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Changing a bank’s culture needs actions not words

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Barclays ad

We had a fascinating discussion about how to fix the banks at the Financial Services Club last night (Part Two next week)
and the gist of what most panellists came back to, as well as the audience, is
that we need to return to basics and get the culture right.

This is not an overnight change, a quick fix or an easy
thing, but it is a fundamental.

The values and culture need to focus back upon doing what’s
right for the customer and society, being ethical and moral, open and transparent,
trusted and secure.

These are all things that banks used to be, some say, and
should be again.  In particular, like
lawyers and doctors, banks should have a code of conduct that they adhere to
and that, if broken, would result in being struck-off.

Now these are things that some feel are already there.

We do have an industry code of conduct regulated by our
Chartered Institute of Bankers and Institute of Financial Services.  However, these are nowhere near as formalised
or respected as the Law Society or the Medical Council in the legal and
healthcare services, so being struck off by the Chartered Institute of Bankers
does not strike fear into our hearts.

Some would say the new Financial Conduct Authority (FCA) would strike such fear, but really? The FCA hasn't struck off Fred Goodwin because, technically, Fred has done nothing wrong.

Similarly, we have heard all about doing the right thing for
customers and society and returning to the right values and culture lots over
the last five years.

A great example is Bob Diamond who, you might not remember,
only became CEO of Barclays after the previous CEO, John Varley, left in
January 2011.

Bob gave the inaugural BBC Today Lecture in November 2011, and
it was all about Barclays bank becoming good citizens.

A senior economic
adviser at the White House put a question to me.

"Do you think
banks can be good citizens?" he said.

I wanted to answer
yes, but before I could reply he said: "If the answer is "yes",
think about the fact that no-one will believe you."

I did think about that
- I have thought about it quite a bit over the past three years.

I want to use this
opportunity tonight to share with you my views on why the answer to that
question must be "yes"; it's because the single most important thing
for banks and for businesses now is to focus on helping to create jobs and
economic growth; and being able to do that requires us - banks in particular -
to rebuild the trust that has been decimated by events of the past three years;
and that rebuilding trust requires banks to be better citizens.

I believe in this

What does being a good citizen mean Bob?

It “comes down to

It's a very personal
thing, but throughout my career - from my time as a teacher, to my time as a
banker - I have seen just how important culture is to successful organisations.

Culture is difficult
to define, I think it's even more difficult to mandate - but for me the
evidence of culture is how people behave when no-one is watching.”

Oh dear.

Eight months later, Diamond is out of a job when his bank is
found to be fixing mortgage rates when no-one is watching.

Barclays ad

Now, to be honest, Bob was not far off the mark.

Barclays got caught with their LIBOR scandal headlines when,
in reality, they were the bank that were the whistle-blower on the scandal.

It was Barclays that told the Fed and Bank that banks were rigging
LIBOR rates, and it was Barclays that were the first mover, co-operating with the
governments and regulators to sort it out.


But then Diamond’s successor comes in, Antony Jenkins, and
he also starts blathering on about values.

In a letter to all staff in Barclays staff at the start of
the year
, he says:

“The behaviour which
made those headlines in 2012 took place in the past. But it helped underline
how banking as a whole had lost its way, and had lost touch with the values on
which reputation and trust were built.

“Over a period of
almost 20 years, banking became too aggressive, too focused on the short-term,
too disconnected from the needs of our customers and clients, and wider
society. We were not immune at Barclays from these mistakes.”

But these are just more words aren’t they, some would say.

For example, all banks have values and have always had

For example, if you walk around HSBC’s offices, you find
posters like this one:

HSBC values

So all banks have the words, but do they act the values?

Do they believe them?

Do they ensure they are being followed?

Obviously, it takes more than speeches, words and posters.

It takes action.

We need action.

Antony Jenkins at Barclays has taken action getting rid of
Rich Ricci, the last vestige of the Bob Diamond BarCap Empire.  At the same time he has closed down the banks’
tax avoidance division and their food commodities trading desk, even though it was profitable (but not ethical) and more.

Will this change culture in Barclays?

I think yes.

According to my contacts, Barclays is reforming itself back
into an honest-to-goodness bank, with honest-to-goodness bankers.

Mr. Jenkins has shrunk the portfolio of 27 values down to just
five: Respect, Integrity, Service, Excellence and Stewardship.

Interestingly, the five principles spell the acronym RISES.

Will Barclays rise?

I hope so.

And I hope the other banks do too, with a new moral compass pointed
firmly for doing what’s right for society and for the customer.

More on this later.

Chris Skinner Author Avatar

Chris M Skinner

Chris Skinner is best known as an independent commentator on the financial markets through his blog,, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal's Financial News. To learn more click here...

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