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

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Starling educating the Hong Kong banking industry on use of AI for bank governance and supervision

Starling Team

Regulators are asking critical questions as the phenomenal pace of advances in RegTech continues. As firms and regulators adopt more AI-based tools, it is clear that more attention will need to be placed on the topic of transparency. This article from the South China Morning Post describes how regulators are focusing on these types of questions as the technology begins to enter the mainstream. As AI-based take on more decisions in the bank, there will be many cases where it will be critical for bankers and regulators to understand how that decision was made.

Starling has long recognized that as AI becomes integrated into Fintech and Regtech applications it will be critical to work closely with regulators to educate and share real world experiences. It is for this reason that Starling has actively cultivated relationships with regulators across the globe.

In the spirit of education, Starling has been invited by the Hong Kong Montetary Authority (HKMA) to speak at a seminar this coming November on the subject of AI applications in Risk Management and Performance Optimisation. Starling’s Founder and CEO, Stephen Scott, will be joined by Mirea Raaijmakers, the Global Head of Behavioral Risk at ING to speak about practical examples of the application of behavioral science and RegTech tools in the context of improving bank governance and supervision.

We hope to see you there!

Read Starling’s Event Announcement: Harnessing Behavioural Science and AI for Risk Management and Performance Optimisation

Read the article: HKMA’s ‘regtech’ push raises transparency concerns at financial institutions

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“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.

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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

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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

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