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…
I have worked in the mutual financial services sector for all of my working life. Specifically, this career spanning some 37 years has been spent with UK building societies, who are often collectively cited as being the paragons of mutual financial services.
During my time in which I started as a graduate management trainee, continued through various departments and leadership roles in the UK’s largest building society, and now to leading the smallest building society, I have been struck by the high level of trust and loyalty which are so evident between providers and the members who are the recipients of our products and services. This has often made me seek to understand why that should be so.
The legal definition of a mutual, that it is owned and run for the benefit of its members rather than a separate group of shareholders who seek to derive a profit, is often given as the reason that mutuals gain so much trust from their member customers. Perhaps this ownership model is the main reason for that built-up trust. However, in survey after survey, it is also clear that members do not really understand the difference between shareholder-owned businesses and mutuals.
Perhaps then the answer to the question of trust lies in the people that are drawn to working for us. Building societies grew out of people’s desire to own their own homes and were local or community focused. The community pooled their savings and these savings were lent out in mortgages to borrowers to build or buy their own homes. The needs of savers and borrowers have diverged over time but the sense of community and looking after your own is very much still alive. I often remind my team that they are not engaged in ‘making widgets’. Instead, they are deeply entwined in the lives of the people they serve. Savings, homes, family and family protection – it doesn’t get much closer to life than that. It is clear then that the ownership structure and the desire of our people to help their fellow human beings in their communities promotes a culture of trust and great behaviour. This can be fostered and spread and the role of leadership in this process is incredibly important. A recent Banking Standards Board (BSB) staff culture survey in which our organisation took part saw us achieving the highest ratings for employee understanding and engagement with our corporate vision and values.
Being a member of the BSB gives me the opportunity to spread best practice as well as to learn from others. Regulation can go so far in promoting good ethics and culture in banking, but this is not enough to build a trust culture. Developing and engendering trust and values takes a very long time, but this can so easily be destroyed and so we must cherish and celebrate what mutual building societies have built up over nearly two centuries.
Amyn Fazal, Chief Executive, Penrith Building Society