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Blog series – Susan Rice

In advance of our event at the Bank of England on 21 March 2017, we asked interested parties to write on the theme: Worthy of trust? Law, ethics and culture in banking…


A three-legged stool – that’s how I see the relationship between law, ethics and culture in an organisation.

Wearing two hats, one as chair of the Chartered Banker: Professional Standards Board (CB:PSB) and the other as a Board member of the Banking Standards Board, I think a great deal about trust in banking. With the CB:PSB, we’ve developed standards of broad knowledge and professional behaviour that we should expect of every banker. In the BSB, we’re prompting conversations at the highest levels in member banks about the culture of their organisations, about how things are actually done.

These initiatives matter because trust can’t be regulated. It isn’t something we can add to online training for colleagues. We can’t neatly slot it into a business plan. Trust can only be bestowed by others, it has to be earned.

I’m often asked how long it will take to restore trust in banking, or when the culture in banks will change for the better. These questions are important and complex, begging a short treatise by way of response. Since I’m not about to write a treatise, however, this is where the three-legged stool comes in.

Typically we’ve judged banks based on short-term financial performance – quarterly capitalism – sometimes even on spot numbers. In other words, we measure outputs. And link ongoing performance to capital or a similar financial surrogate for longevity. One leg of a stool.

We also take comfort from what’s called the tone at the top – the executives who are the voice of the bank both with investors and more widely. Can they claim that the bank is well-regulated, that they’re acting ethically, doing the right things? The second leg of the stool.

Not a comfortable place to sit for long, however, because it’s a two-legged stool.

So what else matters if the numbers add up at the end of the day, the bank successfully operates within regulation – within the law – and it’s on message? When things go well, we describe it in numbers; however, when they go badly we blame behaviors. I believe it’s the behaviours, the judgements, the decisions of every colleague in every bank that create genuine value and earn trust.

So if colleagues’ actions matter, could we place a value on ethical lapses, customer detriment, percent of bankers qualified and percent achieving their professional standards, and more?

In business, and especially banking, value should be determined beyond today’s outputs and yesterday’s numbers. We can make a business or transaction or product commercial by factoring in future benefits to the customer, to society, to our own business. A kind of net present value that accounts for more than financial performance.

Doing that will keep us focused on our purpose as a bank, a purpose which goes beyond just numbers, which is societal at its heart. Doing it also starts with what the customer needs. If we deliver that fairly, openly and simply, we reduce future risk and create value instead. Indeed, I believe we only create real value if the numbers, the outputs, are derived from a set of values, values with an ‘s’.

If our purpose is societal, we have to face into what society thinks. Call it behaviours, culture, professionalism – it’s this that comprises the third leg of the stool – and makes it a seat you can trust.

Lady (Susan) Rice CBE, Chair of the Chartered Banker: Professional Standards Board, BSB Board member