By Colin Heath - Banking and Capital Markets Leader
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It was an honour to have Alderman Charles Bowman join us for the launch of the latest issue of Banking Matters at events in Sydney and Melbourne. Charles is the 690th Lord Mayor of the City of London, as well as being a Chartered Accountant and a PwC partner. As a global ambassador for the UK’s financial and professional services industry, Charles has been instrumental in driving the City of London Corporation’s Business of Trust programme, an initiative with clear relevance for Australia.
Charles noted that trust in financial institutions remains low worldwide, with survey results in the UK suggesting that fewer than one in three people trust their bank, with barely one in 10 trusting funds managers. Given the importance of the sector to the UK economy – it employs 2.2 million people nationwide and accounts for 12.5 per cent of GDP – this loss of trust demands an urgent response.
Charles told the audience “The message I will be repeating, relentlessly, throughout the course of my year as Lord Mayor, is that if the UK financial and professional services industry is to remain pre-eminent, we have a responsibility, indeed a duty, to re-earn the trust of society.”
The good news is that when the City of London Corporation went out to industry leaders and the wider public – through an industry advisory group and a series of citizen juries – the answers they came back with were remarkably similar. This led to the development of five civic principles which were then used to provide a roadmap for greater public trust and greater public prosperity.
These principles could be best summarised by the comment from one citizen jury participant who said simply: “Just tell people what you’re doing, and why you’re doing it.”
This thread was picked up by PwC’s Chief Creative Officer, Russel Howcroft, who opened the panel discussion by stating that ongoing cuts to marketing and advertising budgets meant banks were missing a valuable opportunity to engender trust through better communication. "Marketing spend is in fact a heuristic for trust," he told the audience, "because you spend your money on your brand. Advertising is a really powerful way to communicate."
Russel also cited an advertising campaign from the nineteen-eighties that used the tag line 'tailoring banking to your needs' as an example of a great proposition. He noted how Bunnings have maintained the one simple and consistent message (‘lower prices are just the beginning’) for years, and suggested that banks could learn much from this approach: "Imagine if they had stuck to that line from 1987 through to 2017? We'd have had 30 years of that one line, the idea that we are here to meet your needs."
Elizabeth O'Brien, a PwC partner who spent several years working in the US during and after the financial crisis, suggested that banks there had initially been resistant to the regulatory requirements introduced post-GFC and, while they have now found ways to operate in the new environment, and generate improved returns on equity, they still hadn't regained the trust of society. Interestingly, she suggested that perhaps this is due in part to society distributing trust differently now, and trusting institutions less. Elizabeth noted that author Rachel Botsman talks about a 'trust shift', where we put our trust in digital platforms and individuals to get more timely, reliable information. Perhaps the key is for institutions to "actually become more humanistic by putting the individual back in front of community and society."
Hugh Harley, our Asia Pacific Financial Services Leader, also noted that technology – and social media in particular – have introduced a new dynamic to the concept of trust, and so in this regard "the levers for institutions [to improve trust] are more constrained than they were in the past."
I'll give the last word to Charles who, in response to a suggestion that the distrust of banks was levelling the playing field for start-ups seeking to leverage FinTech for market advantage, noted that the companies who thrive in this space do so not just because they are using technology effectively, but because "they look at their business model through this new paradigm of trust." As Charles suggests, that is a very powerful combination, "and when it works, it works very well."
By the time we wrapped up the discussion, it was clear that we had just scratched the surface and there is still much work for our sector to do in addressing the issue of trust. I do feel confident, however, that the conversation is at least well under way.
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