In recent years, financial services companies, and more often, banks, have been in the news for mostly the wrong reasons. Gaming the system in LIBOR, laundering money for the Iranians, misrepresenting mortgages, mis-selling insurance, rogue or ‘whale’ trading, questionable foreclosures, assisting tax-dodgers, hedge funds embroiled in insider trading – the list of shenanigans goes on.
No prizes for guessing which industry was voted the least trusted by the general public in the 2013 Edelman Trust Barometer: Financial services.
Financial services least-trusted by public
“A crisis of culture – Valuing ethics and knowledge in financial services,” a study by the Intelligence Unit of The Economist, authored by Michael Kapoor, is a timely examination of the restoration of culture in the financial industry and its efforts to become more risk-averse and client-centric.
Soul-searching is evident. “In recent years many firms have launched thorough reviews of their practices as part of their efforts to decide who they are, what they do, and how they should do it. But it could take years before change is seen at all levels of the organization,” says the report.
The study examines the steps taken by the industry to improve ethical standards, and the role of knowledge in making the industry more resilient through fostering a better culture.
Conclusions of the survey
Global surveys and in-depth interviews throughout the industry led to the following conclusions:
- Most firms have made efforts to improve compliance with ethical standards. Interestingly, nearly 43% of respondents confirmed that they introduced career or financial incentives to encourage adherence to these standards.
- Regardless of poor press, and more skeletons falling out of industry cupboards, respondents agree that both financial success and ethical behavior are equally important.
- On the other hand, executives remain somewhat skeptical that ethical behavior can lead to business success.
- Both employers and employees are unanimous that firms need to identify and address knowledge gaps on a priority basis.
- One factor that has not changed from the days of the crisis is the lack of knowledge of, and communication with, other departments or units of the firm.
“The challenge for firms is to form enduring partnerships between functions to ensure that the firm is run by experts in everything it does,” says the study.
