Has there been any change in UK Banking culture? And will there be in future?

I've blogged several times before about the predominant culture of the banking sector.  About short term thinking driving pursuit of targets at all costs and resulting in a culture that at best takes customers for granted and at worst results behaviour that blatantly takes advantage of them.

I last wrote about it here: http://everythingengagement.blogspot.co.uk/2012/09/big-banks-customers-complain-every.html in September, following the release of statistics suggesting that the banking industry as a whole receives a complaint every 7 seconds!

More bad news today for the 'Big 5' banks following the release of a report by consumer watchdog 'Which?' that suggests the 'sell at all costs'culture is if anything getting worse rather than better.  The report said:
"Which? interviewed branch and call centre staff from the five major banks – HSBC, Royal Bank of Scotland, Lloyds Banking Group, Barclays and Santander. Our research revealed that two-thirds of bank staff who have a sales role and sales targets say there is now more pressure than ever to meet those targets."

It went on to say that:
"The dominant sales culture in Britain's banks is encouraging mis-selling, almost half (46%) said they knew colleagues who had mis-sold products in order to meet targets. Four in 10 felt they were sometimes expected to sell even when it was not appropriate for the customer."

This echoes feedback I'm receiving from contacts I have in the industry.  They tell me that whilst PR and marketing is focused on rebuilding trust with customers by telling them their bank has changed, the reality internally is that banks are more profit focused than ever and that achieving ever increasing sales targets is absolutely critical.

I don't expect banks to change their culture overnight.  It can take a long time before the culture of large organisations changes.  But I would expect to be starting to see some changes by now.  After all, these issues have been on the agenda for at least two or three years now.  So why isn't change  happening? 

Culture change also requires strong leadership and consistent and aligned actions over a prolonged period.  What the Which report seems to illustrate is a lack of alignment - a view that reducing incentives will prevent the problem.  In reality though how people are incentivised is just one of the factors and evidently the benefits of those changes are outweighed by the pressure to meet sales targets.  The report indicates that two thirds of those who took part in the survey say they are "sometimes or always told to sell more."

I believe that the banks' failure to achieve change comes down to two things:

1. An inadequate understanding of the factors causing the problem.  What this also suggests is an inadequate understanding of culture.  Leaders in many organisations look for a quick fix lever they can pull to resolve a problem, not appreciating that the culture of their organisation is caused by complex, inter-connected and concomitant factors.  Looking at them in isolation is the wrong thing to do.
2. Inadequate leadership.  Let me be clear on this one.  I am NOT suggesting that the leaders are inadequate per se but I AM expressing my view that their leadership of the culture change is inadequate.  Different skills and behaviours are required to lead change than to lead steady steady state.  It requires a different focus.  And it means priorities have to be reconsidered.   Unfortunately the existing business model, focused on short term financial performance and the generation of shareholder value, is so deeply embedded that these short term requirements are in conflict with the longer term and strategic changes required.  And the short term is winning.

The size of the prize is enormous for the bank that shifts its culture, and sustains it, but the size of the challenge facing leadership is also enormous.  And so far it's been too big.

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