Paths of glory
The financial services industry has not exactly covered itself in glory in these past few years, so if consumer trust is to be restored a different approach is needed
If you wanted to build consumer confidence in the financial services industry, to quote the apocryphal Irishman, you would not want to be starting from here.
The sector’s reputation continues to receive a battering in the wake of the global financial crisis – and it is not just banks that find themselves in the eye of the storm. Most other financial organisations have been swept up in the subsequent maelstrom of public mistrust. Contamination has been swift and public anger intense.
No matter the industry’s efforts to improve itself and to assume a more ‘client-centric focus’, most members of the public remain unconvinced. It is a common complaint that good news is seldom reported, yet one look at some of the online responses following negative newspaper coverage soon tells you that there are many who have nothing but contempt for financial organisations. The criticisms are general and frequently wide of the mark; nonetheless, the failings are often quite specific and share a common factor.
This is an industry that is inherently averse to change. This is not to suggest that it has not been compelled to adjust – to a significant extent, much, some would say ‘excessive’, regulation has driven this. But retention of the status quo is in most instances the preferred option and it is the accompanying mindset that puts short-term interests ahead of those of the client. Yet with a little imagination, it does not take a genius to work out the potential ‘relationship’ rewards for the longer term.
This resistance to change is borne out of the way the industry has evolved. Each facet has its roots in its own separate silo – banking, insurance, pensions, investment management – and although, as acquisitions have been made and new ventures explored, greater overlap has emerged, many of the core organisational structures have remained intact – and even more silos have been created on the inside.
The stove-piping of front and back offices continues unabated; there are quasi-fiefdoms of operations boards, investment boards, communications and marketing boards that appear unaware of what the others are up to; and I dare not think of the teams that sit but a desk away from their colleagues and yet are oblivious to their contribution to the firm.
With restricted scope for communication within organisations, it is not surprising that communication among competitors is limited. Between subsets of the industry, it is worse still. And when there is contact, all too often the focus is on talking rather than doing. Issues that straddle the industry, requiring a cross-industry solution, can and do end up in the ‘too difficult box’ as vested interests take precedence.