- Leandro Herrero - https://leandroherrero.com -

Big Banks have been fined again. A tiny fraction of the fines with the right behavioural change approach would change their cultures for ever.

It seems like the Weekly News about Banks Bad Behaviour. This time about  big fines. ‘Between fines and legal costs, 150 billion sterling have been incurred by some banks (..) another 45 billion is expected for the same reasons in the next two years (The Observer, UK, 16 November 2014)’ Significant figures, say some; pocket money say others.

Just a recent bad behaviour? No, this is five years of constant malpractice. Just a few bad apples? No, the problems were (are?)  systemic.

The headline of The Observer is revealing: ‘City is shamed but fines don’t stop banks behaving badly’.

Paul Myners, now Lord Myners, a UK politician, ex Financial Services Secretary in HM Treasury (UK finance ministry) says: ‘The only thing that will affect behaviour is the insistence from the top that behaviour must be exemplary’. This is an incredible naïve statement that says a lot about the flawed arguments we use every day about culture change. ‘Insistence from the top?’ How much? Daily? Weekly podcast? Monthly threat saying that the sky will fall? Super training on compliance?

Nothing of that will change a bit of the culture. Unless you think of culture as a next two weeks reaction. Cultures don’t change by top-down dictations or threats when people can carry on with old behaviours.

Another false approach is the premise, many times heard, that ‘there are only a few bad apples’. I don’t have hard data on this, so I don’t know about the size of the apple plantation.  But whoever says this, will have the redefine the word ‘few’ before another billion or so invoice comes in.

Mark Carney, Governor of the Bank of England, has been unequivocal: “The succession of scandals means it is simply untenable now to argue that the problem is one of a few bad apples. The issue is with the barrels in which they are stored.”

Thank you Mr Carney! The problem with banks is cultural. To be more precise, sub-cultural. There are sections, areas, ‘Desks’ with endemic bad behaviours, powerful enough to infect others. These sections, areas or ‘Desks’ do not need more training and awareness. They need a behavioural counter-epidemic as I have stated before  in these Daily Thoughts.

Cultural change is bottom-up, behavioural, and leading towards a true social movement. This pending Cultural Revolution needs to be led both by the top, sure, but, mostly by peer-to-peer, bottom-up (positive) influence.

The good news is that we, in 2014, know how to orchestrate this. The bad news is that listening is not high in the bankers skill set, perhaps because their powerful management ‘knows’ already what needs to be done (Barclays is sending people to a business School), whilst Governments only seem to know about legislation and regulation. Neither of which have a clue about how behavioural and cultural change works.

Am I harsh? Prove it to me.