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  • AutorenbildFriedhelm Boschert

Mindful Finance: New banking and without illusions

Aktualisiert: 4. Feb. 2019

For restoring credibility banks will have to move away from illusions and they should learn simple things again such as listening or "MINDFUL FINANCE".

On the negative list, both items are at the very top. Money and banks: “Financial institutions don't get out of their image rut”. - This was the title of a study already published years ago. But nothing has changed so far. At the same time "money" is one of the tops of personal stress factors, as shown in a comprehensive survey by GfK: "Pressure, money and work are the main reasons for stress in Germany.

GfK data demonstrate that in case of 23 percent of the interviewed people, mainly their own demands trigger stress. Financial troubles rank second with 19 percent and 15 percent state work to be the principal cause." Therefore, the common experience of dealing with financial issues and money is still felt more stressful rather than joyful or satisfactory.

Must this be like that? We have already considered reasons and solutions at personal level in the previous blog. Here, we put another question. There are thus people who have a real problem - and the institutions originally created and being responsible to solve their problems, the BANKS, are anxiously withdrawing in the ivory tower and are pouting. And are watching. And are looking after themselves. The employee are suffering. The customers are suffering, too. WHAT GOES WRONG? And: what could be solutions?

Restoring credibility

"Getting the customers enthusiastic about a story," I've recently heard at a sales meeting for bank employees. Good grief! "Stories" are the last thing that customers need. "The bank at your side," another bank states. Do they want to marry me? Not even better. "Deutsche Bank sends their employees to ethics courses." Well, a bit of Max Weber and Kant in three days. Who thinks to be able to change the behaviour in this way should rather browse a book of fairy-tales.

But: the real problem, to restore credibility actually, isn't addressed in no way. They continue to struggle around old recipes. And the fundamental problems are still ignored as the survey states: "People still experience the financial sector to be hermetic. Above all, they wish the institutions to show more transparency with respect to entrepreneurial behaviour and concrete work practices." Exactly! This is, what we are talking about. People want to have a comprehensible partner. Not one, who pretends to be like that. They want to understand, what is going on. And they want to know what happens with their money.

"Thus, German bank managers haven't yet found a remedy against the negative reputation trend," the study, mentioned at the beginning, states. Really! Not only in Germany. Because here it is not so much a question of recipes, rather than a very fundamental MINDSHIFT is required. At the end of the day, the banks have to leave their ivory towers, overcome their fears and pouting behaviour and make a move. With new ideas and thoughts. With a fresh wind. They have to commit themselves as bankers again, in an offensive (not arrogant) way. One who understands his customers and stakeholders and takes them seriously. This creates credibility. And possibly, it simply helps to change the perspective. With Mindful Financefor example. As my gentle readers just know: "there is always the mindful solution as well." And the first step?

"Banks must consequently abandon their illusions,"

Johann R. Flesch, former executive bank director and today head of an advisory company, says in a guest commentary for the German Börsen-Zeitung newspaper. And he shows with analytic brilliance, where and how banks lie to themselves. Outdated and visionless business models from the 1990s, all sorts of unnecessary products and advisory services without customer value and thus without profits for the bank, too. And I'd like to add: even corporate culture remainded unchanged in many institutions. Still reflecting the period before 2008. There is neither an offensive innovation culture, nor an "appropriate risk culture" - but a lot of mission statements that normally nobody reads however.

Although the renewal wouldn't be so difficult: "… consequently focusing on customer orientation and meeting customer requirements according to simple principles of reduction, transparency, convenience, reliability and fairness“ (Flesch in Börsen-Zeitung newspaper as of 18/6/2016). Oh well, that's what we have already been doing all the time, the bank managers counter immediately then. Really? And why nobody believes them? Why do the supervisory bodies of the financial market authorities push them to review their business models? And why their profits still decline?

Banks would only be able to really meet their customers' requirements, if they examined precisely, what these needed. Example: we directly move to a sharing economy, where we don't have to own all by ourselves, where access to and common use of consumer goods (such as cars) and services (such as care)will be the future. Cars, for example, are not used most of the time, stand around in front of the house or in the car park. But they are needed to go to work and on holidays. Many families consider to use them jointly with others. What's wrong, when the banks take care of this need? Offering sharing platforms, standard contracts and at least even financing the decreasing number of cars and managing cost allocation. This would finally be an innovative initiative again to be taken by the banks. Crowd funding, green bonds, local retail delivery service, user sharing models, etc. - all sorts of new activities and business opportunities! To be able to be discovered with MINDFUL FINANCE.

MINDFUL FINANCE: Listening and being courageous

But how will we cope with this challenge however? This is not that difficult:

  • Looking at business and customers with d i f f e r e n t e y e s. What is also called a “change in perspective”. No problem with a mindful basis attitude. In this way, plenty of new ideas can be discovered. And: the bank will proceed in that direction where the bosses draw their attention to. Awareness can however only be guided by means of mindfulness - which can thankfully be learned. By the individual and by the whole bank as well. Quite practical: have you ever been in a school class and listened, what they said about banks? Or in a university lecture with students? They are nonetheless tomorrow's customers. Or once gone to the customer without anything in your bag. And only listened?

  • R e a l l y understanding the customer. This is nothing less that the bank manager and the account officer can emphatically understand their customer. Because they can put themselves into their customer's position. Not good for business, you will counter? Quite the contrary! Just take a look at Goleman's "Empathy Triad“(Harvard Business Manager, February 2014). And if you don't believe that, let's talk about it. As the point is: Not only listening to words and figures and taking standard products off the shelf, but i d e n t i f y i n g, what the customer wants to have. Or what the village, the region or the city quarter needs. And only then tailoring a solution. Industry has proceeded in direction of batch size 1 production, yet. Why not banks as well?

  • Being courageous, experimenting, creating prototypes and off we go. This is true for offers and services and for forms of a new customer dialogue as well. If banks continue to think in product development cycles of years, Bill Gates will finally be proved right ("banking is necessary, banks are not," 1994!). And if banks don't find new forms of stakeholder dialogues soon, the last customer will say goodbye to them by Twitter. Bad! Very bad!

Bank managers will ask at this point, how they shall change all that within short. And first of all, h o w they can introduce the new values into the bank. In this case, I recommend to have a look at a research study made by the elite university INSEAD on behalf of the EU, the famous RESPONSE study. This paper addressed how responsible acting can be brought into the management of companies, above all "corporate social responsibility". And the astonishing result of the study shows that an approach based on deep introspection and mindful techniques can direct outdated behaviour patterns and personal values to socially responsible acting in a better way that traditional CSR change approaches are able to do. Or in short: when using mindful approaches, you can achieve more in the course of your change processes than by means of traditional approaches.

No wonder: Mindfulness is transforming - the individual and the company as well. Already tried?

With mindful regards,

Friedhelm Boschert

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