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How does smoking marijuana affect academic performance? Two researchers explain how it can alter more than just moods

In their quest to feel high and relax, college students who use marijuana may be setting themselves back, research consistently shows.

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Marijuana use among college students during the pandemic reached record highs, data show. wildpixel via Getty Images

In a trend that coincided with the pandemic, marijuana use among college students in 2020 reached levels not seen since the 1980s. That’s according to the latest research from Monitoring the Future – an annual survey that looks at drug and alcohol use among the nation’s young people. Below, Jason R. Kilmer and Christine M. Lee – both University of Washington researchers who study marijuana use among college students – explain some of the reasons behind the trend, and some of its consequences.

Why is marijuana so popular among college students as of late?

Research has consistently shown that people report using marijuana in order to feel the high, experience enhanced feelings, increase social connections or cope with certain feelings and moods.

Among young adults early in the pandemic, there were modest reductions in motivations for using marijuana for celebratory reasons and slight increases toward using marijuana because of boredom, possibly due to initial physical distancing mandates and stay-at-home orders. However, among the main reasons for using, both before the pandemic and during as well, are feelings of enjoyment or the high associated with marijuana use.

We do not yet know the impact of these shifting motivations for using marijuana or whether patterns seen during the pandemic will continue after.

How many college students are actually using cannabis?

With 18 states legalizing cannabis for non-medical or “recreational” purposes – the first of which did so in 2012 – access to marijuana has increased, especially for college students over 21 years of age. While the past three reports from Monitoring the Future – a national drug use survey conducted annually by the University of Michigan – have shown that between 43% and 44% of college students report any cannabis use in the past year, over half of college students do not report use. This is important to note because research has shown that when people think “everyone” is doing something, they are more likely to start doing it themselves or do it more.

Different from any use in the past year, researchers often look at past month use as an indicator of current use. Given that about 25% of college students report use in the past month, this suggests that three-quarters of students do not report past month use, and not using marijuana is actually the most common behavior.

How does smoking weed affect academic performance?

As researchers who work with college students, we hear students say things like marijuana is “safe,” “natural” or that it’s “just weed,” but research tells a very different story about potential risks. This is particularly true with the high potency cannabis that dominates markets in legal and medical states.

Published research consistently shows that the more frequently a college student uses cannabis, the lower their GPA tends to be, the more they report skipping class and the longer it takes them to graduate.

Probably the most direct impact to academic performance is a relationship between marijuana use and impaired attention and memory. This relationship has been documented for years, including with college students.

The good news is that studies that follow people as they abstain show that when marijuana use stops, cognitive performance improves, though it can take 28 days of abstinence. So much of this depends on how often someone uses and the type or potency of marijuana they are using. But whatever the case, it certainly seems that the more frequently people use, the more likely they are to experience challenges with attention, memory and other cognitive abilities.

In an August 2021 article about recommended guidelines for lower-risk cannabis use, the authors concluded that people who use cannabis and experience impaired cognitive performance should think about taking a break or significantly reducing how much they use, or the potency of what they use.

Are there any academic or educational benefits?

In our conversations with college students, we hear some students who typically use marijuana say that when they don’t use, they can’t sit still, or they feel restless and anxious. These students might assume that marijuana use is “helping” them.

Unfortunately, the anxiety and restlessness they experience when not using marijuana can be symptoms of withdrawal. Those things could also be indicative of addiction to cannabis, or what is called a cannabis use disorder. This might mean when students continue to use marijuana, they might feel a sense of less anxiety or restlessness, but are actually making withdrawal symptoms stop by resuming use.

We are not aware of any studies that point to academic or educational benefits of using marijuana.

Are we forgetting anything?

Science has to play catch-up on the cannabis products being sold today. Among the many cannabinoids in cannabis, THC, the psychoactive component typically associated with the “high” from marijuana, is arguably the most well studied. In the U.S., THC concentrations in the 1970s on average were under 2%, reached 3% in the 1980s, were 4% by the mid-1990s and steadily climbed to almost 15% by 2018.

Today, especially in legal markets, we are seeing even higher concentrations. For example, in Washington state, flower products – that is, marijuana that is smoked – commonly exceed 20% THC. Concentrates, which include dabs, hash oil and other products, routinely exceed 60% THC.

“High potency” cannabis is considered to be anything over 10% THC. Use of high potency cannabis is associated with a number of outcomes, including greater risk of cannabis use disorder and adverse mental health outcomes.

[You’re smart and curious about the world. So are The Conversation’s authors and editors. You can read us daily by subscribing to our newsletter.]

Young people seem to be particularly vulnerable. Although we sometimes hear from people that marijuana use doesn’t seem that risky, recent studies make clear that cannabis use may increase harms and risks for those who use. For college students, these issues range from having trouble concentrating and paying attention to feeling antisocial or paranoid.

Jason R. Kilmer, Ph.D. receives (and/or has received) funding from the National Institute on Drug Abuse (NIDA), the National Institute on Alcohol Abuse and Alcoholism (NIAAA), and Washington State's Health Care Authority, Division of Behavioral Health & Recovery.

Christine Lee receives (and/or received) funding from the National Institute on Alcohol Abuse and Alcoholism, the National Institute on Drug Abuse and Washington State's Health Care Authority, Division of Behavioral Health & Recovery.

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Parents were fine with sweeping school vaccination mandates five decades ago – but COVID-19 may be a different story

Public health experts know that schools are likely sites for the spread of disease, and laws tying school attendance to vaccination go back to the 1800s.

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Children and parents lined up for polio vaccines outside a Syracuse, New York school in 1961. AP Photo

The ongoing battles over COVID-19 vaccination in the U.S. are likely to get more heated when the Food and Drug Administration authorizes emergency use of a vaccine for children ages 5 to 11, expected later this fall.

California has announced it will require the vaccine for elementary school attendance once it receives full FDA approval after emergency use authorization, and other states may follow suit. COVID-19 vaccination mandates in workplaces and colleges have sparked controversy, and the possibility that a mandate might extend to younger children is even more contentious.

Kids are already required to get a host of other vaccines to attend school. School vaccination mandates have been around since the 19th century, and they became a fixture in all 50 states in the 1970s. Vaccine requirements are among the most effective means of controlling infectious diseases, but they’re currently under attack by small but vocal minorities of parents who consider them unacceptable intrusions on parental rights.

As a public health historian who studies the evolution of vaccination policies, I see stark differences between the current debates over COVID-19 vaccination and the public response to previous mandates.

Compulsory vaccination in the past

The first legal requirements for vaccination date to the early 1800s, when gruesome and deadly diseases routinely terrorized communities. A loose patchwork of local and state laws were enacted to stop epidemics of smallpox, the era’s only vaccine-preventable disease.

Vaccine mandates initially applied to the general population. But in the 1850s, as universal public education became more common, people recognized that schoolhouses were likely sites for the spread of disease. Some states and localities began enacting laws tying school attendance to vaccination. The smallpox vaccine was crude by today’s standards, and concerns about its safety led to numerous lawsuits over mandates.

The U.S. Supreme Court upheld compulsory vaccination in two decisions. The first, in 1905, affirmed that mandates are constitutional. The second, in 1922, specifically upheld school-based requirements. In spite of these rulings, many states lacked a smallpox vaccination law, and some states that did have one failed to enforce it consistently. Few states updated their laws as new vaccines became available.

School vaccination laws underwent a major overhaul beginning in the 1960s, when health officials grew frustrated that outbreaks of measles were continuing to occur in schools even though a safe and effective vaccine had recently been licensed.

Many parents mistakenly believed that measles was an annoying but mild disease from which most kids quickly recovered. In fact, it often caused serious complications, including potentially fatal pneumonia and swelling of the brain.

With encouragement from the Centers for Disease Control and Prevention, all states updated old laws or enacted new ones, which generally covered all seven childhood vaccines that had been developed by that time: diphtheria, pertussis, tetanus, polio, measles, mumps and rubella. In 1968, just half the states had school vaccination requirements; by 1981, all states did.

Smiling boy rolls up his sleeve to get a shot from a nurse
Sometimes, students even received vaccinations from nurses at school. NIH U.S. National Library of Medicine, CC BY-ND

Expanding requirements, mid-20th century

What is most surprising about this major expansion of vaccination mandates is how little controversy it provoked.

The laws did draw scattered court challenges, usually over the question of exemptions – which children, if any, should be allowed to opt out. These lawsuits were often brought by chiropractors and other adherents of alternative medicine. In most instances, courts turned away these challenges.

There was scant public protest. In contrast to today’s vocal and well-networked anti-vaccination activists, organized resistance to vaccination remained on the fringes in the 1970s, the period when these school vaccine mandates were largely passed. Unlike today, when fraudulent theories of vaccine-related harm – such as the discredited notion that vaccines cause autism – circulate endlessly on social media, public discussion of the alleged or actual risks of vaccines was largely absent.

Through most of the 20th century, parents were less likely to question pediatricians’ recommendations than they are today. In contrast to the empowered “patient/consumer” of today, an attitude of “doctor knows best” prevailed. All these factors contributed to overwhelmingly positive views of vaccination, with more than 90% of parents in a 1978 poll reporting that they would vaccinate their children even if there were no law requiring them to do so.

Widespread public support for vaccination enabled the laws to be passed easily – but it took more than placing a law on the books to control disease. Vaccination rates continued to lag in the 1970s, not because of opposition, but because of complacency.

Thanks to the success of earlier vaccination programs, most parents of young children lacked firsthand experience with the suffering and death that diseases like polio or whooping cough had caused in previous eras. But public health officials recognized that those diseases were far from eradicated and would continue to threaten children unless higher rates of vaccination were reached. Vaccines were already becoming a victim of their success. The better they worked, the more people thought they were no longer needed.

In response to this lack of urgency, the CDC launched a nationwide push in 1977 to help states enforce the laws they had recently enacted. Around the country, health officials partnered with school districts to audit student records and provide on-site vaccination programs. When push came to shove, they would exclude unvaccinated children from school until they completed the necessary shots.

The lesson learned was that making a law successful requires ongoing effort and commitment – and continually reminding parents about the value of vaccines in keeping schools and entire communities healthy.

Add COVID-19 to vaccine list for school?

Five decades after school mandates became universal in the U.S., support for them remains strong overall. But misinformation spread over the internet and social media has weakened the public consensus about the value of vaccination that allowed these laws to be enacted.

adults and kids with signs protesting COVID-19 vaccines
Some anti-vaccination activists are vocal opponents of vaccine mandates for kids. Sarah Reingewirtz/MediaNews Group/Los Angeles Daily News via Getty Images

COVID-19 vaccination has become politicized in a way that is unprecedented, with sharp partisan divides over whether COVID-19 is really a threat, and whether the guidance of scientific experts can be trusted. The attention focused on COVID-19 vaccines has given new opportunities for anti-vaccination conspiracy theories to reach wide audiences.

[Over 115,000 readers rely on The Conversation’s newsletter to understand the world. Sign up today.]

Fierce opposition to COVID-19 vaccination, powered by anti-government sentiment and misguided notions of freedom, could undermine support for time-tested school requirements that have protected communities for decades. Although vaccinating school-aged children will be critical to controlling COVID-19, lawmakers will need to proceed with caution.

James Colgrove has received funding from the National Library of Medicine, the Greenwall Foundation, the Milbank Memorial Fund, and the William T. Grant Foundation.

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How Robots and A.I. are About To Change This $11 Trillion Industry Forever

TikTok’s nearly 700 million users seek medical advice from random individuals and charlatans, since anyone can claim to be a medical expert on this raging social media machine.
Dr. Google is also working overtime, receiving more than one billion…

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TikTok’s nearly 700 million users seek medical advice from random individuals and charlatans, since anyone can claim to be a medical expert on this raging social media machine.

Dr. Google is also working overtime, receiving more than one billion healthcare questions every day.

Web MD is recording over one billion searches a year, too.

When you combine this voracious hunger for digital diagnosis, symptom checkers and immediate medical assistance, with a global mobile app market whose revenues had already hit $365 billion in 2018, and are now on track to generate over $935 billion by 2023 ...

You get one of the best bets on disrupting the virtual medicine industry to date. You get Big Tech built by doctors for doctors in the Global Library of Medicine (GLM).

You get Cara, the new, sophisticated AI, powered by the unique Global Library of Medicine, that has been trained by hundreds of doctors to think just like them.


Cara will be launching at the end of November, marking the first time in our medical history that we can check our symptoms online, at the touch of a button, and truly trust what we are being told.

Over the past five years, Treatment.com (CSE: TRUE; OTC: TREIF) has been developing the world’s next-generation AI symptom checker, picking up where the billions of requests were left hanging by Google and WebMD … and certainly by TikTok.

Now, the app is about to launch as Treatment Mobile with an intelligent digital assistant, Cara, with over 400 diagnoses by a global team of hundreds of doctors who are adding more every day.

A Digital Fix for a Broken Healthcare System

An overwhelming majority of Americans find the healthcare system impossible to navigate.

Nearly three-quarters have no idea how they will afford their healthcare.

Those two facts have led to a shocking increase in at-home health solutions.

Need a healthcare big tech vendor who knows North American Healthcare

From 2019 to 2020--even before the COVID-19 outbreak--telemedicine grew by 46%.

In 2020 alone, wellness apps were downloaded 1.2 billion times.

Major investment into the telemedicine space combined with a massive increase in uptake and rapidly rising favor among consumers has seen telehealth increase 38X so far in 2021 from pre-COVID levels.

In April 2020, right at the start of the pandemic, telehealth use was 78X higher than in February 2020, according to McKinsey.

Total VC investment into the digital health space in H1 2021 was $14.7 billion. That’s more than VC investment for all of 2020, and twice the amount for 2019. That leads McKinsey to project that 2021 could see total investment in the sector hit $30 billion.

The bottom line is this: American healthcare is broken, and digital offerings are a major element of the fix. Cara steps in at exactly the right time to provide the first sophisticated AI that can help bring it all together. This is where big money is going in the healthcare sector.

The Digital Doctor Is In

Working with the University of Minnesota Medical School, Treatment.com (CSE: TRUE; OTC: TREIF) has gathered the best doctors and tech engineers that built the Global Library of Medicine (GLM) from around the world to teach Cara to do two things that no other digital health platform has been able to do successfully:

1) Think like a real doctor

2) Provide consumers with a personalized health assessment and full-on health management

Cara integrates everything by providing consumers with a bridge to wellness, telemedicine, pharma and health products ...


Cara asks you questions about your symptoms and then sorts through millions of pieces of information that include historical medical cases, demographic data and advances in medical knowledge. The end result is a more accurate recommendation than any other digital tool in the world.

Cara helps you understand what your symptom could be. It helps you monitor and track health changes and understand your general health and prevent illness. It gives you personalized support and follow-up and even allows you to track and manage your entire family.

And it can all be integrated with Apple Health Kit, Apple Watch and FitBit.

Treatment’s AI has been so effective, in fact, that the University of Minnesota Medical School licensed it to test medical students.

How Does Cara Make Money?

Treatment.com (CSE: TRUE; OTC: TREIF) plans to leverage its healthcare AI to build a multi-billion-dollar business.

The initial app will be free, but there is an impressive scalability here.

This is how the wildly lucrative world of apps works. Once the upfront costs of development and AI learning are paid for, it’s all revenue, all the time. And app revenue streams are recurring, which is exactly why the mobile app industry continues to surge.

Consumers will pay for recommendations through premium app subscriptions, and Treatment.com’s next move with Cara will be to add a series of paid plugins for everything from dermatology specialty segments, to cardiology.

Additionally, Treatment.com will seek health and wellness partners to integrate to access qualified referrals and improve efficiencies, while simultaneously reducing costs.

There are three revenue-generating avenues here: corporate licenses, health and wellness products and university medical school training.

But the biggest value here is that Cara is a goldmine of data …

Cara’s access to individualized health trends will help insurance providers and governments to provide better health services.

In healthcare, big data like this helps avoid preventable diseases by detecting them in their early stages.

The market for big data analytics in healthcare could be worth an astounding $68 billion by 2025, and Treatment.com will have a major advantage with Cara.

WebMD--a private company--is valued at $2.8 billion, and it doesn’t even have any AI to back it up.

Treatment.com, (CSE: TRUE; OTC: TREIF) which listed on the Canadian Securities Exchange on April 19th, 2021, is about to launch a healthcare app that could completely change the way we view and access healthcare.

Global Medical and AI Expertise

Founded by John Fraser and Dr. Kevin Peterson, Treatment.com International Inc. (CSE: TRUE)(OTC:TREIF) is a sophisticated big-tech setup from the roots up.

Fraser is a computer scientist and entrepreneur with a background in healthcare technology. He’s a 20-year IT software veteran who has done this before. He sold his first unicorn--Vision Share (now Abilities Network)--for over $1 billion.

Dr. Peterson is a leading doctor and tenured professor at the University of Minnesota Medical School. He was also the architect of an international disease surveillance and research system, the first such in the world.

Add to this a global team of doctors in the United States, Canada, Singapore, India, Ethiopia and South Africa and you have the makings of the most intelligent AI symptom checker and health care management platform on the planet.

Again, that’s why it’s been licensed to train medical students at the University of Minnesota.

The Next Healthcare Wave

The healthcare industry is overripe for disruption, and it’s being disrupted in waves.

The most recent wave saw Babylon Health, valued at $4.2 billion in its latest funding round, explode on the scene with an AI-powered platform for virtual clinical operations. Babylon is about to go public via a SPAC deal through a $4.2-billion merger with Alkuri Global Acquisition Corp., led by former Groupon executives.

It’s also been disrupted by Teladoc Health, the $25-billion telemedicine behemoth that has nicely rewarded investors. Investors who jumped in on this in early 2018 could have seen gains of over 1,500% by January this year.

When we miss one wave, we move on to the next because the healthcare industry is set to see wave after wave of disruption, and Cara comes next.

Set to launch by the end of October, Cara is about to go mainstream, and because of the global experts behind it, it stands a good chance of becoming the next app to go from zero to hero--and perhaps to billions.
Treatment.com International Inc. (CSE: TRUE; OTC: TREIF) has:

1) unfettered access to a data goldmine

2) A Global Library of Medicine (GLM) that is continually updated and referenced by its AI engine that will eventually scale up to all ~10,000 diseases known to man

3) Proprietary IP that could one day be worth billions of dollars

4) Massive growth runways

The next healthcare disruption is about empowering consumers to take better care--and control--of their health, and early-in investors may have a unique opportunity here with a new app that puts another big patch on a broken healthcare system.

Other companies looking to transform healthcare:

3D Signatures Inc. is a high-tech Canadian firm that has found itself in the center of two explosive sectors. It’s armed with an innovative new software platform which uses 3D analysis to target various diseases and help clinicians identify a diagnosis and optimize treatment plans. 3D Signatures’ software is saving doctors time which could be the difference of life and death for some patients.  3D Signatures sets itself apart from its competition through creating individualized treatment plans for patients. Using its mapping platform, the software can determine how a disease will progress and whether or not the patient will respond to treatment

3D Signatures’ broad scope and futuristic technology brings a promising opportunity to potential investors. It truly is at the forefront of a new era in medicine, and investors should not overlook this company’s massive potential.

CRH Medical Corporation specializes in products and services designed for the treatment of gastrointestinal diseases in the United States, Canada, and internationally. With a long history within the space, CRH has positioned itself as a leader in the field, trusted by medical professionals all over the world.

CRH also made a majpr acquisition at the beginning of the year, buying out Anesthesia Care Associates, LLC, an Indiana-based gastroenterology anesthesia practice. The estimated $2.6 million deal will increase CRH’s footprint in the space, and has been well received by investors.

AEterna Zentaris Inc. (TSX:AEZS) is a major biopharmaceutical up and comer. The company has seen steady growth, and an array of new developments over the recent years. With a focus on oncology, endocrinology, and women's health solutions, AEterna has created a variety of new products, including Macrilen, the first and only FDA-approved oral test for the diagnosis of Adult Growth Hormone Deficiency.

Recently, AEterna received European approval to market Macrillen which has pushed its value even higher. Dr. Christian Strasburger, the Head of Clinical Endocrinology at Charité Unversitaetsmedizin Berlin and the principal investigator for macimorelin explained, “Clinical studies have demonstrated that macimorelin is safer and much simpler to administer than the current methods of testing for insulin-induced hypoglycemia, and is well-tolerated by patients and reliable in diagnosing the condition.”

Aptose Biosciences Inc. (TSX:APS) is a biotech company specializing in personalized therapies to address Canada’s unmet oncology needs. The company uses genetic and epigenetic profiles to gain insights into certain cancers and patient populations in order to develop new treatments within the space.

Aptose has an exclusive partnership with Ohm Oncology to develop, manufacture and commercialize APL-581 in order to treat hematologic malignancies and related molecules.

Toronto-based Field Trip Health (TSX:FTRP) is taking a three-pronged approach in their work in the transformative psychedelic medicine sector. Not only are they involved in drug development, but they’re also involved in manufacturing and run a number of treatment clinics.

Field Trip has hit the ground running. With clinics currently operating in Toronto, Los Angeles, and New York, they have plans to ramp up to 75 clinics – providing psychotherapy along with psychedelic treatments. As one of the frontrunners in this exciting new industry, investors are keeping a close eye on Field Trip.

By. Charles Kennedy

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UK Banks – Digital Dinosaurs

UK Banks – Digital Dinosaurs

Authored by Bill Blain via MorningPorridge.com,

“Tuppence wisely invested in the bank…”

As UK bank reporting season kicks off, the dull, boring, predictable UK banks should look good. But the reality…

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UK Banks – Digital Dinosaurs

Authored by Bill Blain via MorningPorridge.com,

“Tuppence wisely invested in the bank…”

As UK bank reporting season kicks off, the dull, boring, predictable UK banks should look good. But the reality is they are dinosaurs – their failure to digitise and evolve leaves them vulnerable to tech-savy FinTechs and Challenger filling their niche. If the future of modern finance is a Tech hypersonic missile… British Banks are still building steam trains. 

Today see’s the start of the UK bank reporting season. Yawn….

I wrote a piece for the Evening Standard y’day – Another set of numbers to disguise the rot. (I’ve reused some of it this morning – lazy, eh?) Exactly as I predicted in that note, Barclays came in strong this morning with a decent lift from its investment banking businesses. Lloyds and HSBC will also produce acceptable numbers and limited losses on post pandemic recovery.  The sector outlook looks positive, the regulator will allow them to increase dividends, and there is higher income potential from rising interest rates.

But… would you buy the UK banks?

They face substantial market and ongoing pandemic risk. The cost of economic reality falls heavy across them all. This morning the headlines are about Medical groups screaming out for a renewal of lockdown measures to protect the NHS – a move that will 100% nail-on recession and cause multiple small businesses to give up. The threat of recession in the UK is pronounced – exacerbated by global supply chain crisis and risks of policy mistakes. The worst outcome for banks would be stagflation resulting in exploding loan impairments.

Lloyds is the most vulnerable to the UK economy – hence it’s underperformed the others. Even without renewed Covid measures, potential policy mistakes by the Bank of England in raising interest rates too early, or by government by raising taxes and austerity spending, will hit business and consumer sentiment hardest, causing the stock prices to crumble back towards its low back in Sept 2020 when it hit £24.72. It’s got the largest mortgage exposure – but no one really expects a significant housing sell-off. (When no-one expects it – is when to worry!)

If you believe the UK’s economic potential is under-stated, then Lloyds has the best upside stock potential among the big three. If the economy recovers strongly, Lloyds goes up. If it stumbles, then so will Lloyds!

Barclays is a more difficult call. It’s a broader, more diversified name. It retains an element of “whoosh” from its markets businesses – which have delivered excellent returns from its capital markets businesses fuelled by low rates, but it also runs a higher-than-average reputational risk for generating embarrassing headlines. But, when the global economy normalises, higher interest rates will impact the fee income of all the investment banks, thus impacting Barclays to a greater extent than Lloyds. Barclay’s international business gives it some hedge against a UK economic slide.

HSBC is the most complex call. The UK banking operation is a rounding error compared to the Bank’s Hong Kong business. The bank is pivoting towards Asia, orbiting China and other high-growth Far East economies where it seeks to attract rising middle-class wealth. It’s underperformed due to a distaste among global investors for its China business, but also the perception it’s just too big a bank to manage effectively.

If its China strategy was to pay off, it will be a long-term winner. But that’s no means certain – Premier Xi’s crackdown on Chinese Tech threatens to morph into a China first policy, and the space for a strong foreign bank in China’s banking system looks questionable, even as the developing crisis in real-estate could pull it lower.

Ok – so good for UK banks…

Whatever the respective bank numbers show this week, the banks will remain core holdings for many investors. Generally, big banks are perceived to be “relatively” safe. Regulation has reduced their market risk profiles, and strengthened capital bases since the post-Lehman unpleasantness in 2008 which saw RBS rescued by government.

Conventional investment wisdom says the more “dull, boring and predictable” a bank is, the more valuable it will be perceived in terms of stable predictable dividends, sound risk management, and for not surprising investors. Strong banks are perceived to be less vulnerable to competition with deep moats around their business.

Since 2008 that’s changed – in ways the incumbent banks have completely missed. The costs of entry have tumbled as banking has evolved into a completely different service. New, more nimble Fin-Techs like Revolut, digital challenger banks such as Starling, and cheaper foreign competitors, including the Yanks, are not only eating their lunch, but dinner as well.

The old established UK banks don’t seem to have a clue it’s happening. These incumbent banks look like dinosaurs wondering what that bright shiny light getting bigger in the sky might be. Despite proudly boasting of hundreds years of history, they are constrained by old tech ledger systems and never built centralised data-lakes from their information on individuals or the financial behaviours of crowds to improve and develop their services and income streams.

The future of banking is going to be about Tech and how effectively banks compete in a marketplace of online digital facilities and services. Banks that you use tech smartly will see their costs tumble, freeing up resources to do more, better! (When I ran a major bank’s FIG (Financial Institutions Group) about 100 years ago – the best banks were those with lowest cost-to-income ratio!)

There is an excellent article outlining FinTechs and Challengers from Chris Skinner this morning: Europe’s Challenger Banks are Challenging (and worth more than the old names). Let me pluck a bite from his piece: “Revolut is the most valuable UK tech start-up in history and the eighth biggest private company in the world, worth an estimated US$33 billion, according to CB Insights. Revolut has more than 16 million customers worldwide and sees over 150 million transactions per month.”

The new generation of nimbler Fin Techs and Challengers can innovate product offerings with sophisticated new systems and software. In contrast, UK bank IT departments are engaged in digital archaeology.  I understand only 17% of Senior Tech positions are held by women. Within the banks, I’m told its still a boys club, where the best paid IT jobs are for ancient bearded D&D playing coders brought into to patch 50 year-old archaic systems. Legacy systems leave the big banks with impossible catch up costs.

It’s probably unfair to say the big UK banks don’t know what’s happening – their management can’t be that unaware? Surely not…. But…. Maybe..

Although the banks brag how well diversified they are with over 37% of UK board members female – how much have they really changed? Hiring on the basis of diversity is a fad. At the risk of lighting the blue-touch paper and this comment exploding in my face, I would hazard to suggest the appointment of senior ladies who’ve worked their way up the existing financial system simply risks confirmation-bias on how things are conventionally done in banking.

They might do better hiring outside movers and shakers – rather than listening to themselves.

The bottom line is its not just their failure to innovate tech that’s a crisis. Over the years the UK banks have become increasingly sclerotic – slow to shift and adapt. The middle to senior levels of banking are hamstrung by bureaucracy, a satisficing culture, stifled innovation, a compliance fearful mindset, and senior management fixated on impressing the regulators first and foremost.

If the future of modern finance is a Tech hypersonic missile… British Banks are still building steam trains.

Tyler Durden Fri, 10/22/2021 - 05:00

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