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