Why Satya Nadella Should Be the Next CEO of JPMorgan Chase

by Ben Gaddis

Big banks are bracing for the pandemic fallout. JPMorgan Chase set aside $10.5 billion to cover potential losses due to anticipated loan defaults. Citigroup and Wells Fargo are preparing for equally grim loan losses. And there is a growing fear that this could lead to anything from a recession to a full-scale industry collapse.

While there’s no doubt that the current and developing economic situation will put many consumers — and the banks that fuel them — into dire straits, the banks are focused on the wrong thing: the banking industry is largely reliant on an old, outdated constant (that we need it to hold our money), and I believe they are ripe for a reckoning. The only viable way forward goes beyond setting aside profits and hoping for the best. It demands a radical, irrational approach that rethinks the very nature and function of the industry. 

I believe that starts at the top: JPMorgan should consider hiring Satya Nadella as its new CEO (with apologies to Jamie Dimon!).


A tech CEO is uniquely equipped to lead the bank of the future, particularly at this moment in time. 

Nadella took Microsoft from a business centered on Windows and Office, to a thriving cloud and services company, and in so doing, he shifted the organization toward the customer and away from their core product. Microsoft is now competitive against digital behemoths like Amazon and is opening new areas of competition, like gaming. That shift is one of the most underrated and under-reported transformations in modern business history. 

Nadella is a computer scientist, and while it may seem logical that a developer would lead a tech company, what about a bank? Seems irrational, right? Not anymore. The next CEOs of banks like JPMorgan Chase will need comparable skills. 

New Game, New Rules

As with every industry, banking has evolved radically in recent years. The game has changed: it’s no longer about how money is stored, but how and where it moves. And yet, big banks continue to play the old finance game with consumers. They’re not incentivized to educate consumers on their finances or coach them into new and better ways of saving or spending it. But they’re REALLY good at holding cash. 

And that’s the problem. They’re using an old school business model that’s become outdated. Dating back as far as 2000 BC, banks performed a similar function that they do now: guarding money. But back then, there was physical currency in legitimate need of protection. Most people were unable to sufficiently act as bodyguards for their piles of coins, so they deposited it into local banks, where they could retrieve it in bits and pieces. And in the meantime, the banks had the luxury of lending out that money (with interest) to other people. Pretty slick. 

While you may occasionally still need a loan, it’s unlikely you’re struggling with what to do with bags of money. We no longer see or touch most of our money; instead, we digitally move it around. Yet banks still operate as if there’s value in cash sentries — a false constant — thereby securing their role as high-priced lenders. 

When you remove that constant, we’re left questioning not only how we define a “bank,” but also who is the best watchdog for our money?

FinTech: Building the Bank of the Future

Alibaba, the Amazon of China, understands that traditional banking’s presumed constant (that we need someone to hold and protect our money) is an outdated model. The future of money is about moving it, not holding it. So with Alipay, the Alibaba mobile wallet, people deposit money with the intention of spending it on Alibaba — and they smartly make it very easy for you to spend that money. Alipay has over 1.2 billion active users worldwide, and on “Singles’ Day,” the Chinese equivalent of Black Friday, they processed $38.4 billion in sales in 2019. 

Companies like Alipay understand that consumers are less interested in money bouncers and more focused on what their money can do for them. Traditional banking, by contrast, erroneously assumes we need and want a middleman. Since they make their money on lending, modern banks actually need us more than we need them. And it’s this over-reliance on an outdated false constant that has allowed creative destruction to descend upon the financial services sector, with Alipay, PayPal, Square, Stripe, and Venmo all setting their sights on gobbling market share from traditional banking — long before the pandemic hit. 

The big incumbents, however, have resisted change until the last possible moment. They dabble in innovation with products like Zelle, which is essentially just a less popular version of peer-to-peer payment platforms like PayPal or Venmo (plus, part of PayPal’s success is a result of their monetization via integration on retailer sites — something Zelle currently lacks). Big banking’s value proposition is further disrupted by blockchain: Its secure distributed ledger replaces the need for banks, and like Alipay, it’s more interested in where the money is going, than where it is stored. 

Look no further than NBCUniversal’s investment in Acorns, the personal finance management app, for yet another example of external, digital disruption. Now the largest investors in the company, NBCUniversal plans to pair CNBC and Acorns to create content on financial literacy, thereby also expanding its demographic reach to younger customers.

Aligning Leadership Competencies with Banking’s Revised Value Propositions

The future of money and banking is technology — not the technology itself, per say, but what that tech enables money (and those who have it) to do. From blockchain to mobile payments to financial education, technology is reframing the way we think about money, and it’s at the core of the finance sector’s disruption. 

Which begs the question: What is the core competency required to lead a financial services company now and in the future? 

Sure, financial fluency is important, but investment banking was not Jack Dorsey’s expertise when he launched Square, nor was it the distinguishing skillset of the PayPal Mafia. Rather, the necessary core competency is a startup-minded developer or someone fluent in technology. There’s no time for explaining technology to the senior banking leadership (lest a savvy startup with a technical co-founder will bolt ahead). 

So what’s a big bank to do?

Banks must embrace change now. It’s time to blow up their constants and move away from deposits (and therefore loans) as their primary business driver. Here’s how:

  1. Change the profit model. Banks continue to over-rely on their old deposit-focused business model. To keep up, they’ll need to stop relying on every innovation being a derivation of something tied to deposits, all while maintaining stock price and shareholder confidence. Nadella did this for Microsoft, and the same will be asked of big banks. 
  2. Embrace technology to deliver new value to customers. This means building entirely new customer experiences, products, and services through the cloud. Nadella understood the cloud was Microsoft’s opportunity, and while all eyes were on Amazon, he moved the entire company in that direction. And it paid off.
  3. Focus on the customer needs first. Nadella realized where his customers and the market were headed and what they needed: the cloud. So he got out in front of it. Meanwhile, big banks are still focused on their old core business model — deposits — instead of paying attention to the popularity of companies like Alipay and a growing number of FinTech startups, all of which prioritize the customer. 

Banks need this exact thinking now, before it’s too late. While traditional banks might not disappear tomorrow, this slow-drip play by competitors outside the financial services sector will eventually catch up to them if they don’t move beyond their traditional leadership and out-dated constants. Someone like Satya Nadella realizes the challenges a large bank faces, and more importantly, he’s done it before. 

A tech CEO can and will transform the bank of tomorrow. Putting a tech leader like Nadella at the helm of a major bank would be the boldest move they could make — and one that I believe would double their stock price. 

JPMorgan: Your move.

Ben Gaddis

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