Culture Bites 010 - How the Banks Got Here

Published on 26 Jun 2018

How the Banks got here

The culture in banks is all over the news with the Royal Commission. How did the banks get here and where to now? This episode is hosted by Shaun McCarthyLiana Sangster, and Dominic Gourley.



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Microphone Key Takeaways and Ideas

Below are some of the main ideas we discuss in the podcast. Listen in to the episode to get more of the discussion and examples around these ideas.



Moving from Custodian to Sales

The change in Bank culture is part of a larger trend: every bank in the late 80s and early 90s was shifting from a custodial culture to a sales culture. Banks back then were very protective, very risk adverse, very careful with your money – it meant that it was really hard to get a mortgage back in those days.

Globally there was a move to being more responsive, more customer orientated. The phrase that was coined was ‘building a sales culture’ and they took people who had never worked in a sales environment before and started teaching them the concept of sales and building cultural values and expectations around sales.

 

Driving the Change:

Outside pressures from the marketplace demanded that banks move towards being service and sales orientated. In addition: technological changes, electronic disruption etc. were all on the horizon and meant the banks needed to move more towards service.

In the move towards sales and culture, a lot of trainers came in to advise the banks but they didn’t really understand culture. They used aggressive techniques from a sales point of view, the banks adopted those values/techniques/approaches and it ultimately had a knock on effect on the culture.

 

It Hasn’t Been All Bad:

Service at banks has become far better than it was in the 80s and 90s - plus, during the Global Financial Crisis, the banks actually saved Australia from having a direct financial crisis – we did of course still have to deal with the rest of the world being in crisis. That says something very complimentary about the banks here.

 

The Drive for Short Term Success:

Part of the outside pressures has been shareholder's drive for short term performance. As a shareholder, are you interested in where the organisation is going to be in 5 years’ time? Or what their performance will be in 10 years’ time? Probably not. You’re interested in what their performance is right now – you have a stock market index and your wealth adviser's aim is to outperform the index.

This behaviour, drives a short term focus within companies. The expectations within the organisation are about creating short term performance because that is all people are actually interested in. The outcome of this kind of focus is typically an aggressive culture with volatile business results.

So why should they focus on culture and long term effectiveness? It's tough because the average tenure of a CEO is only 4.2 years. The long term view needs to be a personal belief of the leaders of the organisation. It takes a brave leader who says that they want to build a business which is sustainable over 10-20 years but they're only going to be here for 4 or 5 of those.

Looking long term and building a constructive culture isn’t about ignoring results or not caring about profit. If you’re a public corporation then you’re obliged to make a return to your shareholders. The point is not getting caught up in short term indicators and instead focus on long term sustainable profits.

 

Where to from here:

The regulation authorities are talking about risk cultures (as they should) but what they seem to be talking about is procedures and protocols for risk management – which is actually not about culture. Culture is about behavioural norms and the expectations for how people should behave. The risk is that we will put in place all these regulations and people will tick the box to say they have complied, yes I have a risk culture, and then we all move on.

So what do the banks need to do? They need to really question what thinking and beliefs caused them to do what they have been doing. It’s not necessarily about certain people falling on their sword - because these are systems issues and are not only the Chief Executive’s problem.

So they need to reflect, they need to think, they need to measure their culture, and they need to get feedback somehow on what is causing that stuff to happen. Then they need to talk about "these have been the unintended consequences of what we’ve done in the past, we haven’t done it on purpose, we didn’t understand it was going to cause this… so if we don’t want these things to happen again in the future then what do we need to put in place?"

 

Want to Learn More?

Cutting Through The Noise - Whitepaper
 
Download the Whitepaper: Cutting Through The Noise: What is Culture? or get in contact with us at info@human-synergistics.com.au


Do you have a question or feedback for us? Send a message to podcast@human-synergistics.com.au


 

Previous Episodes:
001: Kick Starting a Passive Team
002: Dealing with Delegation
003: Telling Someone They have a Blind Spot
004: What's Wrong with Being Competitive?
005: I have a Competitive Teammate – Help!
006: What is a Toxic Culture?
007: How Leaders Impact Culture
008: Is Culture / Climate / Engagement the same thing?
009: My Manager is Resisting Culture Change