The Chartered Banker Institute – the oldest institute of bankers in the world – is backing the Finance Innovation Lab’s 2017 Fellowship programme. As the Lab point out, 1.7 million adults remain unbanked in Britain, and 12 million people lack access to affordable credit. According to the Joseph Rowntree Foundation, 15 million people regularly struggle to pay their bills and use credit to do so, and a recent white paper from the Bank Workers’ Charity reports that money worries have a significant impact on mental health.
There is a two-directional relationship between financial worries and mental health.
Citizens Advice found that 74% of people with debt worries said it affected their mental health and more than half had experienced panic attacks. People with mental health problems are also twice as likely to fall behind on their bills, and one in four of them are in debt.
Improving the UK’s financial health is of direct relevance to the Institute, as the professional body for the banking industry, and to our members. We believe banking should have a social purpose as well as a profit motive, with that purpose being to support an economy that creates wealth and health (mental, physical and financial) for everyone, including our future customers. Financial health, or the lack of it, should worry banks as employers too: stress, lack of sleep, time off work and poor quality of work is estimated by Barclays to reduce productivity by 4%.
That is good for business in the long-term, but more importantly, it’s simply good.
When it’s done well, banking serves many proper and positive social purposes: it allows individuals to save and borrow; it facilitates payments; it helps businesses to grow; it’s the very foundation of modern economic life. The key point being that banking is the foundation, the essential facilitator of these indispensable social purposes. The purpose of banks is and should be to support the economic growth of society. I know some commentators feel that growth itself is the problem, but I don’t believe we’ll improve Britain’s financial health by reducing our GDP, and our average incomes.
In supporting a model of economic growth where the benefits of growth are shared across society, we need to see a banking industry built on three rather ‘old-fashioned’ values, although ones that are perhaps more rightly thought of as universal – stewardship, prudence and professionalism:
- Stewardship – because this defines a banker’s primary purpose, to manage the financial and other resources belonging to others and make best use of those resources for customers and for the overall social good
- Prudence – because this requires acting with due care, skill and diligence to avoid doing harm to customers’, the bank’s or indeed the nation’s financial health
- Professionalism – because it acknowledges a wider public interest, a recognition of the asymmetry of information between banker and customer, and a dedication to always put customers’ interests before those of the institution.
Bankers should take these duties and responsibilities as seriously as, for example, healthcare professionals would.
For me, the ethic of banking requires us to recognise that, whilst most (although not all) banks are commercial, profit-making institutions which need to offer a fair rate of return to shareholders, the primary role for bankers and the bank as a whole is to protect customers’ financial health and promote their financial well-being and resilience. While the banking industry has done a great deal in this regard in recent years, no reasonable observer could conclude, when looking at the facts, indeed when just looking around us, that we are doing enough, individually and collectively, to improve the financial health of us all.
That’s why we need the insight, inspiration and innovation of the Finance Innovation Lab and it’s 2017 Fellows. And why the Institute and our 30,000 members are proud to support them.