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Podcast: Professional Qualifications, Royal Commission submission and the UK experience

by Lewis Panther | 25 Jun 2018

Putting professionalism at the heart of banking is already helping the bottom line, according to FINSIA partner Giles Cuthbert.

The Chartered Banker Institute managing director’s mission to see a financial services industry that is staffed by a professionally-qualified workforce is already paying dividends, with institutions seeing a return to profit.

Research revealed customers who were being dealt with by professionals thought they were more trustworthy. Therefore they were more likely to do business, said Mr Cuthbert, who has been in Australia to help launch our Professional Banking Fundamentals qualification.

The UK experience showing the trust deficit can be bridged echoes research carried out by FINSIA.

Hundreds of thousands of bankers have become professionally qualified since the global financial crisis, which amounts to around half the workforce. Some high street names have 100 per cent of their staff meeting professional banking standards.

He said: “There’s been a great deal of work done on measuring success. 

“One bank recognises when individual bankers send a customer off to another bank to get the correct product, rather than just selling the product there in front of them. 

“So we have seen quite shift in how banks measure performance.

“What’s interesting is that this is happening at a time when we have seen banks return to profitability. 

“It’s possibly because of the trust that is inspiring that we are seeing banks return to profit.”

While Australia did not suffer the same as the UK in the aftermath of the GFC, evidence coming out of the Royal Commission shows similar patterns of bad behaviour that need the same solution.

He added: “There are a suitable number of similarities (in Australia to the UK) to say the remedy of building professionalism is needed and we need to start qualifying people in banking here.

“We need people to not simply have academic qualifications but professional skills. 

“Technical knowledge is first and foremost. Because in many banks people are working in silos you will often find there is a fair level ignorance about what happens. 

“They also need to know about the economic impact of banking, about giving good financial advice as well as about serving the bank to ensure it is stable.

“Finally behaviour which does encompass what you would expect in terms ethics, managing conflicts of interest for example. At the heart of those professional skills is the client-centred focus and a clear understanding of professional ethics.”

Mr Cuthbert argues that everyone in a bank needs to be qualified to the right standards — even though lawyers and IT specialists come with their own qualifications.

He said: “Basically you need to understand what a bank is, how a bank makes money, the environment it works in. As we know if someone works in the IT department and knows nothing about banking it can be very difficult for them to have a sensible conversation. Likewise with law, there’s a requirement to understand the industry.

“I draw the parallel with a hospital. Yes you have a large number of doctors who are the paradigm in that sector, but equally you will have people in law, you’ll have people in marketing, you will have cleaners.

“They all need to understand patient confidentiality, but do they need to know the hospital equivalent of credit risk, no they don’t.

“Standards can be applied in hospitals, but you don’t all have to be a doctor.”

Explaining the difference between standards and qualifications, he added: “A standard will deal with skills and behaviour as well as knowledge, whereas a qualification will only deal with technical knowledge. 

“A qualification may be used to meet the technical requirements of the standard. Yet you can never act in the appropriate way if you don’t have that technical knowledge and know how to do you job. But qualifications gives a very important underpinning.”

Newer banks — including those set up by supermarkets — and fintechs are some of the most fervent supporters of the roll-out of professionalism, according to Mr Cuthbert.

He said: “Generally speaking newer banks have been far quicker in taking up the standards.
“Supermarket banks are huge supporters of standards. As supermarkets they have to demonstrate they are bankers. They are doing a good job of that by what they are doing. “But they also want to demonstrate the fact through these qualifications.

“I have noticed in terms of recruitment strategies, the fintech companies look to our list of fellows to make sure they have got the right qualifications in terms of banking expertise.”

With a mind towards the future, he says “clearly technology lies at the heart of banking these days.

“Understanding how to manage tech and working with fintech is fundamental. But we don’t want is a whole lot of technocrats who don’t understand banks.

“Without tech, you can’t be a banker in the future. Arguably, you can’t be one now.”

But for those who are bankers, what does he want their future and their legacy to be?

It can certainly be argued the numbers are starting to show that professionalism is the way forward. Research carried out by the CBI shows a 10 per cent increase in the trust towards bankers.

But it’s possibly the pride now being felt by bankers that is the most rewarding. Twenty five per cent more of those in professional bodies said they were proud of their jobs.

As Mr Cuthbert says when asked what he wants his own legal to be, it’s to install that pride in the industry.

He said: “If I’m being flippant, it’s so bankers can go to dinner parties and not feel embarrassed and tell people they are bankers. 

“In more serious terms, the aim of the CBI is to improve professional standards in banking for the benefit of the public interest and the customers of that industry.

“I would like to hear the banker talking about the number of families who have just paid off their mortgages and are very happily living in houses. I would like to hear the banker talking about people retiring with a good amount of savings behind them because they had been given good advice by their banker at various times in their lives.”

For more information on the Professional Banking Fundamentals, please visit our page here.

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