impact of this phenomenon in our industry is obvious: products are designed to replace existing systems and processes, rather than reinventing the experience overall.

  • SoFi (among others) reinvents the lending market while traditional lenders cling to FICO scores and traditional origination channels.
  • Mint (among others) brings data aggregation and PFM to the masses while traditional banks figure out how to cobble together a consolidated, internal view across multiple systems.
  • Credit Karma (among others) empowers customers to own their credit history while traditional institutions continue to charge a fee to access the very same data.

Colleagues at several different institutions have mentioned to me that it feels that we design products for ourselves, or that we design experiences that make operational sense for us, rather than for our customers. This is a direct result of the blinders & constraints we have embraced at all levels of the organization.

But all hope is not lost. To overcome this love-affair between our constraints and our employees, we must pursue a variety of strategies:

  • Ambidextrous organization design — This approach describes a team that is separated (physically, culturally, and structurally) from the traditional teams within the organization. This gives the new team freedom from delivering everyday goals that might cloud their ability to dream up new realities.
  • Organizational Detox — Similar to the above, leaders need to allow existing members of the org who work on these new projects to wash away the residue of the constraints they faced in their jobs. It’s easy to ask for an open mind, but our actions need to back up our words.
  • Delaying the marriage of experience and business case — too often, a new experience is created internally only to be shot down because it is too expensive, or has no hope of customer acquisition, or only works for a part of the customer base, etc. We need to defer judgment long enough for the experience to be tested. As disruptive as these changes are to our customers, they may be even more disruptive to our organizations.


As I’ve written before, traditional banks are being forced with a mutually exclusive decision: do we focus on the relationship, or do we focus on operations? Those are the two, mutually exclusive, options that each bank must choose between.

In either case, leaders need to figure out how to create the freedom to dream up experiences that change the industry from the inside out, rather than outside in.