Back to school for the banks

I must admit that it is becoming difficult to overestimate the reputational damage the financial services sector seems capable of inflicting on itself. Just as our data drawn from UK consumers was showing some recovery in the sentiment towards the banks along comes the PPI scandal as another symbol of their perceived lack of integrity. It is often said that reputation is painstakingly built over time but can be damaged or destroyed in a second – the danger for the banks is that the consistent undermining of trust in the sector will lead to a point where recovery or the idea of building reputation will become a redundant concept. Some may say so what? Their view is that people will always need financial products such as current accounts, savings etc and the last year or two has show that despite constant opprobrium many of the banks are continuing to increase their profits. The danger of course is that once the dust has settled and the banks have fully recovered their financial strength they will then become fair targets for more aggressive regulation and control. We are already seeing the beginnings of this with the recent FSA 11/1 paper on Product Intervention – the view being that the FSA and its successor the Financial Conduct Authority will adopt earlier intervention to protect consumer interests. So what to do? How can the banks and indeed the sector as a whole begin the process of reputation rehabilitation? Well the first part of the answer is indeed an obvious one – change your behaviour - no more scandals. The corporate landscape from Enron to Parmalat is full of examples of companies who did not change their behaviour only to pay the price in terms of financial ruin and ultimately, prosecution. The second is more subtle but in many ways holds the key to achieving the first. That is to look around and find companies that somehow have instinctively and intuitively placed the customer at the centre of the organisation. This is where one generally finds high levels of integrity and indeed certainty in what the organisations stands for. They can be drawn from any sector and even utilise any business model but the key is to understand how such organisations inculcate the customer perspective into the fundamentals of their thinking. The comment by Sir Terry Leahey sums the philosophy up in a nutshell: ‘it’s better to look after customers and let the market share figures look after themselves.’

So my advice to the CEO of any bank that wants to send out a message to its employees and the wider world that things will change would be very simple. Look in the UK or beyond for organisations that get it, that understand the dynamics of true longevity and success, that eat, drink and sleep the customer. They are out there, ready to talk and you can find many that aren’t competitors – one only needs to think of organisations such as Virgin Atlantic , Johnson and Johnson and Miele to name but a few. Then approach any conversation you have with them as if you were a pupil and it’s the start of your first term.

Milorad Ajder is Managing Director of the Ipsos Reputation Centre. He wrote this article for GFS News.