Retail Banking Academy news roundup – 27/03/2017

UK banks face further scrutiny on top of annual stress test

“The new “exploratory” test, which will be carried out every other year, will assess banks’ resilience to a wider range of risks beyond those emanating from the financial cycle — such as persistently low interest rates and high costs.

Amazon Is Winning at Credit Cards Too

“According to a Morgan Stanley AlphaWise survey, 23% of U.S. adults have Amazon cards – tied with Wal-Mart. Plus, 13% of those who don’t have Amazon cards indicated that they were “very likely” to sign up for one.”

The high cost of our vanishing bank branches

” The [House of Lords committee on financial exclusion], chaired by Baroness Claire Tyler, has just issued a damning report on “unacceptable” levels of financial exclusion… The report shows that older banking customers are the most likely to rely on local branches, and the least likely to bank online. They also make up a growing slice of the UK’s ageing population.

Lafferty Daily Briefing – 27th March 2017

“Singapore will continue to push innovation in payments, with the latest scheme backing a Central Addressing System for the collection of mobile numbers for e-payments. The government hopes that this will eventually lead to drop in merchant charges and bring more small businesses into the payment acceptance infrastructure.”

The Retail Banking Academy is the only international training academy that offers qualifications exclusively dedicated to the best practice principles in retail banking from the practitioner’s point of view. We are committed to making the Certified Retail Banker qualification (CRB) the recognised industry standard by making it possible for ambitious retail bankers worldwide to embark on a structured programme that sets the highest standards of ethics, education and customer-oriented retail banking excellence.

“At its core, banking is not simply about profit, but about personal relationships”

Even though Felix Rohatyn was an investment banker from a bygone age, his simple quote underlines the importance of long-term relationships in retail banking. An ideal time then to review the latest findings from the 2016 survey undertaken by the Banking Standards Board. My first thoughts, as I picked up news of the report through one of my social media apps, was why has this received so little news coverage? How soon we forget. The Guardian has a banking reform tab on its newspaper web offering … not a mention of the findings. I don’t remember hearing anything on the BBC news either (perhaps they are too focused on the Trump effect!).

I started by refreshing my knowledge of the nine characteristics of the BSB framework – a shared purpose for banking employees, supported by honesty, competence, respect, reliability, responsiveness, openness, resilience, and personal accountability. Putting aside my recent frustrations with an eagle-eyed bank (who are struggling to deliver on the competence, responsiveness and accountability front) I launched into the findings …

In her review of the findings Colette Bowe noted:

“The BSB’s Assessment2 found examples of good practice across the banking sector but also identified some deep-rooted attitudes and behaviour that still need to change. 

Responsiveness, accountability, personal resilience and openness are all areas requiring progress. 

Firms need to speak honestly and bravely about what needs to be done, what they are doing, why they are doing it and how they will know that they are succeeding.

Everyone in a firm needs to see that executives and board members live up to what they say they are trying to do. Actions speak louder than words. And they all need to be saying the same thing.”

… and the fact that this remains the case, some 10 years after the financial meltdown, shows just how long it takes, inter alia, to tackle cultural change. It also reinforces why it is so important, that as a society and a profession, we do not drop the baton or allow this issue to fall off the agenda.

I can’t be alone in finding it disturbing that of the bankers surveyed, 18% doubted that the senior leaders in their organisation ‘mean what they say’ (Q1) and 12% of those surveyed agreed with the statement ‘in my organisation I see instances where unethical behaviour is rewarded’ (Q2) although it is encouraging that 89% of bankers surveyed agreed with the statement ‘my colleagues act in an honest and ethical way’ (Q3).

In the respect category, whilst ‘listening to the opinions of others’ and ‘putting customers at the centre of business decisions’ needs some improvement, the scores are generally positive and significant.

From an openness perspective it is also encouraging to see that ‘providing customers with information in a way that helps them make the right decision’ (Q11) and ‘sharing learning and good practice with each other’ (Q13) receive very positive feedback; however the fact that 27% of those surveyed agreed that ‘if I raised concerns about the way we work, I would be worried about the consequences for me’ (Q14) illustrates that there is still work to do on this aspect of cultural change.

Whilst it is clear that individuals surveyed agreed that they have an understanding of the required behaviours, far too few agreed that senior leaders take sufficient responsibility for their actions and far too many agreed that others turn a blind eye to inappropriate behaviour or too frequently ‘pass responsibility for things going wrong’ on to others (Q18). Unsurprisingly, 15% also felt uncomfortable in challenging a decision made by their manager (Q19).

That competence in risk assessment is very high should come as no surprise, though a significant 9% disagreed that colleagues have ‘ the skills and knowledge to do their jobs’ and 10% aligned themselves with the view that they are not ‘encouraged to learn new skills or improve their existing ones’ (Q20&21). Addressing this issue is critical to making headway for the customer (and given these survey questions are a partial a reflection of the respondents own competence, the skills shortages identified may well be understated!).

Given that reliability is the core dimension of perceived customer service quality (see Retail Banking Academy – RB1 Module 107) it is disconcerting that 18% of respondents disagreed with the statement ‘when people in my organisation say they will do something, I can rely on them getting it done’ (Q25). I can tell you as a customer that this is my number one issue (when such matters arise) with the banks I deal with and is intrinsically linked with the resilience findings (Q26) where a comprehensive 20% of those surveyed think that people in their organisation are not good at dealing with issues before they become major problems.

Responses about the focus on short-term results, pressure to perform and ‘works impact on health’ identifies resilience as topic demanding more senior management attention and cultural change.

Sometimes it’s the simple stuff that gets in the way … for example nearly 60% of respondents agree that ‘our internal processes and practises are a barrier to our continuous improvement’ (Q31) … so hallelujah we can expect this to be a priority then? Perhaps not when 11% don’t believe the organisation responds effectively to customer feedback and another 23% feel the same way about staff feedback.

Finally, on the responses front, it’s welcoming that a large proportion (81%) of those responding agree with the view ‘my organisation’s purpose and values are meaningful to me (Q35), however a significant 14% think there is a conflict between stated values and how their organisation conducts its business.

Turning to the themes and priorities for 2017, we see the BSB’s number one priority is addressing the mismatch between the values espoused by a firm and the way that some employees see business being done. 

As a faculty member for the RBA, I am particularly interested in the second priority, helping to develop a culture within the banking sector of responsibility and accountability, rather than of blame and the intention, through the Professional Forum, to engage educational bodies in supporting constructive change (e.g. focusing on critical thinking skills and ethics). The latter is the bedrock of the Certified Retail Banker Qualification offered by the Retail Banking Academy.

The third priority of the BSB is identifying practical steps to help promote employee well-being and resilience by working in partnership with the Bank Worker’s Charity, as well as with other subject matter experts and organisations including the Trades Unions, to explore in particular: the relationship between motivation and well-being at work, and how to create an environment that is both supportive and promotes autonomy. Again professional education will have a significant role to play, informing and developing professional bankers on their modus operandi.