Whoever said business is challenging was the Mistress of understatement! There is no shortage of things to get right to drive profitable growth.  Leaders need better, faster decision-making. They need to develop a strong, positive, performance culture. There is urgency to innovate and transform the Organisation. Then there’s the imperative to create and share the strategy with the people working in the business so they can be aligned and set up for success and have transparency on their individual and team priorities. Mission critical, of course, is hiring, retaining and engaging the talented people needed for the business.  With all those plates spinning, attention also turns to managing risk and reputation and all the potential pitfalls there. And on top of all that, Covid has accelerated the complexity of workplace dynamics and how and where all those talented people actually get the work done.  Feel the need to lie in a dark room for a while?

Companies operating in Financial Markets have all of the above to contend with plus the added factor of regulation, which brings with it a whole set of expectations, requirements and obligations for the organisation to meet - every day, with each and every customer interaction.

In recent years, the regulators around the world have dialled up the importance they place on conduct risk and purposeful culture. In Ireland, for example, in a CEO letter dating back to 2019, the topic of “Culture and People”  had its own full section with 5 sub-sections spelling out exactly what is required. In addition companies are required to evidence how they are improving their behaviour and culture.

And this is certainly not unique to Ireland. The Royal Commission in Australia, in its 2017 report, stated“ ...effective leadership, good governance and appropriate culture within the entities are fundamentally important. It now must be accepted that regulators have an important role to play in supervision of these matters. Supervision must extend beyond financial risk to non‑financial risk and that requires attention to culture, governance and remuneration”.

Risk shows up in so many ways in financial services companies.  Risk management and compliance teams are mushrooming functions, which often seem like they’re engaged in a game of Whack-a-Mole trying to identify and mitigate already-identified risks, and pre-empt an ever-increasing list of potential risks.  There can be no doubt that the behaviours of people, and every decision they make, is the number one risk facing large, growing organisations. As is so often said “Culture is what happens when no-one is looking”

When it comes to compliance around conduct, there are relentless rounds of chivvying everyone in the organisation to ensure they have completed their AML and other annual training requirements, depending on the scale and complexity of the organisation. Continually issuing internal communications to ensure that everyone understands and executes all the required processes and procedures correctly - all while trying to drive growth and compete in the marketplace.
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In addition to the regulatory requirement aspect of culture and conduct, there is another critical imperative for financial services companies - attracting talent.  A positive, purposeful culture is rated very highly amongst talented career starters looking to join a company and many Financial Services organisations have a job to do to improve perceptions of its culture amongst some people. Anecdotally, I hear many smart, ambitious young people say they would not consider a career in Financial Services. Surely this is one of the biggest challenges facing these organisations? And surely for all these reasons, a strong Culture is the next competitive advantage for the Financial Services Industry?

In summary, any deficiency in any team member’s behaviour could result in enormous financial and reputation exposure.  So, ensuring everyone in the organisation is fully briefed and compliant with current regulations is an absolute business imperative and I think the suite of tools used in companies today can be upgraded.  And any organisation finding it difficult  to attract and retain the talent they require will also struggle to grow. 

As I was thinking about all this, I recently had the good fortune to have a conversation with Professor Roger Miles, Co-Founder and Head of Faculty, UK Finance Conduct & Culture Academy and I’m currently reading his rather excellent book - “Culture Audit in Financial Services”.  (I plan to do a book review on it once I’ve finished it) but suffice to say it is filled to the brim with great observations, relevant perspectives, expert commentary from a plethora of informed individuals and some smart suggestions for impacted organisations.   A key outtake I have so far is the idea of holding frequent “Conduct Conversations”. These bring conduct into the day-to-day working of the business.

I highly recommend that anyone interested in this important topic should get their hands on the book - it’s also written in accessible, straightforward language, which I certainly appreciated.

For this second suggestion, let me just call out my potential “bias” here as I’m a Co-founder in Frankli, but I’m absolutely convinced that the deployment of a performance management and engagement platform is a super-smart way for financial services organisations to set everyone up for success AND to evidence its regulatory compliance. Furthermore, it drives up engagement with its talented workforce and builds a positive, motivating culture where everyone thrives. 

What’s not to love about that?

Putting a powerful yet easy-to-use communication and management tool into everyone’s hands drives consistency and aligned ways of working.  It gives employees a voice and helps drive the right behaviours.  Training and development plans are agreed, captured and tracked.  The regular one-to-one meetings that are automatically scheduled in people’s calendar can lead with those Conduct conversations that Professor Miles referenced. The built-in talking templates can encompass both performance and compliance topics for a fully-rounded conversation each time.   The data and insights captured on the platform can serve as an early warning signal for any brewing issues.