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Jo Ann Barefoot explores how to create fair and inclusive consumer financial services through innovative ideas for industry and regulators

Game of Regulatory Thrones


Game of Regulatory Thrones

Jo Ann Barefoot


Like all Game of Thrones fans, I’m still reeling from last week’s season finale. Unlike most, though, I’m also thinking about banking (and I don’t mean the Iron Bank).

A few days before the last episode, I had spoken on innovation and regulation at CFSI’s Emerge conference in Austin. Answering an audience question, I suggested the financial regulators consider creating an interagency council on how technology innovation will impact their work. My remark sparked a Twitter exchange with CFSI’s Rob Levy about whether such an approach would be practical, given that the regulators kind of have their hands full.

Rob seemed to me to be a likely GoT fan, so I tweeted a message to him – “winter is coming.”

Turns out, he’s mainly into House of Cards.  But that thread got me thinking further about the challenge the agencies face in regulating innovation with sufficient speed, clarity, and consistency, while filtering out the bad from the good.

If you’re not into the GoT phenomenon, the first thing to know is that Game of Thrones is not (as I embarrassingly once thought) a game. Rather, it’s HBO’s wildly popular series based on the Song of Ice and Fire books by George R.R. Martin. Its story is set in a magical past where seven powerful families rule kingdoms within a far-flung empire and vie to dominate it all by winning the central Iron Throne.

This drama is profoundly engrossing. So engrossing that both the characters and the audience constantly forget that something else is happening. A far greater menace is gathering, one that seems likely to obliterate all these warring parties, together. A supposedly extinct race of superhuman beings called Wight Walkers has reawakened in the north, beyond a high ice wall that has been guarded against their possible return for thousands of years.

From the series’ very first scene, the audience knows this risk is rising. All of the audience and some of the characters are reminded of it intermittently throughout the story. A few prescient characters fully understand it and in fact are playing the game specifically to unite a kingdom that can fight back. 

For most, though, this overarching danger is unnoticed. Many scoff at warnings, thinking the problem doesn’t even exist. The rest figure that, at worst, it’s remote – distant in both space and time. Everyone has urgent priorities -- here, now, absorbing all their attention.

Of all the kingdoms inside the wall, only the northernmost – the one closest to the ancient danger -- has retained some cultural alertness to it.  For centuries, they have cautioned each other with the words, “winter is coming.”

Game of Thrones is obviously an imperfect metaphor for our regulatory system. Our financial agencies rarely fight, much less seek to rule each other. And they of course do see and work with the big changes evolving in technology.

Furthermore, tech innovation is not a menacing force. To the contrary, it is bringing massively positive impacts as well as new risks.

Still, though, I think this metaphor merits thought. I have become convinced that technology disruption is the most important issue now facing the financial system, and the financial consumer. I think the regulators will have to move it toward the center of their agendas – despite still being overloaded with post-crisis work -- rather than mainly viewing it as a component of other topics.

And I hope they will do this together, because these changes are coming fast, in huge and converging technology trends that will sweep around them all – all the agencies, all types and sizes of financial providers, and all financial consumers, bringing change that needs unified collaboration and thought.

Do you agree?  Disagree? Please share your ideas!

And if you’re a GoT fan, feel free to tie your comment to the story. I’m always hoping to spark more dialogue on my website so our readers can benefit from each other’s thinking (I receive lots of input, but most of it comes privately just to me). In writing this post, I fleetingly considered inviting readers to suggest which GoT characters remind them most of real figures in our financial and regulatory community. I abandoned the idea, of course, as images came to my head of nominations for real-life counterparts for, say, Ramsey Bolton, or  Joffrey Baratheon.  We want to have fun and some edge here, but we don’t want to be mean!

Within that guideline, if you think GoT offers parallels and lessons for financial innovation and regulation, please post them!

To get you started (and to prove I’m not the only person pondering GoT and banking together), enjoy this thoughtful Forbes article by contributor Adam Ozimek on why Westeros lacks a central bank…and whether the Night’s Watch could help (Sam as the next Fed chair?).

Maybe actually spring is coming, if we prepare.