When I was a schoolboy in Edinburgh in the 1960s, the head office of the Bank of Scotland was an imposing building on the Mound, the street that leads from Princes Street to Edinburgh Castle and the Royal Mile. The Royal Bank of Scotland, its arch-rival, occupied Dundas House, the finest property in the city’s Georgian New Town.

Banking was then a career for those who did not quite make the grades required by the good universities. If they joined either of these two institutions, they might with diligence become branch managers after 20 years. The bank manager was a community figure who would base his (they were all men) lending decisions as much on his local knowledge and the character of the borrower as on figures. He expected to spend his career at the bank and retire with a generous pension to spend more time on the golf links where he had schmoozed his clients. It never crossed his mind, or those of his customers, that the bank he had joined would not continue forever in broadly its existing form.

By the time both banks failed in 2008, the financial world had changed beyond recognition. The causes included globalisation, deregulation, technological and product innovation and new ideologies, as well as shifts in social and cultural norms.

Lawrence Summers (the former US Treasury secretary who experienced the transformation variously as academic, politician, university administrator and would-be central banker) described it thus: “In the last 30 years the field of investment banking had been transformed from a field that was dominated by people who were good at meeting clients at the 19th hole, to people who were good at solving very difficult mathematical problems that were involved in pricing derivative securities.” Professor Summers reported this shift with evident approval.

Yet these cleverer people managed things much less well than had their less intellectually distinguished predecessors. They were rarely as clever as they thought they were — or sufficiently clever to handle the complexities of the environment they had created.

The growth in the size of the financial sector, the explosion of remuneration and the changes in the nature of financial activity were not to any large degree driven by changes in the needs of the non-commercial economy for financial services. These needs — the operation of the payments utility, the management of personal wealth across lifetimes and between generations, the allocation of capital between different forms of productive investment, and the pooling of risks — have changed very little.

In fact, the growth of wholesale financial markets is the result principally of a massive increase in secondary market trading of existing assets; and the focus of innovation has been the management (or mismanagement) of risks created in the financial system itself. In the self-referential world of modern finance, the primary activity of financial institutions is trade with other financial institutions.

There may be less need today for the networker, the individual who knows whom rather than what; technology helps make connections, although it cannot displace personal relationships. But efficient capital allocation requires above all the knowledge and experience to assess the quality of the underlying assets, and the capacities of those who manage them.

Yet the ability most valued in the finance sector in the first decade of the 21st century was a keen appreciation of asset markets themselves. The deployment of such abilities by people with an exaggerated idea of the relevance of these skills, and an overblown sense of their own competence, plunged the global economy into the worst financial crisis since the Great Depression. Perhaps those nice boys with low golf handicaps had something to offer after all.

This article was first published in the Financial Time on September 2nd, 2015.