Very good this week to hear both Anthony Jenkins, chief executive of Barclays, and Justin Welby, Archbishop of Canterbury, tell the BBC that the overwhelming priority of the banking sector is to restore public trust.
And very good to hear them both acknowledge that the project will take a long time – Jenkins suggested it might take a decade, before conceding to Welby’s more judicial view that it would take a generation to restore trust in banks, or as he puts it “around 30 years”.
Changing a mentality in financial services which has been so self-centred, so greed-driven and so entrenched in the idea that reward is privatised but that risk is socialised isn’t an exercise which can be conducted as a marketing programme. That would be the politician’s short-term answer – an advertising campaign that says: “Trust Us!”.
It won’t wash, even if that’s what most of the PR and financial marketing industry is geared up to offer as a message. What Jenkins and Welby are acknowledging essentially is that bankerts can no longer be judged by what they say, but only by what they do; not by how they present themselves, but by how they behave.
Jenkins and his banking colleagues and competitors are undertaking nothing less than a cultural revolution. If that sounds Maoist, then it’s worth noting that this western cultural revolution is the exact obverse of Chinese communism’s attempt to expunge capitalism from its system – our neo-liberal free markets need to re-invent capitalism, to make it something closer to what the Archbishop identifies as a principled form of service industry from a couple of generations ago.
That’s an exciting undertaking. And it will have to negotiate not just the “denial” among some bankers to which Welby points – the idea that the 2008 crisis was a glitsch and that, with a return to economic growth, normal service can be resumed, with the bandits of the financial services industry transferring the savings of the poor into the pockets of the rich once in every generation.
It will also have to negotiate a professional marketing services industry, which has successfully leeched off financial services for a generation by helping its client companies to sell products and services to customers that they don’t need. It will be worth it – if only for the systematic destruction of all those egregious “Your Money” supplements.
But there is one aspect of this debate over which I take issue with Archbishop Welby. He seemed to suggest – though he may have been led by my old friend, the BBC’s Hugh Pym – that there had to be a “massive cultural change” to move banks away from “serving the interests of shareholders”.
The idea that operating like watch-the-lady tricksters ripping off gullible customers is a strategy that best serves shareholders is one of the great canards – and, of course, best kept secrets – of financial PR.
It simply isn’t true that shareholders demand casino banking and ruthless exponential earnings growth. That’s what banking personnel and their PR bag-carriers demand, so that they can coin it. What shareholders demand is stability and capital growth. And they know that behaving well and serving customers’ best interests can deliver it.
Research conducted by impact-investment management firm Sonen Capital in 2013 showed that impact investment does not come at the expense of return on investment. These findings were corroborated by a recent exercise conducted by the Social Stock Exchange, which exists precisely to conduct the market revolution which Jenkins and Welby anticipate, when it demonstrated that, over a three-year horizon, returns on a weighted index of companies delivering positive social impact outstripped the FTSE-100 and FTSE-250. The share price volatility of these companies was also seen as being below average for UK equities.
So let’s not for a moment, whether we’re a bank chief executive or an archbishop, suggest that we’re indulging in a kind of “nicewash” of banking and financial services, just applying lipstick to the pig, as it were. Investing in public ethics and developing a corporate social impact is also an efficient and effective asset class for shareholders.
This isn’t just about being good – it’s about making money. In short, no more Mr Nice Guy.