Diversity is the Key to improving Retail Financial Services Culture
With the latest FCA paper on the need for Cultural change within financial services, we take a look at what this means and how RegTech can help.
What is corporate culture?
“The collective programming of the mind that distinguishes the members of one organisation from others." The Hofstede Centre
“How people act when no one is looking and when the pressure is on” Anon
Defining culture: different students of organisational development describe culture in many ways. It is often presented as the glue that holds organisations together or the ‘way things are done around here’, and thus presents a real issue when we are presented with change and a new regulatory environment.
Much of the cultural background is tacit and unspoken and is concerned with the beliefs, habits and attitudes of the workforce. The fact that culture is taken for granted means that BE can help to facilitate an understanding of cultural drivers and also play a role in cultural change. In his work, Schein describes culture as “deeper levels of basic assumptions and beliefs… that operate unconsciously”. He distinguishes three levels of culture:
- Basic underlying assumptions – they are not visible or accessible, rather they are taken for granted: beliefs, unconscious thoughts and feelings
- Organisational values – they are the explicit strategies, goals and philosophies that organisations use to justify actions
- Artefacts – visible organisational structures and processes
The social scientist Geert Hofstede conducted one of the most comprehensive studies into how values in the workplace are influenced by culture. Where organisational culture is concerned, it is the practices that these organisations exhibit that matter.
In its paper The FCA cites the introduction of the Senior Managers and Certification Regime (SM&CR) as an example of its work to promote good culture and governance, by creating a formal link between behavior if individuals and the conduct of the firm. The paper also makes clear that just complying with the rules is not enough, firms need to go above and beyond in creating an accountable culture, this requires self driven and self regulated firms that avoid corporate biases such as group think and over confidence.
With RegTech in mind, if we accept this presentation of culture as a ‘corporate glue’, then we can begin to define strategies that can help decision-making and create a self diagnostic or sense-making culture based on recognition of behaviour at play in the ‘programming’ stage and steering strategies or levers for change such as mission statements, diversified boards, codes od conduct or corporate philosophy which create a positive constructive value programme.
At Model Office we aim to achieve this by encouraging firms to self-audit and benchmark their performance against all the regulatory rules and thus gain a understanding of how they score and most importantly steers and strategies about how to improve those scores.
MO® the digital compliance chat bot also provides a resource for users to ask key questions or queries and she will interrogate the FCA handbook and web to provide meaningful management information (MI) to help improve. MO® will also link to back office technology to provide tailored data to aid regulatory reporting.
So with the on-going FCA theme for assessing culture and conduct, we would encourage your firm to use RegTech to help assess where you sit, any blind spots and provide real time strategy to improve professional practice
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