For much of the last 20 years Cultural Change in the Banking and Financial Services Industry was viewed by many as a “nice to have”.
One of the reasons for this in my view is lack of understanding of Culture Change and the benefits it can bring. This lack of understanding mainly emanated from the ephemeral nature of the word “culture”. If you look at all the standard definitions they articulate a holistic definition, utilising words such as “language, religion, social habits” etc.
If you’re a CEO or FD with an inexhaustible list of priorities you might think that it has little to do with delivering successful outcomes for your organisation and would not figure in your top 5 priorities, however, I would suggest this should not be the case – particularly now.
A good definition of Culture is:
“It is about the beliefs and mind-set of all individuals of an Organisation and how they are played out in the behaviours of everyone.”
Both academic evidence and real-world experience shows a World Class Culture can drive a World Class Organisation and in many ways, rather than looking to the boardroom for guidance, a deeper understanding of why a “World Class” culture is business critical is found on the shop floor.
Whilst technology and process are also important, people deliver the end result. Their beliefs, mind-sets and behaviours underpin Culture and those behaviours must be exhibited both internally and externally.
So What? Why is it imperative to get Culture right now?
The FCA have identified Culture as a primary driver of failures over the past 10 years in the industry and they are determined to put it right.
Poor culture in our industry has generated customer detriment, financial loss and a heavily tarnished reputation.
As the FCA has made clear, a culture that delivers poor outcomes for customers will no longer be tolerated. Under the FCA’s Senior Managers Regime (SMR) the sanctions, if found guilty, are now significant.
This regulatory pressure has rightly put the topic of Culture and Cultural Change front and centre in many firms. If it is not a live topic at recent Board meetings it should be! In many senses, this is where it should always have been, it just makes great business sense.
I have worked in Financial Services my entire career including as Director of Barclays UK Retail Bank Collections and Head of Collections at LTSB Asset Finance, I have sponsored Cultural Change programmes and can testify that, done well the good outcomes can be clearly measured and can simultaneously deliver:
- In year (and future) P&L improvement
- Reductions in Customer Complaints
- Improved customer satisfaction scores
- Substantial reductions in staff turnover
- Improvements in industry benchmarking
Each of these alone would be great but together they are a compelling reason why Cultural Change should be high on the agenda of any executive responsible for collections and recoveries. But “where to start”?
We would have the following recommendations:
- Ensure there is a clear vision that all staff can articulate, with a pathway showing the journey. Baseline bench marking is essential to evidence improvement and to be clear about what is being measured.
- Positive engaging and timely communications. These are mission critical as a “wraparound”. Communication should be two-way. Senior Managers need to listen and act, not tell.
- A hierarchical Bond of Trust must be created; undermine this and the change will fail. Technology and Process must be aligned to the Cultural Change that is being created. It’s not just about Customer Facing Staff; everyone in the Firm is part of the transformation. World Class Cultures are internal as well external facing.
- Everyone must be empowered to say “No” and take personal Accountability/Responsibility.
Let’s be clear delivering a “World Class” Culture takes time, up to 5 years in many cases. Leaders in every firm are mission critical to drive this forward, if any cadre of leaders abdicate responsibility, there is a high probability it will fail.
Today we no longer have the choice; the industry is coming under increasing Regulatory pressure to create a culture that works for Customers, what’s more it just makes good business sense!
If you would like to discuss our experience of Cultural Change in collections and recoveries, please do not hesitate to contact us.
Clive Pickett, Collections Transformation Specialist