The culture of an organisation, while intangible, can be one of its greatest assets – it can be the magic ingredient which sets it apart from other businesses and captivates both customers and employees. We can all think of businesses like this and, similarly, businesses which have paid the price of allowing a harmful culture to become established.
Culture was one of many issues quickly cited as defining what was wrong with the banking sector at the time of the financial crisis. Seven years later, it remains on the agenda for both banks themselves and the likes of the media, the public, shareholders and regulators.
To help gain a deeper understanding of the progress that’s been made in recent years, and the amount of work still to do, KPMG has undertaken qualitative research involving in-depth interviews with 21 senior banking executives from right across the sector.
1. Culture remains high on the agenda across banks of all shapes and sizes, but not always for the same reasons
By force or otherwise, culture has risen to the top of the agenda. It is now frequently discussed at executive level and for many of the respondents it has become an explicit strategic priority.
2. Banks have made considerable progress on their respective cultural journeys
All of the banks interviewed are at different stages of their cultural evolution, and while many of the changes implemented to date have been challenging, the more difficult task of embedding the culture in all parts of the organisation will require the resolution of some tough dilemmas that will likely require changes to the business and operating model.
3. There is a need to establish robust metrics to help track and measure cultural reform – effective measurement of culture remains a challenge
Banking leaders recognise the need to establish measures that provide a rich picture of how culture is developing over time. Quantitative and qualitative metrics that adequately capture the nature of a bank’s culture are hard to find, but are necessary to demonstrate progress.
4. Building a sustainable culture for the future is a long game
The key challenge for banking leaders is to get the balance right between the needs of all groups, including customers, clients, staff, shareholders, regulators and society overall.
The third theme, relating to effectively measuring cultural change over time particularly interested me. The views of the banking executives in this piece of research varied significantly. A comprehensive flagging system integrated into the organisation’s HR, compliance, training and communications system was cited. In contrast, another executive took the position that first-hand experience is a more effective measure of culture than a defined set of metrics, saying, “We don’t rely on reporting, we believe it’s important to walk the patch, meet customers, talk to people and talk about the bank’s culture”.
However, many banks are starting to look at the richness of the people data that they hold to measure progress on cultural attributes. I share the views of my colleague, Tim Howarth, KPMG in the UK Banking Partner who commented, “HR predictive analytics has a big role to play and real-time big data can provide powerful insights in areas such as trader surveillance – I think this is a really exciting area where banks can achieve institution-wide benefits.”
Through our conversations with a diverse range of UK banking executives, we’ve learned that much of the cultural change that can easily be achieved, has already been achieved. Creating truly sustainable, ethical cultures is a journey which will continue for some time yet, but the data and the technology does exist to help make this journey both shorter and more rewarding for banking institutions and their workforces.
To request a copy of the research findings, please contact us.