Trust is at the very heart of financial services, so it’s nothing short of a tragedy that an industry so reliant on trust should have lost so much of the public’s confidence. We are not alone in this. In January, for the first time, the Edelman Trust barometer recorded a simultaneous decline in trust across all four of its constituencies – governments, business, media and NGOs.
In past eras, building societies were created by people who knew each other and met socially, providing that essential glue of trust. Meanwhile, large banks built giant edifices to reassure customers they wouldn’t abscond with their money. But there has always been scepticism about the motives of bankers, right back to the money lenders in ancient times. Today it’s commonplace to believe that financial services has not been run for the greater good, but for the benefit of a narrow “elite” who escape censure and justice when things go wrong.
And yet, financial services are a vital part of our economy, with the capacity to improve the life chances and wellbeing of individuals and of the country. With the advent of a digital revolution which will change dramatically the industry’s business model and upend the competitive landscape, regaining trust is mission critical for all market participants. So how can the sector become a respected contributor to the social and economic good once again and regain its legitimacy in the eyes of society?
At Nationwide, we believe this fundamentally starts with purpose, ethos and values. As a building society, we were born of a social, not a commercial purpose, and this alignment of interest between the Society, it members and the communities we serve is fundamental to how we think and make decisions. Of course, regulation plays a necessary and important role, through rules and principles, but it is not sufficient. Voluntary initiatives including, importantly, the Banking Standards Board are valuable; they maintain scrutiny on firms, and work in partnership with leaders of financial organisations. However, they can only be an enabler.
Regaining the trust of society starts and finishes with the Board, the leaders and the colleagues within firms, and a clear and concrete commitment to ensuring the interests of customers and wider society are placed on an equal footing with the interests of the owners. In other words, it’s about the culture and values of the organisation.
Culture is not about putting words on walls, running programmes or making big, bold pronouncements. Rather, it is about providing a clear sense of how we expect everyone in the Society to approach the decisions, big and small, that we face every day, and how we wish to balance the interests of the various stakeholders we have the privilege to serve.
Therefore, at Nationwide, alongside rules and best practice, we take a values-based approach. Put simply, it is our values that determine how we instinctively behave and provide the “polar north” that shapes the decisions we take every day…
Values mirror and are inseparable from the culture of an organisation. At Nationwide, we believe that our mutual ethos has produced an ethic of care and a norm of doing the right thing by our members. This golden thread, explicitly encapsulated for the last 15 years in our five “PRIDE” values, flows right back to our roots, when our founding fathers established that ‘borrowers should be treated as… customers… as though the society was established for them…’.
This ethos has shaped our behaviour through many challenging times. For example, during the Second World War when homes were being bombed, loans were extended and deferred, and managers were told to deal with customers with ‘simplicity, sympathy and speed’. In other words, empathy and values were considered alongside the rules.
I am not arguing that mutuality by itself guarantees good practice; many companies also have strong values and culture. These will be essential to repairing trust in our industry and allowing it to play its valuable role in people’s lives. Rules, regulations and best practice play an important role, but ultimately, it will be the culture of our organisations and the way the culture translates into actions which will determine whether our industry can become a respected contributor to the social and economic good again.
David Roberts, Chairman, Nationwide Building Society