The worldwide financial meltdown of 2008 severely damaged the reputation of the financial and banking sector. Eight years on from the crisis and people are still talking about the lack of consumer trust in the financial sector — here in the Middle East and even closer to home in the UK.
The events of the past few years provides us with an important reminder of the need for firms to consistently demonstrate transparency and fairness in their operations.
Restoring trust and public confidence is crucial for a flourishing financial services industry that can continue to fulfil its vital role at the heart of UAE’s economy. A country’s financial stability depends on trust, and without it consumers are likely to react to future turbulences and crises by withdrawing their investments from products or firms, resulting in further liquidity and confidence pressures.
Suffice to say, trust is the single most important currency in today’s business world and a critical component when dealing with clients. As the famous saying by Mark Carney, Governor of the Bank of England, goes, “Trust arrives by foot and leaves by Ferrari” — trust that takes years and years to build up, can all be gone with a snap of your fingers. Today, it is up to all members of the financial services community to instill trust and reassure consumers.
The level of trust in business relationships — whether internal or external — is a greater determinant of success than anything else. Poor actions by individuals can result in tremendous costs to firms, both financially and through loss of reputation. Fostering an environment of trust, integrity and professionalism leads to greater confidence, strengthening a firm’s reputation in the market and ultimately reinforcing the overall sector as well.
Financial professionals in the region can therefore boost their performance with clients with a three-pronged approach:
— Increasing competence through attaining globally recognised professional qualifications;
— Maintaining and enhancing their skills through continued professional development; and
— Upholding the highest standards of integrity by signing up to a financial body or professional code of conduct.
As guardians of money, mortgages and investments, people rely on professionals to look after their most important assets, so making sure we’re honest and competent is not something we can afford to overlook. Integral to this has been the adoption of qualifications by the CISI, which ensure that financial professionals in areas such as wealth management, planning and investment are tested against real-life scenarios and benchmarked against global standards.
These qualifications are the same exams taken across the world — to ensure an international standard of skill, and to overall increase the level of professionalism in the global financial services industry.
According to a report by Technavio, a market research firm, EMEA dominated the retail banking market and accounted for 44 per cent of the total market share in 2015. The UAE stood out as one of the leading retail banking centres. It is therefore crucial to further build the skills of employees within this sector.
Retail banking is largely unregulated — therefore banks need to ensure that they are competent, honest, treat their customers fairly and provide the right kind of customer advice, thereby increasing trust in the firm, its products and services.
We have seen a positive shift in mindsets about integrity, professionalism and trust across several financial firms. Banks here are placing integrity and ethical conduct at the heart of their business, For instance, in 2013 Abu Dhabi Islamic Bank launched an annual initiative to recognise and reward innovation in ethical finance and drive change in the industry by showcasing practical innovations to promote sustainability and social benefit.
Initiatives such as these are encouraging to witness.
Confidence and trust can be increased by a highly trained and skilled workforce. Promoting an environment of trust, integrity and professionalism leads to greater confidence in financial services professionals from their clients, ultimately strengthening a firm’s reputation.
Trust is an essential underpinning of finance — the entire system is predicated on people acting with integrity and trust. Trust that our money will be there when you need it, trust that borrowers will repay their loan and trust that our investments will grow over time.
With this trust, we can strengthen the financial sector and support people with making the right investment decisions, in the face of future challenges or crises. Since 2008, a major concern has been how banks can restore the trust of their clients. Surveys conducted by IPSOS Mori and Edelman in 2016 revealed that while financial services is still one of the least trusted industries globally, trust is slowly increasing.
Banks and financial institutions have been focusing on upskilling their employees to build trust with their customers. If we continue down this path, it’s only a matter of time that trust can be fully restored and future challenges addressed in a transparent and effective manner.
The writer is Regional Director, Chartered Institute for Securities & Investment (CISI).
