A phrase that is used regularly throughout the banking industry since the crisis began. I particularly remember it being used as a theme at SIBOS two years ago; it was a theme that ran through Bob Diamond’s Today Lecture in 2011; and it is a theme that is running throughout the City still, with Adair Turner’s speech yesterday focusing upon rebuilding trust.
However, as my blog pointed out yesterday, trust is trashed and I honestly do not think we can rebuild it.
So stop talking about rebuilding trust as though that’s an easy thing to do, and start talking about being honest.
The focus is completely different.
Rebuilding trust is all about an external focus upon the fact you are losing business with the person you want to connect with: the customer.
As a result, it’s all focused upon how to rebuild the belief the customer has in you, rather than to change you.
‘Rebuilding trust’ as a phrase, for me, just rings of creating this new veneer to try to get the customer to believe in you again.
Like some rampant gigolo having intimacy with anyone, trust in a partnership is hard to rebuild when the partner knows they can no longer trust you.
It has to be earned.
It can only be earned by showing that you can be trusted.
You have to demonstrate you have changed, not just talk about it.
And every time the banking sector slaps the governments, corporations and consumers around the head with a new scandal, that trust is broken further.
So, is it irreparable?
But it cannot be rebuilt.
It has to be earned.
We should talk about earning trust, not rebuilding it.
And how do you earn trust?
By being honest.
Being honest should be the mantra, not rebuilding trust.
Being honest as the focal point starts to point to behaviours that show you can be trusted.
As I mentioned yesterday, it’s about what you do when no-one else is in the room.
It’s about the things that National Australia Bank is celebrating in their latest ad campaign.
It’s about being transparent, open and clear.
It’s about avoiding secrets, avoiding lies, avoiding dishonest practices.
It’s about paying your taxes, doing what’s right for the customer, putting the needs of those you serve above your own.
These are all things that the City, and the banking sector as a whole, has trashed although it’s not the whole banking sector, but the part of the industry wrapped up in sleazy practices.
Rate rigging, bonus grabbing, insider dealing, corrupted bankers.
These are the small few who have rotted the barrel for the many.
The majority of those involved in banking are honest brokers.
It’s the dishonest few who have trashed the reputation of the honest many.
So when we talk about a return to boring old banking – something that is unrealistic but nice to imagine – the real point should be a return to honest banking.
Get rid of the dishonest few and keep the honest many.
What does that mean?
Take Vickers to Volcker and turf the whole darned speculative group of casino capitalists who think of their clients as muppets out into the hedge fund fringe.
Sure, there’s more to it than that simple action, but at least it would be a good start.
Postscript: to be clear, I am saying that the Volcker Rule will go global. The Volcker Rule states that investment banks can no longer be involved in proprietary trading, where they are speculatively investing their own money in trades that sometimes are at opposites with their client's needs. In addition, brokers should return to being private partnerships where the partners have to invest their own capital to trade, rather than just running a book of business with massive risks and rewards, but zero accountability.