Peel back the layers and it’s simply about culture. Kenneth Hayne’s royal commission report into misconduct in the banking, superannuation and financial services industry clearly states the interests of Australian customers have been sacrificed for short-term profits. The underlying culture of the Australian banking ecosystem has been to systematically take advantage of customers.
The report seeks to effect lasting change based on principles, producing a raft of policy and administrative design and implementation projects across governance, remuneration practices, controls and reporting, directors’ duties and accountability, cultural change programs and improved customer care.
If you peel back the layers of the issues laid out in the report, it’s that Australian banks’ deep-rooted culture is largely about putting itself and shareholder interest ahead of the customer. In Hayne’s words: “In almost every case … providing a service to customers was relegated to second place. Sales became all important.”
The report has clearly called out the financial ecosystem as an industry riddled with conflicts of interest and an overarching highly questionable moral compass. Unsurprisingly, the findings of this report are the result of an entrenched culture that has evolved over decades.
Building trust and public confidence
Ethical behaviour is fundamental to building public trust and confidence. Australians need to rethink who they trust, how they manage their finances and where they source funding. They should ready themselves for the credit squeeze to be even more pronounced as banks address their culture, become very internally focused and wrestling with a time-consuming new regulatory environment.
Culture is one of the hardest things to change in an organisation like a bank. This focus on culture will remain for a very long time. It will be difficult for banks to see impactful change if they remain in their current form, without significant structural change across leadership, operations, strategy and processes.
Moving forward, the role of the trusted accountant will become elevated, providing insight on how to manage financial challenges and opportunities. Accountants are well positioned to give independent advice, operating under strict ethical standards and code of conduct enforced by robust disciplinary processes. Accountants have an incredible opportunity to build upon their reputation in local communities as tax, superannuation and financial planning experts who put their clients first.
Doing things differently
Australians will have to do things differently and change their mindset to be prepared for the next decade or more of turbulence in the industry. For business owners, this includes tight cashflow management and seeking alternative forms of working capital to support their business.
There is a great opportunity for fintechs and alternative financiers who are culturally aligned to doing the right thing by the customer and who can provide transparent and fair solutions. This cultural alignment is critical.
If the Hayne report tells us anything, it’s that you need financial advisors and partners who are aligned. They are built on a culture of fairness, transparency and genuine care for their customer. Package that cultural element up with a digital proposition and accessible service to find a long-term solution.
The next generation of financial partners are there for Australian business, they just look and feel different. Partners who have both the right cultural foundations and a contemporary offering which legitimately supports their customer.