Harsh Vardhan, an expert on the financial sector, joins Amit Varma to discuss his life and learnings. They explore topics such as banking without banks, consulting experiences, the impact of different languages and literatures, personal journey of self-discovery, regulatory capture, optimal mix of banking and regulation, and changing perceptions of time and history. They also touch on the nature of kindness and compassion, split brain experiments, the concept of rationality, and influential thinkers for India.
Rebooting civilization allows us to examine human nature and rethink institutional structures.
Consulting requires understanding complex interplays and providing fresh perspectives.
Continuous learning and challenging beliefs are crucial for consultants to provide better insights.
Businesses must prioritize customer focus to adapt and succeed in evolving markets.
Legacy issues and risk aversion hinder transformative changes in the banking sector.
Deep dives
The Evolving World of Civilization
The podcast episode explores the idea of rebooting civilization and imagining what a hypothetical civilization 2.0 would look like compared to our current civilization. The speaker discusses how this thought experiment can reveal essential aspects of human nature and identify what is accidental. Using the example of banking, the episode highlights the need to rethink the nature and structure of certain institutions in a hypothetical rebooted civilization. The podcast also delves into the guest's background, his education, and his career as a consultant and academic researcher.
The Complexities of Consulting
The speaker reflects on his experience as a consultant and how the role requires a particular temperament and mindset. He emphasizes that consulting is not about having specialized knowledge in a specific field, but rather about understanding complex interplays and providing objective advice. He notes that consulting often involves addressing business challenges and making strategic changes, while considering internal dynamics, groupthink, and politics within organizations. The speaker showcases how consultants play a crucial role in breaking established beliefs and providing fresh perspectives to help companies navigate complexity and implement effective solutions.
The Transformation and Evolution of Perspectives
The podcast episode touches upon the speaker's personal evolution in terms of mindset and outlook. He describes how his understanding of the world became more nuanced during his time in the United States, where he developed a realization of the complexity of societal, economic, and political issues. The speaker shares how he evolved from having a more rigid, ideological viewpoint to adopting a more comprehensive and principle-based approach. He also discusses the importance of continuously challenging established beliefs, adapting to new perspectives, and learning from diverse experiences in order to provide better insights and solutions as a consultant.
The Importance of Understanding Customers
Understanding customers is crucial for businesses. In high-growth environments, companies often overlook this and focus solely on growth. However, as the economy and consumer demands evolve, companies must prioritize customer focus to ensure success. Building an understanding of customers' needs, preferences, and experiences allows businesses to adapt and provide better products and services. This requires a shift from reactive to proactive approaches, investing time in comprehending and catering to customer expectations.
Legacy Issues in Banking
The banking sector is challenged by legacy issues that stem from outdated systems and processes. Many banks rely on legacy software and fragmented operational structures, making it difficult to implement comprehensive changes or rebuild from scratch. The complex nature of these issues, coupled with risk aversion and organizational structures, hampers the redesigning of banking systems. Incremental optimization is often the chosen path, but it poses its own limitations. Cultural change and a shift in mindset towards customer-centricity are necessary to drive meaningful transformations in the banking sector.
The Challenges of Infrastructural Lending and Consumer Credit
Banking in India has witnessed a significant shift in lending patterns. Private banks, which now dominate the sector, often focus on consumer lending while shying away from project finance. This has led to a lending gap in infrastructural projects. In turn, government spending has replaced private lending for infrastructure, leading to a shift in the way these projects are financed. While this approach may be less risky for banks, it raises concerns about adequate capital deployment for large-scale projects. Moreover, the consumer lending space, which has experienced substantial growth, has raised concerns about rising levels of consumer debt and the potential risks associated with it.
The Impact of Market Society and Excessive Borrowing
The podcast episode explores the concept of a market society, where transactions and financial success are prioritized. The speaker reflects on how the younger generation is embracing this mindset, even if it means borrowing money and dealing with the consequences later. The implications of this shift towards excessive borrowing, including potential personal bankruptcies and societal reactions, are discussed. The need to address the lack of legal frameworks and protocols for managing personal bankruptcy is highlighted.
Improving the Banking System and Engaging with Law
The speaker discusses the need for incremental improvements in the banking system through focusing on attributes like capacity, efficiency, resilience, innovation, and access. They emphasize the importance of aligning the financial system with the growth and complexity of the real economy. Additionally, the speaker shares their growing interest in law, especially in relation to business and regulation. They highlight the significance of understanding legal frameworks and the role of law in shaping businesses, institutions, and society as a whole.
Appreciating Indian Classical Music
One of the recommended music genres is Indian classical music, particularly the performances of Pt. Shivkumar Sharma and Pt. Kumar Gandharva, which the speaker holds in high regard and suggests others to listen to as well. Their performances evoke such admiration that the speaker would willingly spend days solely immersed in their music.
The Significance of Indian History
The speaker emphasizes the importance of studying Indian history beyond the limited scope taught in schools. He suggests delving into Indian history with comprehensive books like 'The Wonder That Was India' by A. L. Basham, which explores various aspects of the country's past, including the ancient civilization of the Indus Valley, history surrounding Emperor Ashoka, and philosophical debates such as Advaita and Vishishtadvaita.
