Tapestry Bank Governance Leadership Network Summit 2012
Turning values into action
Since the first summit in 2009, BGLN participants have been discussing the need to rebuild their industry's reputation. So why does this remain a top priority in 2012? Arguably, it is because uncertainty still prevails on many fronts.
Few, if any, bank directors believe the journey of cultural reform will be an easy and quick one.
Yet what sets the last 12 months apart is a trail of what one seasoned financial services leader called “self-inflicted” wounds. The scandals facing the industry – particularly those related to the LIBOR rate rigging – have been cast as issues of culture. So with culture again a central theme at this year's summit, participants concluded:
- Culture problems are real, and boards have a major role in shaping it. This includes revisiting some fundamental questions about a bank's purpose, and setting out core principles and values that will drive long-term success and respect.
- Stakeholder interests need rebalancing, with customers coming first. Metrics for success need to be redefined, and relationships with regulators and supervisors must be rebuilt.
- Selecting and rewarding the right talent and monitoring behavior are critical. Pay remains a power lever for influencing culture throughout the organization. Boards also need to become more systematic in gathering and evaluating data on their bank's culture.
Few, if any, bank directors believe the journey of cultural reform will be an easy and quick one. The structure and business models of the industry are changing, and culture has to change in tandem.
Yet if banks fail to act now on culture reform, there is a serious risk that others will step in. As one summit participant concluded, “all institutions have the power to change themselves. Waiting for outside authorities to impose cultural reform upon us would be disastrous and hold us back.”