Building on my recent updates on sustainable finance and such like, it is interesting the word purpose consistently appears throughout the sub-text. Banks need a sense of purpose to attract talent; banks need to shift from shareholder focus to purpose focus; banks must no longer be socially useless but socially useful, a new sense of purpose; banks need to do good for society and the planet, which maybe is their purpose; and so on.
The purpose-driven company is something that emerged as a dialogue around 2011, but only really became ‘a thing’ at the end of the decade. I guess all the voices clamouring for change around how we treat the planet, along with the greatly unequal wealth divide, has created this buzz, and banks are at the centre of it.
Banking was the industry that destroyed the illusions of millions of millennials and their successive generations when they destroyed value. Banks were accused of being socially useless, and had lost their moral compass, and they have to try and get that back. The 2008 financial crisis spawned many FinTech entrepreneurs to break out with their vision and launch a start-up, many of which are making inroads a decade later. These thousands of breakout start-ups are driven by vision and purpose; banks were driven by bonuses and shareholders. The compass has moved.
Not all banks get this. In fact, most businesses don’t get it. As I noted on Friday, CEOs can make all the pious and bland statements they want about stakeholders coming above shareholders but the bottom-line is still the bottom-line. It’s where the action is at and is the only barometer that gains the CEO’s attention. That has to change.
I think it’s interesting as we move into the third decade of the new millennium that the dialogue is shifting, the compass has moved, and the focus has changed. CEOs are learning that greed is not good and should not be the sole driver of business focus, regardless of what Milton Friedman said. They have to move to having a purpose that is socially useful. Banks and businesses must start to do good for society and good for the planet. If they do not, then our children and their children’s futures are blown. That’s the issue.
People are starting to get this, which is why the Business Roundtable shifted the dialogue towards stakeholders, but it needs to go further. We need a purpose, all of us; and banks need to be purpose-driven, not shareholder driven.
What is the purpose of your bank? Is it to make as much money as possible for everyone or to do good? Can you achieve both when, in many instances, these forces are working at opposites?
“Whoever loves money never has enough; whoever loves wealth is never satisfied with their income. This too is meaningless. As goods increase, so do those who consume them. And what benefit are they to the owners except to feast their eyes on them? The sleep of a labourer is sweet, whether they eat little or much, but as for the rich, their abundance permits them no sleep.” Ecclesiastes 5
“For the love of money is the root of all evil: which while some coveted after, they have erred from the faith, and pierced themselves through with many sorrows.” Timothy 6
Sorry about the bible bashing, but in all religions there are many references to the nature of usury, the evils that wealth and money can generate and the sin of greed, one of the big seven. Like the tablets that Moses brought down from the mountain, these are not things written in holy scripture as platitudes.
I don’t want to get too much into the Holy scriptures, as I’m not a religious person, but I read these things as being far more to do with basic humanity and being a good human. Being a good human is all about avoiding loving money for greed, but seeking wealth to do good for everyone. Giving is better than receiving. That’s why the wealthiest seek philanthropy.
In summation, there is a massive movement away from the immoral compass of the love of money for money itself, towards the focus upon purpose and doing good for society, good for the planet, good for our children and good for the future. Is your company part of this, behind the 8-ball or not even on the agenda?
If you want to know more, checkout Creating a Purpose-Driven Organization from the Harvard Business Review, July-August 2018.
Chris M Skinner
Chris Skinner is best known as an independent commentator on the financial markets through his blog, TheFinanser.com, 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...