We all know that banks have to rebuild trust with the British public. What interests me is how they will achieve this. I think a return to ‘long-term thinking’ on which many UK banks originally built successful businesses may be the answer.
Many of our most familiar high street banks have been around for a very long time and I think this naturally inclines them towards long-term thinking. Until quite recently, banks saw beyond the need to deliver short-term returns for shareholders, important though these are. They considered the long-term implications of their actions on others who came into contact with their business — customers, suppliers, employees, and communities – and attended to their needs. Not from some altruistic impulse, but because they inherently understood that when Britain prospered they prospered.
This ‘responsible’ approach to business earned them the trust of the people, businesses and communities they served. I believe it can do so again.
It’s in everyone’s interest to do so, because banks at their best serve an essential purpose. They oil the machinery of the UK economy: mortgages for affordable homes, saving and pensions for later life, and more. Not so long ago banks were great examples of responsibility, branch managers respected figures in every town.
And then things went so wrong, so fast. The global financial crisis, a series of serious, commercial mistakes, destroyed the trust earned over centuries in short order.
I think we need to re-engineer the best of British banking past for the UK of the future: local, personal, responsible banking re-engineered for a digital age. And I see evidence that this is underway. British banks are starting to think long-term once again, addressing the concerns of all their stakeholders, not just investors’ expectations and short-term returns.
Lloyds is using its size and 250 years’ experience, to help address some very contemporary issues and have launched the Helping Britain Prosper Plan, which includes public commitments to help more people get on the housing ladder, support SMEs, lift people out of financial exclusion and encourage consumers to save for tomorrow.
Why these commitments? Because they address the issues that affect customers and communities and because the bank is well equipped to tackle them. Of course, Lloyds hopes to gain — if Britain prospers so do banks — but not necessarily in the short-term. This is about re-establishing trust over the long-term through acts and deeds – in short — by behaving responsibly.
No bank can change the shape of the entire industry alone. We need to learn from each other, contribute to the debate on specific issues with trade or industry bodies, and persuade investors to join us in our endeavours.
‘Short-term thinking’ has become a default position for many investors; for some it always will be. But we need to convince the majority of investors that there’s significant benefit in responsible banking for them too – reliable, low risk returns over the long-term, steady and consistent rather than spectacular. The stocks on which Britain’s pension plans were traditionally built.
Once converted, these investors will influence other businesses to embrace responsible business practices too. They’ll also become part of the solution.
I’m convinced that many investors already recognise the benefits they will gain from initiatives such as the Lloyds Banking Group Helping Britain Prosper Plan and those introduced by other banks. I think the same will prove true for the ‘Great British public’ – particularly if we in the banking profession can live up to the legacy of our predecessors: thinking long-term; listening and learning from all those who are affected by our business; making ‘measurable’ improvements for UK households, businesses and communities.
Sara Weller is a Non-Executive Director and Chair of Responsible Business Committee at Lloyds Banking Group.