Tag Archives: Regulation

Why Customer Culture Is Far More Important Than Risk Culture

This is a follow up to an earlier series of articles on risk culture in banks the last of which can be accessed here.

The best institutions and organisations are those which define themselves in terms of how they have they can best serve their customers (and the wider community) and not how they intend to manage risks.

This is a lesson that bankers, regulators and governments all need to learn—the future success of the banking industry depends not on more rules and regulations but how well banks transform their customer culture. As we shall see, that has very little to do with how they measure risk. Continue reading

The Question That All Bankers Should Be Asking: Why Are We Here?

The following article was originally published in the October edition of The Journal of Business Compliance.

INTRO: Jonathan Ledwidge is an author and risk professional with more than 20 years experience in investment banking and has strong views and undeniably good questions. In this opinion article, the first under the Speakers Corner column of the Journal, he asks questions of everyone in the corporate world, not merely bankers, but industrialists, regulators and all those associated with the formation of governance frameworks, the promotion of meaningful corporate culture and their implementation. He considers the many pitfalls into which a generation of business and political leaders have fallen and the consequences these have had on regulation and internal control practices. The scandals that have come to light within the banking sector have overshadowed scandals of corruption and misselling in other industries that just as crucially require answers and reflections of the existential question: Why are we here?

“Tell me again Maximus, why are we here?” Continue reading

Human Risk 3: Why Banks, Organisations Must Rethink Their Approach

This is the third in a series of articles on Human Risk. The first two can be found here and here.

It is commonly acknowledged that a primary cause of the last financial crisis was the poor culture and values within the banking industry—superstar bosses with big egos, greed and the failure to challenge management have all been identified as having played a major role. This assertion has been supported with reference to the likes of Fred Goodwin of RBS, Dick Fuld of Lehman Brothers and Stan O’Neal of Merrill Lynch who have all been named in Time magazine’s list of 25 People to Blame for the Financial Crisis.

If personal skills and attributes were indeed a major cause of the financial crisis then we must conclude that the failure of HR was as much to blame as the failure of traditional risk management. Continue reading

Banks Desperately Need A Crisis Management Plan

Can you imagine a major industry which suffers a near death experience, angers its entire customer base—wholesale and retail, domestic and international—and yet refuses to publicly apologise and adopt a plan of action that commits the industry to not repeating the mistakes of the past. That is where the banking industry is at right now.

This lack of decisive action on the part of the industry’s leadership will do lasting damage to not only the industry but also to its as yet unforgiving customers and the global economy. Part of the problem is that the industry does not appear to even realise that it is in a crisis—one which has been brought about by a complete loss of public faith in its activities. That is a tragedy. Continue reading

Only Bankers Can Create Great Banks Not Governments Or Regulators

It is impossible for any industry to survive if it relies on the actions of governments and regulators to watch over it in order to make sure that it does not blow itself apart. Yet, this is the precise position in which the banking industry now finds itself. Continue reading

Outdated technology could lead to another crisis in banking

This blog has maintained that the lack of proper IT and systems is a major concern for the banking industry. Here is the proof, if indeed any was needed, from the pages of the FT.

Outdated technology could lead to another crisis in banking

The FT goes even further and suggests that the failure of such systems could lead to both a financial and social crisis.

This is why I have always believed that the most important response to the problems within the banking industry is not what governments and regulators can do but what bankers themselves can achieve. Governments and regulators should take heed. IT systems are a major source of risk within banks which no amount of legislation and regulation can remedy.

This is also another example of why focusing solely on the risk culture of banks is simply not good enough–as has been clearly demonstrated in the series of articles on the blog.

Jonathan Ledwidge is the author of the book Clearing The Bull, The Financial Crisis And Why Banks Need A Human Transformation (iUniverse).

Why Banks Are Still In Trouble, How They Must Change

Address to the City Book Fair in London by Jonathan Ledwidge.

Clearing The Bull (Part 1) – Ending 30 Years Of Banking Failures  What banks must first do to stop repeating their history of failure.

Clearing The Bull (Part 2) – Why Banks Are Still In Trouble                   The moment of clarity banks need if they are to make real progress.

Clearing The Bull (Part 3) – How Banks Must Change                              An insider’s view on making the banking industry more human and more competitively and economically sustainable.

Jonathan Ledwidge is the author of the book Clearing The Bull: The Financial Crisis And Why Banks Need A Human Transformation.