Or will their leaders get in the way?
Bungling bankers found guilty of “reckless misconduct” should be put behind bars. That’s just one of the recommendations of the Parliamentary Commission on Banking Standards, in its final report ‘Changing banking for good’. But will headline grabbing recommendations like jail sentences and deferred bonuses really solve the banking problem? Regulation and sanctions might well appease the sector’s most voluble critics, but will they bring about the changes we’re all looking for?
I think CIPD chief executive Peter Cheese got it right: “Banks need to re-evaluate their core purpose and the values which should define their behavioural expectations and norms.” In fact I’d go a step further: what banking actually needs is a fundamental top-to-bottom culture change from within, with a special focus on 3 key areas:
Leadership: Everyone agrees there’s been a colossal failure of leadership in the banking sector. But are the proposed remedies appropriate? Isn’t banking’s most pressing need for new leaders untainted by the cultures that brought about the debacle in the first place?
Competition: Much of the wayward behaviour we have seen can be attributed to the fact that banks have not been regulated by the pressure of competition. Shouldn’t we be focusing on dragging down the barriers to entry into banking and introducing a stiff dose of competition? Competitive pricing and better service would then have a sporting chance.
Reward: Don’t forget the old adage – what you measure is what you get. The problem with banks is that for years their principal measures have related to revenue generation at the expense of customer service, and their people have been rewarded accordingly. It’s now time for a correction. Good service needs to be the principal basis for reward.
Will any of this happen? Will banks re-invent themselves and become good corporate citizens? If you’re like me you’ve got to be sceptical. Engaging your customers and employees is a bottom up process that needs clear direction from the top. I’m sure that the bottom is willing but I have no faith in the top.