Ethical Leadership in FinTech
A new study by the BlessingWhite has raised three major themes which financial services, and we believe FinTech, firms ought to adopt to manage this new post-crisis climate. The three themes are: Paralysis in the face of Complexity and Uncertainty; Reputation, Relationship and Risk; and Right People, Right Drivers, Right Action. Their report provides practical recommendations to build an organisation so it inspires wider “public confidence and engenders ‘ethical high performance’”. Though useful, and we certainly agree to their themes, the report’s methodology and findings must be taken with a heavy dose of scepticism too.
Paralysis in the Face of Complexity and Uncertainty
This is a constant thematic idea with the business world. For the last five years at least, many HR professionals have emphasised that we are in a VUCA (volatility, uncertainty, complexity and ambiguity) state: with many calling it ‘the new normal’. The report highlights a number of issues agreeing with this prospect and advocates several recommendations to tackle them all. Most relevant to FinTech firms is having specific and clear principles or “anchors” to guide the business irrespective of the regulatory changes: your defining mission statement.
Reputation, Relationship and Risk
Already an idea being explored in FinTech, the report agrees that leaders in order “comply they are going to need to co-operate”. Not just with regulators (as is the case in several countries like the UK and France), but with clients, potential customers and their competitors too. This theme puts a big emphasis on trust, recommending firms “[t]ake accountability and stewardship for the long-term legacy”. They highlight this must be managed by leaders and must work from both within and outside the organisation.
Right People, Right Driver, Right Action
Of the participants involved, over 70 per cent believed future regulation will have an impact on “reward and recognis[ing] performance” leading to a change in employee behaviour. Their focus is on “develop[ing] a culture and talent pool that is fit for the culture”. Though not a new concept it’s still a mooted point often ignored. The last aspect of the report calls for wider public inclusion in firms’ “learning strateg[ies]”. It stipulates “financial services… take an active interest in… monetary education”. This is a unique and most inspiring position. We believe it is one which will continue to gain support particular where information asymmetry might exist e.g. crowdfunding.
At only 36 pages it is nicely compact in comparison to the average tomb released by managerial consultant firms. Though a fantastic report with a great overview, it does have several flaws. The most obvious criticism of the report is the low sample size. These ideas have been generated from a paltry figure of just 21 participants from 21 financial services firms. Moreover, this group are a narrow concentration of “Compliance, Audit, Customer Services, Learning and [the] C-Suite”. And though cynical, it’s difficult to take seriously musings on ‘ethical leadership’ from the heads/leaders of what is still the least trusted and one of the most opaque sectors.