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The Value of Kindness in Banking Culture | Allen & Overy LLP

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Banks are at a critical inflection point. The rise of technology and private credit is opening up the possibility of disintermediation in the financial sector. Inflation is rising and the possibility of a global recession is looming. How they respond to these situations can determine their future.

Banks have an opportunity to reframe and restate their principles and objectives. They have the opportunity to establish new ways of engaging with customers, stakeholders and regulators with a more empathetic and holistic view. They can build a more responsive and responsive culture and a foundation for sustainable growth well into the future.

Ethical behavior in banking has recently become a focus of regulators. But ethics cannot be improved by monitoring, monitoring and incentives alone. The culture within an organization has a great influence on the ethics and behaviors exhibited and aspired by employees at all levels. As a result, banks are increasingly focusing on building better corporate cultures, and there is evidence that such activities affect not only economic outcomes but also organizational outcomes such as employee retention and behaviour. I have.

Why kindness matters in a bank’s organizational culture

A rare, highly valuable, and now undervalued fundamental aspect of organizational culture is kindness. It is a product with the power to change outcomes for both banks and their customers. Kindness is a virtue that indicates that an organization is responsive, empathetic, and constructive. Kindness demonstrates a willingness to achieve more and create more value by focusing on what is important to all stakeholders.

Banks have an opportunity to set a unique example. They can articulate that there are values-based and ethical dimensions to decision-making, culture and business practices. They can show that they are doing more than their competitors. You can also demonstrate that you are a market leader and stand out in a growing and diversified field among direct competitors and challengers offering similar services and capital in different ways. This can help you gain attention and support, fostering loyalty and future success.

In times of turmoil and uncertainty, there is a strong argument that kindness has a place in the global economy. There is a role that banks and financial institutions play in the way they do business. Kindness is not a sign of weakness, but of strength and confidence. It has both moral and commercial dimensions and is a lever for achieving competitive advantage. There is a strategic business case for making kindness a key organizational behavior. Being kind and supportive can make a difference beyond a purely business relationship. It helps differentiate you from companies that operate purely for profit.

People remember you when you are kind. Acting kindly promotes inclusion and consideration within communities and organizations. This encourages a more collaborative and productive way of working. It shows stakeholders and customers that your business is more than profit driven.

Value of non-financial value for banks

By consistently conducting every interaction with integrity and with an ethical, empathetic and supportive attitude, banks win a slice of the hearts, minds and wallets of the customers and communities they serve, empowering the next generation of business and politics. of leaders can be involved.

Embracing non-financial values, including responsibility for climate change, is in the public eye. However, this was not without controversy. These ideas are a force for good, but they have been hijacked and abused. Investors, regulators and activists are familiar with it. Token gestures and clichés are easy to find. Genuine genuine kindness and its application to operations can guide banks through a process of incremental change to reach what society, stakeholders, regulators and customers deem most important. increase.

The world has changed a lot due to the pandemic. When we come back together, we will have more empathy, care and consideration for those facing greater challenges than us in our communities and different parts of the world. .

This has spilled over into the corporate world. A sharper and clearer conflict of ideologies leads us to question how we do business, where we do business, who we do business with, and how goods and services are made and delivered. is throwing Kindness guides us in making sound choices and addressing what our stakeholders want from our organization.

How action can help banks under scrutiny

Banks have a duty to ensure that their activities serve the communities in which they operate, the stakeholders they serve, and the economy at large.

But they are surrounded. Despite the huge gains recorded against the long period of low interest rates and rising asset values, we are in an entirely different paradigm. It has a tendency to de-neutralize. In an intense trading environment, there is constant competition and economic growth can slow down. There is a new level of scrutiny and skepticism about how banks, and those who make decisions and set strategy within them, approach their work and their customers. Public expectations of organizations, especially those whose success and reward packages seem disproportionate to those they serve, are at an all-time high.

Regulators are watching. Banks are responsive and kindness shows that they tend to do what is right. you get the opportunity. In return, there may be a greater tendency to make regulations more purposeful rather than rigid and restrictive.

But there is a widespread expectation that we should do more than what is mandated by law and regulation. Banks may meet codified external standards, but what more have they done? What more can they do?

At an operational level, banks should consider the following locations:

  • Eliminate unnecessary complexity
  • Responsible lending and investment
  • treat customers fairly
  • inclusion, internal and external
  • Transparency in all transactions and actions

Kindness Radiates and Emphasizes Sound Operational Behavior

Kindness is a competitive differentiator that works on many levels. It communicates inside out the values ​​that drive and underpin the culture and operations of the organization. Banks need not focus solely on profit to preserve their most valuable banking products: customer trust and loyalty, exceptional work performance and future business growth. Banking decisions have a moral dimension and context that has existed since the beginning. There is no need for them to forget or abandon these principles.

Showing kindness shows that banks do more than just recognize their role as a conduit for commerce. It demonstrates an understanding of its place in the community and its place in helping individuals and businesses achieve their personal and commercial financial goals. It played a role to the grave and was present at every important point in an individual’s life. That means your first bank account, your first home, saving and lending to make your dreams come true, managing your finances for the next generation, and more. For companies and funds: cash flow management, working capital support, financing, risk hedging, acquisition and divestiture advice, supporting loyal clients in financial distress. Banks were sympathetic and at the same time financially responsible. Revenue wasn’t always the only issue.

There is no reason why banks should not reflect and re-adopt these values ​​and behaviors. Doing so can set you apart from your competitors and potentially build trust and loyalty in a world that lasts forever.

Banking is a human business. Many are using technology and AI to improve efficiency and delivery. Technology solutions have proven to help banks increase operational transparency, create personalized communication channels and opportunities to restore trust. But people are at the heart of what a bank does. The impact our employees at all levels can provide with their compassion and kindness to our clients enables them to win and continue to win in the future.

Conducting business with kindness and compassion is a key asset in a bank’s competitive arsenal. They can boost the value proposition of any bank and act as a catalyst for better value and better performance. Banks that bring kindness to their activities achieve positive results by adopting more ethical, empathetic and moral principles into their operations. The market finds the right price for kindness and there is always room for more.