Speech to the to the Irish Banking Culture Board event

17th May, 2021

Good morning,

Chair of the Irish Banking Culture Board – Mr Justice John Hedigan,

Chief Executive – Marion Kelly,

Ladies and Gentlemen.


I am pleased to be here at the virtual launch of the Irish Banking Culture Board (IBCB) 2021 éist surveys of culture and trust in the banking sector.  I welcome their publication and contribution to debate on cultural change within the banking system in Ireland.  


I would like to make some brief remarks on:

  • Banking issues generally;
  • On the surveys.


Future of Banking

As you are probably aware, there is an ongoing discussion on banking in Ireland, including with colleagues most recently in the Seanad.


I think that a number of points are worth referencing here. 


We have seen a number of recent announcements in respect of KBC, Ulster Bank and Bank of Ireland, which require us to think about the structure of the banking sector and to reflect on its future. 


We need to recognise that the operating environment for banks in Ireland is, and continues to be, difficult. 


There is a challenge to existing banks from changes in technology.  Increasingly, banks are competing with new technology-driven firms regarding services that were previously the preserve of traditional banks.


Despite this, there continues to be many who wish to maintain a more traditional relationship with their financial provider and engage with them in person.  


There are also recognised pressures on bank profitability, arising from technological challenges, low interest rates and operating costs.  This is not unique to Ireland and similar challenges exist in and outside Europe.


There is a view that there is a need for consolidation in the banking sector so that it can provide for its customers, while at the same time investing in technology.  This is likely to be a particular challenge for small to medium-sized banks in various national markets as they attempt to manage the cost efficiencies and IT investments that are crucial in the new banking environment. This is a challenge for our domestic banks, as much as it is for similar sized banks across Europe.


It is easy to point to problems with the banking market in Ireland, but it is more difficult to say where the appropriate balance between competition and consolidation lies in the best long-term interests of the economy and consumers of banking services.


Looking to the future, the Government wants to ensure that the banking and financial system is one that will effectively contribute to and support economic growth and employment. 


Ultimately, the banking industry is not an end in itself but rather a system, that will serve as the means to help households and firms achieve their financial, economic and social goals.  This must be our starting point in any discussion.


The wider challenges to the banking sector provide some useful context to todays’ event.


While there are recognised difficulties, it is important more than ever that there is full engagement on the process of reform and change in the culture of the financial sector to improve accountability and increase trust in the banking system.


Building and maintaining trust for customers and staff in the domestic retail banks can only improve the outcome for their businesses.  


Role of ICBC and the éist surveys

I would like to recognise the role of the Irish Banking Culture Board in seeking to rebuild trust in the banking sector through its work and various initiatives.


This event today to mark the publication of their two surveys is one of those important initiatives.


So what do the two surveys commissioned as part of the éist process tell us?


The first is the Staff Culture Survey and the second is the external Bank Sentiment check. 


Both reports produced by the IBCB are important and bear some detailed consideration. I will only reflect on the more significant conclusions from both reports.


I would first like to recognise the staff members in the five banks who took time to participate in the staff culture survey.  Participation in these surveys is important as it can provide valuable information and insights into how financial institutions are run and the way in which it is possible to make improvements and effect change.


It is worth noting that two thirds of bank staff are positive about the day-to-day culture of their organisation. They cite a client/customer focus and risk awareness as a number of positive interpersonal behaviours, such as friendliness, continuous improvement and collaboration. 


Notwithstanding this, a higher proportion of Irish bank staff considered their culture as bureaucratic, hierarchical and inefficient. Improving working processes and procedures was cited as the biggest single aspect of their organisations’ culture that needed attention. This is an important learning.


In terms of the ability to speak up positively, three in five Irish bank staff feel that their organisation’s commitment to building a speak-up culture has strengthened in the last couple of years, which is positive. As a result, more people who have felt the need to raise a concern in the past 12 months did so, and more felt that their concerns were taken seriously. This shows signs of real progress.


However, while this is positive, at least a fifth of bank staff who wanted to raise a concern chose not to, largely due to concerns as to the consequences or a sense of futility of doing so.


Seven in ten Irish bank staff say they have heard from their senior leader at least once a month recently; a trend of increased visibility seen in multiple sectors over the past year.


However, only half of bank staff say that their Executive Committee has communicated a motivating vision of the future, and trust in senior leaders is considerably lower amongst IBCB member banks than across the wider financial services sector.


When making decisions, bank staff are influenced frequently by what will get the best customer outcome, what best reflects their organisations’ values and policies or what they believe to be right.


This is not universal and doing what senior leaders value, what budgets allow or what has worked well in the past still influence decision-making more than people would like.


Finally, there are also concerns about the long hours culture, with considerable strain arising from the workload and from the impact of Covid 19.


The second survey is the external Bank Sentiment Check.


Unfortunately, it would seem that the message here is similar to what the IBCB heard in its public consultation in 2018.


The survey indicates that banks have missed an opportunity to make a positive difference during the pandemic


It tells us that trust in the Irish banking sector is low; that there is a need to bridge the gap between the everyday experience of banks and perceptions of the sector.


Many respondents felt the sector does not have customers’ best interests at heart. It would seem that this low trust is driven more by underlying suspicion than it is on personal experience. This shows how much work needs lies ahead in dealing with perception and reputation.


Digitalisation and reduced number of branches in particular in rural Ireland are resulting in the sector losing its human face.


There is a lingering resentment towards the banking sector among older generations, quite likely due to lived experiences of previous crises.


There are also expressed concerns about the treatment of vulnerable customers and the treatment of smaller/micro businesses.


On the positive side banks performed better on practical competencies, such as offering good services and products and, in particular, maintaining good service throughout the pandemic.


There was also support for the level of competence of staff and indeed a small minority (higher in SMEs) who report that their trust levels in banks have increased during the pandemic.


So what can we deduce from these surveys?


It is easy to be negative about banks and financial institutions. However, there needs to be a more balanced discourse on the banking system in Ireland.



It is, however, heartening to see positive results arising from the staff survey arising from the behavioural actions taken by banks.  This can only bode well for the future of these organisations.  Clearly, there is more that banks can do in improving overall outcomes for staff and the report considers this in more detail. 


As regards the external customer survey, while there are some positives, unfortunately the banking sector seems to continue to bear the weight of negative expectations.  The survey work does recognise the work that needs to be done to improve these expectations and this is one of the values of doing this work.


The Road Ahead

The overall message seems to be that while there is progress being made, and that progress needs to be recognised, individual institutions have to improve their own culture further. This is crucial to building trust among customers and staff.


However, such changes need reinforcement by appropriate legal changes. A change in culture, while essential, is not a substitute for effective regulation, supervision and enforcement. Legal changes and cultural change have to work together.


Thus, I cannot leave today’s event without commenting on the Individual Accountability Framework –

  • The introduction of SEAR;
  • Changes to conduct standards for firms and individuals ;
  • Breaking the participation link; and
  • Other changes including amendments to the ASP.


The introduction of this legislative change will enhance the already significant powers of the Central Bank to appropriately regulate, supervise and, where necessary, to impose appropriate penalties for breaches of the regime.


The focus on individual accountability is important in that it should align with the cultural and ethical changes promoted by the Culture Board.


By setting out individual roles and responsibilities, this regime should help individuals at all levels in financial services organisations understand their roles and responsibilities and how to adopt positive and appropriate behaviour in their work. 


By doing so individuals at all levels can fully change the culture in their organisations to a more ethical and responsible one.


This will allow them to treat and engage with their customers responsibly and appropriately.


In my view, the overall aim of culture and operational change in banking, and this legal framework, is to improve the operation of the financial sector. It should ultimately help change the way in which financial organisations carry out their business and how they engage with their own staff and customers.


With the development of clear lines of responsibility through management responsibility maps, specific responsibilities for individuals at senior level and the extension of conduct standards, there is no reason for individuals in financial sectors not to understand their roles and to be responsible for their own actions. 


I hope, subject to agreement by the Attorney General, to publish the heads of the Bill before the summer session – in effect in July of this year.


The publication of the Bill will allow further opportunity for engagement and discussion on the proposed legislation and how it impacts on individual institutions and the financial sector as a whole.


I look forward to such engagement. 


While I cannot participate on your discussion panel, I hope you have a successful event today.

Thank you.