“My assessment of recent history is that there has not been a case of a major prudential or conduct failing in a firm which did not have among its root causes a failure of culture as manifested in governance, remuneration, risk management or tone from the top.” Andrew Bailey, then Chief Executive of the Prudential Regulation Authority.
The introduction of the Senior Manager Regime is further proof that the culture of financial firms is a theme that no financial firm can afford to ignore. But while we can all appreciate that having a ‘good culture’ is well, good, what this really means in practice isn’t always clear. How firms should measure, assess, and improve their cultures is even less clear.
Since January, we’ve been asking consumers sharing feedback about their financial providers on Smart Money People, the UK’s financial services review and research platform, five additional culture-focused questions and statements. Ranging from ‘describe this firm in 3 words’ to ‘my personal information is safe with this company’, we set out to find out how consumers think about the cultures of financial firms.
How do building society cultures really stack up when compared to banks? Are there any demographic variations? What customers have to say about the behaviours that characterise financial firms looks set to spark some great discussion, and I’m excited to share some of this research with delegates for the first time at the forthcoming Building Societies Association Annual Conference.
I’ve also become interested in what the focus on culture could mean for building societies. Should culture be viewed as just another regulatory burden really meant for big banks? Is it a threat? Or is it a strategic opportunity?
Ten years ago very few financial firms were talking about social purpose or their social missions. Now they’re all it, whether it’s FinTech newcomers like Starling Bank or banking goliaths like Lloyds Banking Group. In an increasingly competitive financial ecosystem jam packed with both threats and opportunities, how building societies navigate the culture challenge looks set to be a key test.
And with the recent news about Revolut, one of Europe’s fastest growing FinTechs, now largely viewed as a culture challenge, it’s clear that talk of culture is not going away anytime soon. In fact, in a speech delivered just last week, Andrew Bailey, now the CEO of the Financial Conduct Authority, talked about a post Brexit future which could see the UK return to a more principles-based system of regulation. Under this vision, measuring, assessing and improving the culture of firms only becomes more important.
Michael will be speaking at the ‘Is the increased focus on culture a threat or opportunity?’ session on Thursday 23rd May 2019, alongside the FCA. This session will introduce the audience to culture and what firms are doing to measure and improve their cultures. It will also feature a panel discussion with representatives from Starling Bank, Family Building Society and the Banking Standards Board.