Carol Realini: When business gets trapped in a bubble

Written by Carol Realini Sunday, 10 March 2013 15:24
Rate this item
(3 votes)


Carol Realini is a successful CEO, entrepreneur and board member with technology and financial services industry experience.  She is a globally recognized technology innovator and has successfully led companies through initial public offerings, as well as into acquisitions.  She is driven by a passion to improve people’s lives through technology.


Carol has extensive experience in financial services (mobile, payments) and technology (mobile, smart phone applications, payments and banking, enterprise software, distributed computing) and has worked extensively in India and Africa on mobile money.


This extract is from Carol's book BankRUPT.


In many ways, New York today is like Detroit in the 1970s and 1980s.


My husband is from Chicago and I am a long time Californian.


My mother owned a VW bug and I think she actually bought the first Toyota Corona to be imported from Japan (funnily enough, we bought it from the American Motors dealership in San Francisco). So for a decade after California embraced small imported cars, people in the Midwest continued to buy big American cars. This was especially true in that consummate company town, Detroit, where so many people worked for one of the Big Three car companies, and were either given a company car or were provided a generous employee discount to buy one.


When everyone working at Ford drives a Ford, it is not surprising that myopia sets in. While Toyota’s cars were gaining acceptance with American consumers, it is likely that most autoworkers and executives in Detroit had never seen one up close, much less driven one.

Besides, the Midwest can be slower to adopt new trends than California. No offense is meant by that – the flip side is that the Midwest avoids being plagued by many of the mindless fads that sweep over California like swarms of locusts.


New York is one of the great cities of the world, with unmatched culture and vibrancy. But due to the concentration of money and power within one industry, New York is a company town. It’s a banking bubble. There are global banks headquartered on every corner, it’s got the highest ATM density in the world, lots of highly paid people are employed by banks, and there are generous perks for bank employees.


How many banks call Manhattan home?


According to the Federal Reserve, these are the ten largest banks with headquarters in New York City, ranked according to assets. Seven of these banks are among the top ten banks in the United States, which demonstrates just how much New York City is the financial capital of the United States and one of the leading financial centers in the world. The ten largest banks headquartered in New York are:

  1. JPMorgan Chase
  2. Citigroup
  3. Goldman Sachs
  4. Morgan Stanley
  5. MetLife
  6. Taunus Corporation
  7. HSBC
  8. Bank of New York Mellon
  9. American Express Company
  10. Utrecht-America Holdings

The three banks not in the national top ten that are headquartered elsewhere are Bank of America (Charlotte, NC), Wells Fargo (San Francisco, CA), and Barclays Group (Wilmington, DE).


The story of Swiss banking giant UBS demonstrates the enduring power of New York City as a financial center. In 1995, the city’s reputation as the global banking hub was called into question when UBS moved its North American headquarters to Stamford, Connecticut, where it had built the largest trading floor in the world. UBS quickly found that it had an unexpected problem: the firm had difficulty attracting qualified people who were willing to work in a town located only thirty-five miles northeast of Wall Street. The best and brightest young bankers wanted to live in Manhattan or Brooklyn, not in Stamford. The firm has also discovered that – even in this age of instant communication – it needs to be physically closer to major clients in the city.


As a result, in 2011 UBS is seriously considering bringing its investment banking division and up to two thousand bankers and traders back to Wall Street, and occupy a new skyscraper at the rebuilt World Trade Center.


Everyone loves New York, and it’s all good – but it leaves the bank employees with the impression that their banks are doing a dandy job of serving the average American. They are not.


These people need to go to Main Street USA and talk to people about their lives and their relationship with their bank.


Consider this story from Rifle, Colorado, a semi-rural town west of Grand Junction. A local upper-income farmer and long-time customer of Wells Fargo was one of the more fortunate residents of Rifle, because he was doing pretty well even in the Great Recession. But this farmer quickly became exasperated when Wells Fargo implemented their new “marketing programs.”  Suddenly, every time he went into the branch to do business they repeatedly asked him if he wanted a new credit card, CD, or home mortgage. Every teller – even at the drive-through – was required to deliver a canned pitch for new business. The farmer became fed up because the service was declining; the bank was losing the personalized, call-you-by-name service he had enjoyed in his home branch; and employees were relentlessly pitching new business in an annoying way every time he came to the bank.


One day he asked a teller point-blank what was going on, and the teller confessed that the hard-sell spiels were a new bank policy that every teller had to comply with.

He was fed up, and after being a customer for fifteen years he left the bank. He felt, like so many others, that there is not only a decline in personalized service, but the bank no longer cared about his financial prosperity. The bank cared only about its own prosperity.


Unfortunately for Wells Fargo, he is not the only farmer in Rifle to have left the bank after many years.


This decline is not restricted to Occupy Wall Street, which is especially vocal about their dislike of big banks. It is Main Street America that is fed up. The bank employees living and working in New York just can’t see it easily.


Add comment