Top 5 Ways to Restore Trust in Financial Services
By Marcy Murninghan, Senior Research Fellow
What keeps bank executives up at night? Given the intense focus and media attention on the financial services industry these days it is apparent there is a need to restore trust within one of the most vital sectors of our economy. Pressure for structural and regulatory reforms continue to escalate but the fact is that such action will not restore trust in the financial services industry nor sustainably revitalize appreciation for its impact on economic development and society. It will require strong principle based leadership with actions by progressive Boards and CEO’s – the kind that has been demonstrated in the past and must be re-energized today. The fact is the financial services industry landscape is changing and with change comes opportunity. Lean on us to help you shape the way forward.
Here are a number of ways in which Boards, CEOs, and Senior Managers can play a leadership role to regain trust, revitalize risk management, and improve performance:
- Make a public declaration or corporate pledge to uphold the values and principles of integrity and sustainability your firm stands for. While accountability, as we’ve seen, may be achieved through dismissals, resignations and leadership changes, they aren’t enough to restore trust. Restoring trust is a long term project of transformation, organizational renewal and stakeholder interaction that begins with a declaration of principles or code of conduct rooted in values and backed by behavior.
- Build a corporate culture and climate conducive to values, integrity and sustainability. This involves shifting the focus from short term opportunism to long term value creation and building sustainability considerations into performance evaluation, training, development & leadership programs, and stakeholder engagement strategy.
- Revitalize Risk Management. Fight against complacency and “groupthink” by aligning risk management approaches with human behavior and sustainability commitments. Embed mechanisms that monitor, challenge, and counteract biases. Learn from social media to identify risks before they go viral.
- Use a variety of approaches to build, strengthen and maintain constructive relationships with key stakeholders such as your clients, employees, investors, industry groups, media, the community, and educational institutions. Learn from the outside through ongoing collaborative engagement and education. Cultivate peer exchanges and communities of inquiry to generate learning and new knowledge. Know how to use a variety of interactive technologies to enhance dialogue and mutual learning and create value for stakeholders.
- Bridge the trust gap by widening the transparency lens. Take the lead on new integrated, material sustainability and other non-financial disclosure and reporting developments. The growth in voluntary sustainability reporting has exploded and even stock exchanges are jumping on board. Also participate in a number of efforts to develop innovative sustainability metrics for the financial services industry.
For further insights into our research on sustainability within the Financial Services Industry please contact:
Thomas Scheiwiller, Director
Ted Grant, Director