Winning Back Trust at Barclays – Rhetoric or Reality?

Ashok Vaswani Barlcays CEO Retail  and Business Banking Image source: Group Barclays.com

Ashok Vaswani
Barlcays CEO of Retail and Business Banking
Image source: Group Barclays.com

Many people see Barclays as a byword for scandal and excess among Britain’s banks – the rigging of Libor, the widespread miss-selling of PPI, and the indecent payouts to top executives and investment bankers.[1] In addition, there are reports of a culture of bullying in its Wealth Management Division.

As a result, Barclays is going back to its roots; retail banking. And the man appointed to regain the public’s trust is Ashok Vaswani.

Ashok gave an impressive presentation at a Cranfield Talks Business meeting last Wednesday. His key thesis was that trust comes from customers believing that the bank is interested in their welfare. His mantra is “make life easy for the customer” and profits will follow; not the other way round. It’s a message Peter Druker preached over 50 years ago, but few have managed to implement.

To achieve this culture change he believes that he and his fellow leaders have to, literally, show the way. Amongst other things: he personally reads customer complaints; he preaches humility as a core leadership value, and he has substituted customer service for sales as a key indicator of performance.

What made him impressive was the energy, enthusiasm and consistency with which his messages were delivered. Slight concerns intruded when he described Bob Diamond as misunderstood, justified executive pay by reference to the healthy majority that had approved it, and suggested that it was hard to tell the extent to which PPI had been miss-sold.

The rhetoric, however, was excellently delivered in the context of  ‘worthwhile purpose’ i.e. doing good. But is Ashok really an enlightened leader? And how do we know if the rhetoric represents reality? So far so good in that he has been party to the divestment of the toxic ‘casino’ aspects of the bank; efforts to involve the bank in socially responsible activities; collaboration with the regulator, and the creation of a web facility for customers to submit ideas for improvement (over 3,000 suggestions to date). But will it last?

And within this question lies a leadership lesson:

Deliver with passion, keep it simple and back up your message with consistency and action, and you can get people to believe in you.

All change programmes have to start with the sort of vision Ashok provided, but as he said, it will take time. And only then will I know if I was right.

[1] http://www.thisismoney.co.uk/money/saving/article-2272502/Despite-scandals-bank-chief-says-We-bad-people.html#ixzz31mLFkFMQ

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3 comments

  1. Mike,

    Great summary of an interesting talk by Ashok (which I also attended). Listening to him and his emphasis on a sort of “back to basics” approach, I was struck by the challenges implicit in his strategy. Simply summarised, if he and all the other major banks do what he proposes (and all the others are indeed intending to do the same), the scope for differentiation will be effectively eliminated. The effect of that will be to commoditise retail banking, giving us the type of utility banking that many advocate. However, we all know what happens in commodity-based oligopolies and the current, much-discussed abuses in the energy market are a case in point. It is questionable therefore whether Ashok’s vision of a customer-friendly, high-service retail bank is realistic in the face of pressures on margins (ultimately translating into pressure on share price) and the (irresistable?) temptation in a cosy oligopoly to gouge customers.

    I also take the view that banking is indeed special in the sense that, unlike any other form of business, its stock-in-trade is money. That makes it very different compared to other businesses. It would be unfair to compare it to Apple, today’s exemplar of the cool, innovation-led business with hot, highly-desirable products, but the comparison serves to illustrate the point. This underpins the inherently commoditised nature of retail banking and explains much of the pressure to innovate and develop non-commodity products that has led to recent disasters, such as PPI. If Ashok plans to abjure innovation of the PPI-variety and to focus instead on innovation in service provision, that also limits his scope for differentiation or at least, for sustainable differentiation. Innovating in services means that the people in the bank have to change fundamentally and given the drag-weight of having money as your stock in trade, coupled with the pressure to control from the centre that affects all the major retail banks, it’s hard to see how fundamental change is possible.

    I await to see how Ashok gets on and wish him every good fortune in his efforts, but I struggle to get past a sense that forces much larger than him and his vision will conspire to ensure that all we get is pretty much the same old stuff that we’ve always had from retail banks. While I acknowledge the power of good leadership, I also acknowledge the significant limits to what a leader can achieve. Leadership is deeply contextual and the context for retail banking is to all intents and purposes impervious to fundamental change.

    1. Hi Gerry – many thanks for the thoughtful response – a blog in it’s own right! I think I agree with your main thesis i.e. that there are forces beyond Ashok that will make the transformation difficult, but would also argue that creating a culture of service is at once difficult and hard to replicate. Somehow or other Pret a Manger and Virgin have managed it while others still struggle. I think as well that your point about money is correct for investment banking, but not so true for retail banking. For the former, money is disassociated from people, in the latter, it is intimately connected with people’s lives.

      My own concern is whether Ashok really means it! But I wish him all the luck!

      1. Mike,

        Thanks for your quick response. I agree it is possible to create a powerful service culture/identity and that such a culture/identity could be hard to replicate. I guess I’m just a bit cynical about the possibilities of delivering that in retail banking. For a start, there’s a lot of antipathy between HQ and branches. HQ invariably sees itself as somehow superior and wants to control things out in the field. The result is a deep-rooted reluctance to allow the kind of autonomy and scope for branch staff to develop a strong service culture/identity. Life in the branches is pretty grinding and not terribly attractive for most employees. It’s not even terribly well-paid and people are monitored and controlled to within an inch of their lives, given the scope for fraud, etc. There are lots of hard measures of performance and relentless pressure on costs and margins means the space for service-oriented innovation is severely limited. And I see no possibility of much change in this regard unless and until banks get richer again and that, of course, would be at our expense, so therein lies the catch 22 aspect of this. Finding the sweet spot where the average customer is happy with the service and regards it as good value will prove immensely difficult.

        I’m not sure I agree with you about the distinction between investment and retail banking though I agree there are differences of degree. I still think that, when money is the product you deal in, it has a particular effect on people. It has something to do with the clarity and immediacy of money. There’s so much less scope for intermediation, for affecting perceptions of value. And the culture of managing money, counting it daily, controlling it, maintaining a sort of “potentially guilty until proven innocent” approach to staff creates a unique atmosphere (having worked in bank security and fraud, I know every major bank has an active list of people under suspicion or investigation for fraud at any time – it’s an ever-present feature of life in banking).

        Ashok struck me as a very smart and very polished senior banker. He clearly has a huge job to do and at his level, he has to manage a very complex task, which is simultaneously to manage upwards to the City and the stock market, watching the share price and investor sentiment, while managing downwards, to create an environment in which people can thrive and innovate and develop that service culture/identity. I fear that that task is beyond anyone, even someone as capable as Ashok, so the net result will be what it has always been: a sort of oligopolistic equilibrium with the oligopolists are unable to resist the temptation (and the pressures from the City) to deliver the minimum to the customer necessary to sustain their positions in the oligopoly. I wouldn’t want to sound like I’m accusing Ashok of cynicism, but I am sure he understands that very well and knows the limits of what he can achieve. Persuading his customers that he is at least pushing at those limits in good faith is perhaps all one can reasonably ask of him or any senior banker.

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