Banks need to change culture

The recent wave of scandals involving the big banks and financial planning institutions has led to the term ‘change culture’ being bandied about by those very same organisations. But it will take more than a catchy phrase to rebuild the trust of customers.

Australian Prudential Regulation Authority (APRA) chairman Wayne Byres and Greg Medcraft, the chairman of the Australian Securities and Investments Commission (ASIC) both spoke yesterday at a business lunch organized by CPA Australia and agreed that the industry still had a lot of work to do to improve confidence and trust.

When asked about the comparison between the regulators’ demand for a better culture and the continued scandals, recently uncovered at the big banks,” Mr Byres agreed. “There is a lot of work to do still.” 

“What we are trying to do is encourage a much more systematic approach to the measurement of culture, so it’s not just ‘I have a gut feel that things are pretty good'”, he said.

Greg Medcraft, who said, “We’ve got a lot of people saying ‘we put customers at the centre of what we do’, and then you see all their actions, and you go, ‘There’s something missing there’, highlighted the disparity between the customer-focused slogans being used by banks and the recent scandals.

While agreeing that culture was vital, National Australia Bank chief executive Andrew Thorburn conceded that it was impossible to weed out all of the bad eggs in the industry. “Greed or poor ethics and integrity will drive people and it has been happening since whenever banking was invented,” he said. “When that happens our obligation is to find it, address it transparently, firmly and swiftly and go back and understand the root cause of why it happened and how do we prevent it happening again.” 

All of the banks claim to be doing more to focus on the needs of the customer but the reality is that promises are little more than sound bites. Last month I heard Chris Riddell, a futurist who works with many of the big banks speak and while he agreed that the big banks did have a focus on improving service and trust for customers, they were failing to deliver on such promises. The recent scandal involving CommInsure is still forefront in the minds of many and sadly it’s just one of many banking institution failures where the customer has been well and truly shafted.

Read more at The Age

Do you think any of the big banks or financial institutions actually care about their customers? Have you experienced poor service or bad practice from your bank? Are they, in fact, primarily focused on profit and keeping their shareholders happy?

Written by Debbie McTaggart