Home Banking Banking Culture in a Time of Uncertainty

Banking Culture in a Time of Uncertainty

by internationalbanker

paul-cookBy Paul Cook, Chief Executive, Alderbrooke




The full impact of Brexit on the City of London will not become clear for a number of years—but there is no doubt that it has instigated a short-term period of instability and uncertainty across the banking sector. Instability of any kind poses challenges for the banking sector. In unpredictable and volatile times, the pressure on teams and individuals to perform at any cost can increase. For financial institutions, this usually (but not always) means compliance costs increase, and the likelihood of regulatory breaches can be higher. Unless an organisation’s culture is strong enough to support teams and individuals through challenging markets, employees may revert back to outdated behaviours or deliberately circumvent the rules to protect their positions.

Indeed, in the moments that matter, culture is what defines and shapes your employees’ behaviour. A positive culture maintains accountability and drives behaviours that enhance your brand. It considers the medium- and long-term future of the business, rather than focusing on short-term goals. Banking leaders must inspire the successful adoption of healthy, positive cultures. When markets turn volatile, a constructive corporate culture—in which feedback is openly shared, employees feel able to raise concerns and talk about problems as well as successes, and leaders engage in open dialogue with the business—makes for a far more resilient, robust organisation.

Defining culture in financial services.

So what is a positive “corporate culture”? Corporate culture is not defined by rules and regulations, market conditions or internal processes and procedures. Corporate culture is defined by the behaviours of the people working within that environment, particularly the leaders. These behaviours can be embedded within an organisation, providing people with a consistent framework to guide their actions, even in times of stress or volatility. In effect, it determines their “default behaviour” when under pressure. Culture provides businesses with a unique ethos, a specific way of working, and can ultimately offer a powerful layer of protection against the temptation to meet short-term objectives at any cost.

Identifying and understanding culture is not easy, but there are comprehensive cultural measuring tools available that can provide much more valuable insights than the traditional employee survey. By using these tools, firms can regularly undertake a thorough analysis of their business cultures and obtain the information they need to act quickly if any potential issues are uncovered. It is far easier to address concerns before they turn into reality rather than fix something when the damage has already been done.

Why is culture important?

Culture steers a business’s long-term health and prosperity to a far greater extent than many organisations appreciate. A business that prioritises particular short-term outcomes, with little regard for how they are achieved, provides no empowerment or encouragement for employees to consider the longer-term impact of their behaviours. The focus on “getting it done” at any cost, and the achievement of doing so, is what drives the business. It is easy to see how this can lead to problems, as numerous examples in the sector over the past two years have shown. Nor is culture just about ensuring that everyone complies with the necessary rules and regulations to appease the regulator. Compliance is obviously a prerequisite for long-term business success, but it should not be confused with culture.

Forward-thinking firms don’t develop a strong culture in order to avoid fines and penalties. Instead, they strengthen their ability to lead the industry with a highly competitive business by actively encouraging positive behaviours. A robust and healthy culture gives firms a distinct competitive advantage—which is crucial in the search for new clients and revenue. Clients are more likely to trust those businesses with values that mirror their own.

Take Apple—not a financial-services firm but one that embodies the power of a positive culture. Apple has created an immensely strong corporate culture that aligns with the values of the brand—innovative, hip, friendly and, above all, incredibly customer-focused. The culture of Apple is tangible as soon as you walk into an Apple store. And people love it. Apple customers tend to be very loyal. It has a reputation not only as a provider of innovative products and superb service but also as a great place to work. Apple epitomises the idea that better culture leads to better behaviours; better behaviours lead to better customer satisfaction; and better customer satisfaction leads to better business and better revenue.

The role of leaders in building strong cultures.

More than anyone, it is a business’s leaders who are responsible for defining its culture. They should be clear and consistent in vocalising what is acceptable and what isn’t. In every moment of every hour of every day, establishing a strong culture should determine their behaviour. Financial-services businesses should aim to instil a universal understanding among staff about what the business is trying to achieve and what its priorities are. It’s not enough to have a mission statement on the wall that includes a few buzzwords, such as integrity and honesty. Too often the script is there, but the action that drives those behaviours is forgotten. It’s about actually living those values—and leaders at all levels have to demonstrate this clearly to their teams at all times.

Establishing a strong culture is not a quick job: it has to be monitored, lived and managed every day. And while the process of changing a culture can be slow and appear complex, it is not beyond the reach of any organisation—it is simply unfamiliarity with the process that causes doubts or confusion.

How good culture can future-proof your firm.

A lot of attention has already been given to improving the banking culture, but this has mainly been driven by purely defensive motives. Rather than focussing on avoiding fines and penalties, enlightened firms are reversing this trend by actively looking at ways of encouraging more positive behaviours within their organisations. Before the crash of 2008, culture was seen as secondary to results. Consequently, the industry was often short-termist and tactical in its objectives. The slew of new rules and regulations that followed has seen the industry become very regulator-centric. The challenge now is to take the next step to become truly client-centric—and creating a positive corporate culture is central to that.

Rules and regulations alone will not prevent another financial-services scandal. Only a bank’s corporate culture can offer robust protection, because it is based on and instils a set of default, consistent behaviours. When faced with moments of intense pressure, the temptation to bend the rules in pursuit of a particular outcome can be strong. But people are far less likely to act against a well-established positive culture that empowers them to instinctively “do the right thing”. It is crucial for the financial-services sector to invest its energy into this next stage of its development, and capitalise on the benefits a positive corporate culture can create.


Related Articles

Leave a Comment

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.