Professionalism in banking; time for a race to the top

Professionalism in banking; time for a race to the top

Whether banking is a profession, is open to debate. Whether people working in banks can and should act professionally is, however, rather easier to agree on. We may differ on what constitutes a profession, but we know what ‘professional’ looks like when we see it (and even more so, when we don’t). In a sector such as banking, where customers – whether consumers, clients or counterparties – have of necessity to put some degree of trust in the behaviour and competence of those they are dealing with, we expect those providing the service to act professionally.

A steady drip-feed of examples of bad behaviour or lack of competence has undermined the reputation of the banking sector as a whole. Public confidence in the industry’s ability to manage and police itself has declined sharply, leaving a vacuum that regulation is now moving to fill.

Regulation cannot, however, do everything; nor should it aim to. Even the best designed, implemented and enforced regulation cannot guarantee that customers will be treated fairly or market participants act with honesty and integrity. It cannot transform poor managers or role models into good ones; and there are obvious downsides to a world in which a firm deems anything not explicitly prohibited, to be appropriate.

A strong, sustainable and competitive banking sector needs effective regulation and compliance; but it also needs something more. It needs firms – or more accurately, people within firms – who have their customers’ interests at heart, and who within this ethical framework have the ability, autonomy and confidence to exercise judgement when presented with situations that aren’t straightforward. It needs a culture in which knowledge and experience are valued, challenge and feedback are expected, and mistakes are recognised, remedied and learned from; a culture, in short, in which professionalism is the norm.

Such a culture is harder to build than one based on least-cost compliance with the letter of regulation. Professionalism is about much more than just the acquisition of qualifications; but if professional qualifications are not the whole answer, they can, in the right context, be a good place to start. Qualifications that are relevant, recognised and valued by employers can boost not only the competence of staff but also their confidence, influence and engagement. The attainment of qualifications can enhance mobility and diversity, and their application can encourage the continuous improvement and challenge that characterise a dynamic and competitive services sector.

Firms will not, of course, all use the same qualifications in the same way. The banking sector encompasses a variety of types of firm; banks and building societies, branches and subsidiaries, single site firms and multinationals, and many more. Firms differ in size, structure, markets, customers, history, technology, geography, ownership and strategy; and each firm will have its own culture and, relating to this, its own aspirations, challenges and starting point. For some, the focus may be maintaining a longstanding culture and proudly earned reputation; for others, restoring or improving their reputation; and for others, on developing a cultural identity, adapting it as the firm grows, or unifying multiple internal cultures. While the use of qualifications and the qualifications used will vary, it is however important that, in a mobile – in parts, global – labour market, the qualifications on offer are recognised and (as appropriate) relevant across the industry. The professional development of the sector is the responsibility of the sector, and a responsibility shared by both the providers of professional qualifications and employers.

The Banking Standards Board, established to raise standards of competence and behaviour across the entire banking sector, will engage with both member firms and professional and industry bodies to examine how qualifications are currently used across the sector, whether and how this is changing in the light of the Senior Managers and Certification Regime and other developments, and whether it would change if the qualifications themselves were different. We will also explore the appetite among both firms and providers of qualifications for the type of professional association more readily found in e.g. medicine, engineering or accountancy being made available to staff in the banking sector, and what the benefits might be.

Acting on its findings, the BSB will encourage and challenge the industry in its efforts to build trustworthiness and demonstrate the sense of collective responsibility to society that has sometimes been described as defining a profession. This sense of responsibility is not about corporate social responsibility; it is, rather, to recognise that putting the interests of customers and clients at the centre of a bank or building society’s business, equates – given the sector’s inter-connectedness and its importance across the entire economy – to a core responsibility also to society.

This responsibility is already recognised and acted on by numerous individual banks and building societies, and by many of the hundreds of thousands of staff who work in the UK banking sector and bring professionalism to life every day. Translating it to the sector level is, however, no small task. It will not happen overnight, and it will not happen at all without concerted effort; but it is an effort worth making and one that no firm can affort to stand aside from.

Is banking a profession? The jury remains out; but we should not let its deliberations distract us from taking steps, now, to make professionalism a competitive advantage for the UK banking sector. Time for a race to the top; and one in which we all want and need as many winners as possible.

By Alison Cottrell, appeared in The Banker on 23 November 2015