Rebuilding trust requires banks to internalize responsibility and accountability | Andrew Bailey

Starling Team

Don’t miss this speech, “Trust and ethics: a regulators perspective,” delivered by Andrew Bailey, head of the UK’s Financial Conduct Authority. Building on his past insightful comments about the importance of culture in the financial services sector, Bailey focuses on trust — discussing how to it has broken down since the global financial crisis and how it may be regained.

“Trustworthiness demands two things: knowledge and skill; and good intentions and honesty. And, both necessary elements of trustworthiness need to be demonstrated … trust depends on solving the conundrum that there isn’t an independent source to prove honesty and good intent.”

For regulators, Bailey points out, that means looking at whether individuals in financial institutions, especially senior managers, act in ways that engender trust: with employees, shareholders, and society more broadly.

At Starling, we have always focused on the centrality of trust in an organization. Understanding the trust relationships among individuals is key to understanding their behaviors — how they will act, from whom they will take their behavioral cues, and whom they will influence in turn. Risk and performance optimization depend on those relationships.

Read the article: Trust and Ethics – a Regulator’s Perspective

Expand

Culture Reform in Finance Requires Advances in Assessment, Technology, and Influence | Kevin Stiroh

Starling Team

Regulators around the world have realized the importance of addressing culture reform in banking. Despite the challenges inherent in managing culture, leading voices in the regulatory community are laying out the groundwork for how this might work.

One of these leaders, Kevin Stiroh, head of supervision at the NY Federal Reserve Bank, recently gave a talk titled, “The Complexity of Culture Reform in Finance.” Stiroh pointed out that culture and conduct are complex problems, in that they are marked by interconnectedness of a large number of factors, constant evolution, feedback loops, and “known unknowns.” His concludes that there must be a long term, sustained commitment to make a difference, and that we must deploy a wide range of tools.

He notes that regulators and industry have made significant progress in addressing the issues, but that more work is needed in three major areas: assessment, technology, and influence. Besides acknowledging the benefits of big data and standardized metrics, he challenges stakeholders to “leverage insights from the social sciences to promote environments that foster healthy group behavioral patterns with better decision making.

At Starling, we are now working with banks around the globe to bring AI-driven diagnostic tools to the market to address these gaps. Along the way we are engaging regulators worldwide to align our products with these reform initiatives.

Read the speech: The Complexity of Culture Reform in Finance

Expand

“If Trust is not your highest value than what is it?” | Marc Benioff

Starling Team

Marc Benioff, Founder and CEO of SalesForce tweeted about his recent interview with Laurie Segall at CNN.

“Employees will walk out, executives will walk out, customers will walk out, & partners will walk out if they do not Trust the company & the CEO’s values. It’s happening now in tech. If Trust is not your highest value than what is it?”

Frankly, we couldn’t say it better ourselves.

Expand

Harnessing Peer Pressure To Drive Firm Performance | Financial Times

Starling Team

Peer pressure is often treated as something to be feared and managed away. And yet, it is actually a powerful tool in the hands of enlightened managers. The fact is that peer pressure, particularly in harnessing feelings of team loyalty and potential guilt at the fear of disappointing peers, can be highly effective at motivating performance. In fact these emotional ‘incentives’ have been shown to be far more effective and long-lasting than other mechanisms, such as cash incentives, alone. In fact, incorporating peer pressure into cash incentive schemes may be most effective at all.

Measuring the effects of peer pressure may appear to be challenging but companies like Starling can reveal such relational dynamics and make them actionable. The key learning for leaders is to consider incorporating peer pressure alongside more traditional techniques into their management toolkit to maximize overall effectiveness.

Read the article: Wise Leaders Understand the Power of Peer Pressure

Expand

Has Banking Culture Really Changed ? | Financial Times

Starling Team

As we reach the 10-year anniversary of the Global Financial Crisis many are taking time for reflection and analysis. How did we not spot the Crisis as it was building towards its crescendo? What was it that really went wrong? Have we have learned the lessons of the past? And what do they suggest for our near-term future?

In this insightful video, Gillian Tett, US Managing Editor for the Financial Times, dives into these questions and more, asking whether we have truly faced up to the role that culture played in allowing these failures to occur.

Through a series of interviews with those that played leading roles at the time such as Alan Greenspan of the US Federal Reserve and Paul Tucker of the Bank of England, it becomes evident that the “rational actor” presumption of orthodox economic theory and regulatory policy-making is simply mistaken. As Greenspan puts it succinctly, “I was wrong.”

Watch the video (15 min): Gillian Tett Asks If Banking Culture Has Really Changed

Expand