This is not a bank bashing article, but a genuine concern for an industry that I think could be potentially at risk in the long term… and my question is, Are major Australian Banks at risk of a serious slip up?
The Reserve Bank of Australia yesterday cut the Australian Cash Rate by .25% and the big question being raised by economists, media reporters and of course the mum and dad mortgage holders is, will the big banks pass on the interest rate cut to home loans?
Regardless of whether they do or don’t, Australian’s major banks have an image problem. Despite what their internal or independent customer feedback surveys might be telling them, and putting aside for a moment the banks’ collective marketing and advertising approaches telling us how focused they are on customer service, my message to the major banks is this… People Get Your Truth! Over time, your intentions, actions and results will either promote or expose you – and in the case of the major banks here in Australia, your intentions, actions and results are exposing you.
I have no doubt that while the banks’ employees, especially at the client facing branches are decent, honest, hard-working people who genuinely try to do the best they can for their clients, the reality is, if the banks’ intentions were to genuinely be client focused, and if their investment in marketing and advertising was equally matched with their investment in creating policies, strategies, programs and reviews that reinforced their intention to be client focused, why then, is there still such a ground swell of disbelief that they are in fact client focused at all?
The opportunity for any Board of Directors of any of the major banks to genuinely embrace an intention of sustainable, profitable, client focus is huge. You don’t get trust – you earn it.
Now, in the interests of full disclosure here, my share portfolio includes bank shares, and I have over the years certainly received a good return on my investments with the banks. But what concerns me is the potential short sighted paradigm of profit and shareholder return is blocking the Boards of Directors of the banks to really embrace the potential of a bigger intention – a bigger WHY!
In the research outlined in his book The Speed Of Trust, Stephen M.R. Covey (the son of the late Stephen R. Covey – author of the best seller 7 Habits of Highly Effective People) outlines the evidence that when trust increases, profitability, growth, productivity, engagement and motivation increases and re-work, stress, presenteeism, disengagement and costs of production are reduced.
Again, you don’t get trust, you earn it.
The opportunity and timing is perfect right now. Bank employees want to be proud of their work, otherwise they exist from day to day just getting the job done, which will typically result in underperformance. Whereas, if the employees genuinely believed in the bigger intention of their Bank’s Board of Directors to be truly client focused in a way that is sustainable and profitable, the internal drive, energy, motivation and intention of those same employees will see them engage more with their clients, discover more ways to genuinely create reciprocal value, be more engaged with their work and feel a greater sense of pride at the end of each of their days at work.
Small business owners live and breathe by their intention to create value for their clients – this is what separates those who struggle with those who flourish. And while it might be hard to argue this point with the big banks’ current levels of positive profitability, all I’m suggesting is it’s hard to believe that any of the major banks are genuinely embracing their own hype of being client focused – despite the advertising and marketing… People Get Your Truth – over time your intentions, actions and results will either promote or expose you.
On the counter argument to all this, the good news for the banks is that we Australians tend to be apathetic. I wonder if that would be the case if from left field a real alternative to the big banks emerged via the internet.
Imagine an online professional banking broker and trusted adviser business. Imagine a growing number of professional business and personal banking advisers and brokers, independent of any major institution, who became the trusted adviser of their clients. Each adviser would work with a limited number of clients, they would charge on a transparent fee-for-service basis, and provide on-line personalised advice, and access to financial products and services from around the world, without the overheads. They would embrace the advances in communication technology, webinars, on-line meetings, interactive community websites and be able to operate locally, regionally or nationally (or even internationally).
As I stated up front – this is not an exercise in bank bashing… in fact, I’m an advocate of the potential and real value that our Banking profession provides to clients in helping them live more happy, flourishing and prosperous lives. But whether the major banks pass on this latest interest rate cut or not, we get their truth… and history has shown time and time again, your past success doesn’t guarantee your future success if the game changes.