Culture in Banking, the Key to Industry Recovery?

Jonny Westcar, MD London, Brand Union

The banking sector is walking on thin ice. Recent revelations about suspected malpractice merely adds to a long list of reported harmful activity, from excessive bonuses to poor customer care, that has reduced the public to a state of cynicism and caution, with little faith in the industry.

The question is how can we turn the situation around and make a better banking system? The answer lies in changing cultures.

Ever since the latest financial crisis, born out of a culture of excess and cavalier planning, there has been a string of new legislation introduced bringing greater levels of scrutiny and new codes of conduct. However, it has failed to bring about the necessary change. These codes of conduct are essentially huge lists of things banks aren’t allowed to do – a tick box exercise -sterile rules and regulations, removed from the reasons why they were introduced, with no engagement with the employees meant to follow them.

Humanising the impact of business decisions is vital. It is widely known that large public businesses are increasingly being taken over by former CFOs. In this environment, employees are likely to inhabit a culture in which the CEO will rely on facts, data and the bottom line when making important decisions. Herein lies an issue with the way senior management might view the world and certain measures; it removes instinct, gut feel and the human element of decision making.

In a highly complex and scrutinized industry, this form of decision making, alongside endless regulation, can lead to an environment where employees feel their jobs are mechanized, with little or no awareness of the human impact of decisions. In order to turn the situation around, a new thinking needs to be established, where people care about how those decisions will impact further down the line. This will take a major shift in culture.

The banking sector is perceived as revolving around taking advantage of people’s assets to achieve huge returns. As the world changes, the biggest companies in the world are now technology groups such as Apple and Google. Hugely wealthy businesses but built around the main concept of creating products and services that are useful to others. They essentially create innovative things to help make people’s lives easier. The perception of banks is that of complexity, exploiting loopholes and using your money to do it.

Jonny Westcar

If cultural change can be brought about there is the opportunity to change the perception of the brand. Culture has a huge impact on the way customers interact with brands and therefore becomes an inherent part of the brand experience. The brand is a central organizing principal that should act as a filter for every policy, every communication, every behavior and every action. The business strategy and brand strategy should be totally aligned and that means that the people who manage the organization must recognize that the business’ performance will undoubtedly be enhanced by a strong brand that puts the delivery of customer value as the first priority.

One of the most important ways banks can start to implement this is to create a stronger awareness of the effects of its decisions on society. Decisions made by banks make a huge impact to real people on the ground and in their homes. This understanding of the connection between the business and the individual is paramount to changing this culture and instilling trust in the future of the banking sector.

Culture fuels brands and if one can accept that culture has inertia, it should be harnessed,as it can become the source of long-term differentiation. Culture adds a dimension that can heighten positive brand experiences. Companies with strongly embedded cultures tend to be driven by values where transparency, authenticity and honesty are woven into the fabric of the organization. They tend to stand out in their category and almost always have commercially strong businesses – just look at the Virgin group for example.

In a sector such as banking that is essentially people driven, strong brands can only be built through the people who work in them. They are representative of the brand and ultimately are the drivers of corporate culture. In the case of the banking industry it boils down to leadership – it is about leadership setting a new moral compass with values that are valued and lived throughout.