Customer culture is a key strategic priority for banks | KPMG | BE

Customer culture is a key strategic priority for banks

Customer culture is a key strategic priority for banks

Banks of all shapes and sizes have made culture a key strategic priority as they still face public criticism.


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Banks of all shapes and sizes have made culture a key strategic priority as they still face public criticism. This because banks have not found a way to explain the new sense of equilibrium between creating trust, generating returns and continuing to innovate. 

The importance that regulators have placed on this need for cultural reform has been taken to the heart of the boardrooms. The Dutch Central Bank (DNB) started monitoring behavior and culture a few years ago. It launched a specialized center of expertise with experts from different backgrounds, such as psychologists, change experts and governance specialists. This team examines 'boardroom effectiveness' by visiting and observing boardroom meetings and extensively discussing its workings with the Board. They have performed over fifty specific surveys already at multiple financial institutions, sometimes in parallel and sometimes in specific settings where risks were suspected. Moreover, those investigations not only focus on behavior within the Board. DNB also assesses if the bank is capable of successfully completing major organizational and cultural changes.

Accountability in the UK

In the UK the introduction of the Senior Managers Regime is expected to enhance the individual responsibility of the Board and Management. It prescribes the responsibility of the Chairman for setting the direction of the culture and the CEO for implementing and leading the cultural change and challenging the business to ensure cultural change is progressing. So for the first time, in the eyes of the UK regulator, the Board has clear accountability for cultural change. For this reason we have seen culture become a key part of the Risk Management Framework for banks.

There is acceptance and acknowledgement that creating the right culture – one that places an emphasis on customer services and ethical behavior – should be at the heart of running a successful bank. It certainly is for banks that have been caught up in the mis-selling scandals of recent times, and are consequently trying to drive cultural change in close alignment to the regulatory conduct agenda. Banks that emerged from the crisis relatively unscathed and did not require regulatory intervention are those that protected and nurtured the culture that served them well through the crisis, then adapted it as required by the current approach to regulation. New entrants to the market, including challenger and specialists institutions, are seen to predominantly protect and develop their culture as values-based banks as their significant differentiator in a crowded and competitive market.

Conduct and culture

The link between culture and negative conduct has been well acknowledge as research by KPMG and the British Banking Association (BBA) has shown1. With 60 plus percent saying they will devote significant capital to transform their business models, it is also believed that culture must be at the epicenter of this (r)evolution. Building a sustainable culture for the future is a long game and will need robust metrics to track and measure cultural reform.

In an earlier Perspectives article we noted that premium customer experience management brands are characterized by their superior cultures. These brands recognize the importance of recognizing the commercial and reputational value that can be derived from the employee-customer interface. Putting the employee first and the customer second is the first step in channeling this. As such, the management lesson is clear: those responsible for employee experience need to be fundamental and clear partners in building customer experiences. Internal values, behavioral frameworks, competencies, training plans and recruitment principles are fundamental determinants in changing customer culture.

The KPMG and BBA survey of senior banking executives found that regardless of a bank’s individual circumstances following the financial crisis, they were all on a cultural journey. This journey, for all banks, comprised three distinct phases:

1. Cultural awareness

This phase starts with campaigns and initiatives to raise awareness of the importance of culture as a key driver of business outcomes, and evangelize it throughout the bank with a clear tone set by leadership. The key success factor is the way you cope with the emotional reaction to these initiatives, a tailored awareness strategy based on lessons learned from the past could help to prevent a complete denial of your investment in a campaign. 

2. Tactical cultural initiatives

This is followed by more formal cultural initiatives or remediation programs focused on tactical changes and improvements across a number of areas such as HR, learning & development, compliance, conduct and risk management. But also measuring the behavioral change periodically and anonymously to track and analyze changes in the underlying drivers and motives, as evidenced by anchoring behavioral change.

3. Operational change

The most challenging phase is to ensure that cultural reform is both reflected in and reinforced by fundamental changes to the end-to-end business and operating model, including the design of products and services, the reward and incentive model for staff, interaction with customers, cost structures and pricing. The only way of moving forward is to redesign these aspects with an outside-in approach and take lessons from other industry sectors like Telco, oil & gas and automotive where engineers have been successfully coping with required behavioral reforms for many decades.

For culture to work it has to change peoples’ hearts and minds and inspire everyone in the organization to support and contribute to it in the long term. They know that in order to be exceptional, something magical needs to happen. Maintaining this sustained energy is a key challenge; it is easy to launch and it is easy to whip up an initial level of enthusiasm – embedding it in a sustainable manner is much harder to do.

Culture should be about how we do banking. Getting the culture right will remain a key an ongoing priority for banks and it is safe to say that the job is not yet done.


Mark E. Straub,

Global Financial Services Customer Lead 

Bert Kempen,

Director Change Management, KPMG in the Netherlands


1Cultural (r)evolution – cultural progress in banks. Research collaboration KPMG and BBA Summer 2015

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