After the financial crisis of 2008, the role that banks need to play in society seems to have been finally clarified. The purpose – or the rationale – of a bank is currently defined in terms of service to citizens, the community or the specific groups with which it interacts (stakeholders). In this new business model, principles are integrated into the bank’s strategy and grant consistency and unity to three fundamental concepts: the purpose, the strategy and the corporate culture. Today in the banking industry, the talk is not about what we want to be but how to become what we want to be. In other words: how to build a responsible culture.
The three fundamental stages in the process of creating a responsible culture are: embracing the principles, embracing the strategy and taking action with the customers.
If anything, what the recent Wells Fargo scandal has taught us is that Conduct Risk is still very high today in the banking industry. More than 5,300 employees were fired in recent months for opening accounts on behalf of thousands of customers without their authorization or knowledge, with the sole purpose of meeting their commercial goals.
And that is just one in a long list of cases. Indeed, in 2014, the cost of conduct for major international banks totaled £106.11 billion, according to data compiled by the CCP Research Foundation. How is it possible that banks are still incurring such a high cost for bad practices? As Governor of the Bank of England Mark Carney rightly pointed out, the problem is that integrity cannot be bought or regulated. “Even with the best possible framework of codes, principles, compensation systems and market discipline, financial must constantly question the standards being applied,” said Carney.
For José María Roldán, Chair of the Spanish Banking Association (AEB), “one of the determining factors to mitigate conduct risk in the banking sector is to educate the people who make up the organization in the bank’s values; in its culture.” Finance professionals are the key stakeholder for ensuring the observance of the professional standards required to guarantee that the desired values of responsibility and sustainability are instilled.
In 2014, over 185,000 banking professionals earned the Fundamental Professional Standard promoted that the top British banks promoted in 2011. Also the Dutch banking association approved a code of conduct for bank employees, which requires them to take a personal oath, whose breach brings a series of consequences.
In 2012, from the Instituto de Estudios Bursátiles and the World Savings Banks Institute we created the first Master in Responsible Banking aimed at industry professionals. It was developed in partnership with the London School of Economics Custom Programmes and aimed to promote a responsible culture in banking, with an approach based on embracing principles, committing to the strategy and taking action of serve customers.
Our experience has taught us that responsible banking training programs allow employees to grasp and disseminate values and standards of conduct, contribute to building an organizational culture aligned with the bank’s strategy and facilitate the correct resolution of conflicts of interest that professionals face.
With this same philosophy, we collaborated with BBVA to develop the first Responsible Banking Management Program, launched in 2015 for 25 employees from different business areas and geographies. The objective was to develop a program consistent with the bank’s business model. The excellent feedback provided by participants in this first edition reaffirmed us in the conviction that education is an essential tool to transmit values, create culture and share responsibilities. All members of the organization are responsible for creating shared value. Participants have demonstrated this with the drawing up and presentation of five extraordinary final projects, setting forth specific actions under the common denominator of profitability within a principle framework.
And the thing is that, as José María Roldán affirms, “it is not a question of doing the right thing only because of a moral question, but because it is in the bank’s own interest, because it is in the ethics and culture playing field where it risks its survival in the medium term”.