Getting Finance to Serving Work and Innovation Again

In the financial industry, the mirage of RoE at 15-20% vanished when the economic crisis revealed that ultimately these returns were not very significant. It is time for investors to stop focusing on this ratio. This change is all the more necessary and urgent as it forces businesses to maximise their RoE (and the payment of dividends) as part of their competitive strategic approach whether national or international. Yet the excess amounts of remuneration paid since the 1990s both in terms of labour and capital has led to adverse effects. For example, the acquisition of highly skilled labour to the detriment of industry, the implementation of short-term strategies favouring profit and dividends over secure employment and finally insufficient funding for innovation. In a context of significant technological developments, financial business models must change: the advent of online banking and insurance, the emergence of new players in the financing process and the fundamental need to take risks to develop the real economy combined with the excesses of past debt means that business models – and even how we finance the economy – will have to change.