Influential group of senior bankers, investors and stakeholders launch findings today on:
- Bank and Government actions to support the vital SME sector and meet the urgent needs facing the UK economy.
- Bank and Investor actions to focus on long-term value creation for the benefit of all stakeholders.
BankingFutures was formed by Leaders' Quest and Meteos, and brings together senior leaders from banks, investors and civil society to support the creation of a healthy, resilient and inclusive banking sector in the UK. The reports launched today are the outcomes of two Action Groups created to explore: a) how banks can better contribute to the real economy, and b) how communication and dialogue between banks, investors and other stakeholders can be improved to enhance banks' ability to deliver long-term value.
The interlinked reports highlight the need for capital markets to focus more on the long-term and how the long-standing challenges to supporting small and medium enterprises (SMEs) have been made more acute by recent changes to the banks' business models. These business model changes are driven by actions to reduce costs given the ongoing pressure on profitability and the demands of capital markets. The report recommendations seek to address these connected issues.
The Banking Small Businesses: Forging Closer Ties between Banks and the Real Economy report recommends a range of bank and government measures to support SME access to finance, advice, protection and redress, especially in the light of the Brexit vote.
The report recommends a range of measures for banks and government, which include:
- Improved bank support to SMEs on business critical issues, including investment readiness and financing options, with a focus on smaller, local and regional SMEs
- Simplified bank/SME lending agreements in the form of a standardised lending contract
- The development of an effective Government SME legislative strategy
- The introduction of a range of government measures to support SMEs, including incentives to banks to lend to SMEs; a new definition of self-employed and micro-businesses (SEMs); new regulatory Transfer of Undertakings (TUPE) to cover onward sales of contracts; a statutory duty of care for banks in their undertakings with SMEs.
- The introduction of a new Financial Arbitration Service that is fast, affordable and available to all SMEs
The Pathway to Long-Term Value: Engaging to Identify and Define Long-term Value Drivers report identifies five milestones and a series of practical recommendations to improve communications and support long-term value creation, including:
- Increased focus by banks, asset owners and asset managers on the contribution of non-financial information to long-term value creation
- Prioritisation of the Strategic Report to include data-driven information on the bank's purpose, culture, long-term strategy and how the bank supports the real economy
- Bank directors to provide regular public feedback on how they have been influenced by stakeholders
The reports identify strategic partners and implementation plans which have received in principle support from the Investor Forum, Financial Reporting Council, Banking Standards Board and UK Finance, and have been well received by government departments and agencies.
The reports reflect extensive dialogue with over 100 senior banking leaders, investors, sector experts, government departments, customers and civil society stakeholders.
Banking Small Businesses: Forging Closer Ties between Banks and the Real Economy is authored by BankingFutures Co-Chairs, Sophia Tickell and Anne Wade
Pathway to Long-Term Value: Engaging to Identify and Define Long-Term Value Drivers is authored by BankingFutures Co-Chairs with Andy Griffiths, Executive Director of the Investor Forum
Statements from members of the BankingFutures Steering Group
"BankingFutures has revealed the value of talking and listening to the stakeholders that banks are here to serve. The sector has undergone significant structural and behavioural change since the financial crisis -but the questions being asked by most investors have not changed much. I hope BankingFutures will help to change that," says John Flint, Chief Executive, Retail Banking and Wealth Management, HSBC
"BankingFutures has convened the broadest group in society to discuss how banking can help Britain prosper. The collective efforts of those involved has helped provide clear areas of focus, so that banks can better serve and support businesses and create sustainable wealth and opportunity for all," says James Garvey, Managing Director, Head of Commercial Banking Markets, Lloyds
"BankingFutures' recommendations are an effective and proportionate response to upgrading banking practices and regulation to meet the needs of smaller companies. They have made a major contribution to the debate by calling out the growing importance and specific needs of the self-employed and micro-businesses, crucial to wealth generation, creativity, innovation and personal fulfilment," says Tony Greenham, RSA
"BankingFutures has created an understanding of what a healthy banking industry might look like forall stakeholders. We look forward to continuing our work with investors to identify practical steps to contribute towards the creation of sustainable long-term value," says Andy Griffiths, Executive Director, Investor Forum
"BankingFutures has successfully supported banks, investors and government to identify tangible sector-wide actions to improve how banks operate in the SME space and communicate with shareholders," says Jessica Ground, Global Head of Stewardship, Schroders
"We have been overwhelmed by the interest and engagement in BankingFutures from a wide range of senior stakeholders. Their interest in taking forward the recommendations means we are optimistic that our goal of identifying concrete actions to improve the UK banking system will be met," says BankingFutures Co-Director, and Meteos Partner, Sophia Tickell.
"The BankingFutures process benefitted enormously from inviting a very diverse set of voices into important conversations about how banks create value. This is significant because it means that the concrete recommendations have resonance across stakeholder groups and champions embedded in key organisations able to bring them to action." says BankingFutures Co-Director, and Leaders' Quest Partner, Anne Wade.
"The BankingFutures report has a vital role to play in changing the role of banking and demonstrating how they can become a force for good in the UK. The report makes clear and practical recommendations on actions which banks and government can take to support small businesses' access to finance, advice and redress, enabling them to grow and prosper," says Bevis Watts, UK Managing Director, Triodos Bank
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The BankingFutures Reports are available for download from the Leader's Quest and Meteos websites:
Notes to Editors:
Press release orginally issued by Leader's Quest and Meteos.
BankingFutures is a structured dialogue aiming to create a healthy, resilient and inclusive banking sector in the UK. It is a partnership run by Leaders' Quest and Meteos, two non-profit organisations committed to improving the role business plays in society. The first phase of the project, which was described as one of the most societally inclusive projects on banking reform, concluded with the publication of the report, Banking on Trust: Engaging to Rebuild a Healthy Banking Sector.
The reports launched today are the findings of Action Groups created in Phase Two to explore: a) how banks can better contribute to the real economy, and b) how communication and dialogue between banks, investors and other stakeholders can be improved to enhance banks' ability to deliver long-term value. The work of this group was undertaken in partnership with The Investor Forum.
The groups met regularly over the course of 14 months and travelled to cities and regions where there is a greater need for improved access to financial services. The meetings included site visits, with leaders from organisations working to understand and support the needs of the real economy.
BankingFutures was overseen by a Steering Group which provided project oversight, guidance and supervision on the dialogue, and ensured the cross-pollination of ideas between the Action Groups. Steering Group members agreed to use their positions of influence to further the project's final recommendations.
BankingFutures is designed to build trust between different stakeholders and to allow them to design collaborative solutions. The work was underpinned by extensive primary and secondary research, and consultation with a range of external experts. Participants included:
- Over 30 civil society and consumer organisations (including RSA, United Nations Environment Programme, Finance Innovation Lab, Paddington Development Trust, Money Advice Service, TUCand Finance Watch)
- Over 20 SME owners and SME representative bodies from across the UK (including the Federation of Small Businesses, the Forum of Private Business and Your Business Community)
- Responsible Finance institutions such as Finance for Enterprise, Sheffield Growth Hub, Responsible Finance and SWIG Finance
- Senior regulators from the FCA and key members of the FCA Consumer Panel
- Senior policymakers from the Department for Business, Energy and Industrial Strategy, Government Inclusive Economy Unit and the Financial Ombudsman Service
- Fund managers and CIOs from some of the biggest investment firms with UK bases
- Governance and ESG experts from those and other investment firms
- Individuals in senior leadership positions of participating banks(Barclays, HSBC, Lloyds, Deutsche and Standard Chartered)
- CEOs and managing directors of new entrant banks including Triodos, Shawbrook and Virgin Money
About Leaders' Quest:
Leaders' Quest is a social enterprise that works with global leaders from all sectors to create a more inclusive and sustainable world. It is passionate about the role of business as a force for societal good -alongside delivery of financial performance. Through its work, it challenges and supports individuals to explore purpose and implement meaningful change in their organisations.
Meteos is a not-for-profit company that undertakes research-based, multi-stakeholder dialogues. Our dialogues, focused on finance, health and the environment, provide a forum for senior figures in the corporate sector, civil society, public sector and investment worlds to share different perspectives on the major trends that will shape market, regulatory and societal outcomes.
About The Investor Forum:
The Investor Forum is a Community Interest Company. Its purpose is to position stewardship at the heart of investment decision-making by facilitating dialogue, creating long-term solutions and enhancing value. The core objectives are to create an effective model for collective engagement with UK companies and to make the case for long-term investment approaches. www.investorforum.org.uk