Banks and the entire financial sector are often seen as groups that earn easy profits and contribute nothing to society. How to reverse this perception?
My personal view is that this can only be changed by building better relationships with customers and better business models that will translate into efficiency for customers as well. With the rise of fintechs that are showing that there different ways to do business, the financial sector will undergo a change of perception by the market. This can be observed by comparing society's perception on companies like Transferwise vs traditional exchange brokers in banks. While one is seen as lean, efficient, and transparent, the other is filled with layers and complications.
The financial sector may be better perceived by the public if banks do not apply usury lending rates with a very low level of interest rates on deposits. In addition, the reputation of commercial and investment banks has declined significantly after unwise management of credit risk led investment banks to trigger the 2008 global financial crisis. Of course, there were more sources of the global financial crisis of 2008. Many mistakes in this matter were made by the management of the Federal Reserve Bank, banking regulators and government agencies and institutions cooperating with banks. Much still has to be fixed in banks, including, first of all, improved credit procedures and the process of managing credit risk and other types of financial risk, as well as in the area of IT systems and cybercrime risk. Only then will the social trust of citizens towards banks and other institutions of the financial system increase significantly. Only then will financial institutions be able to define themselves as institutions of social trust, institutions operating in accordance with the principles of business ethics and corporate social responsibility. In recent years, banks and other financial institutions have also tried to add pro-environmental issues to their missions and development strategies, i.e. in advertising campaigns they present themselves as entities implementing sustainable development goals, that they operate in accordance with the principles of social environmental responsibility, that they implement green finance, i.e. e.g. by granting loans for the implementation of pro-ecological investment projects. However, the key issue is whether banks really operate in this way, whether they actually pursue a pro-environmental policy, or only or mainly indicate these issues in their marketing communication with potential clients. The issues of the above-mentioned issues of improving credit risk management, analysis of the sources of the global financial crisis in 2008, the development of green finance, etc., have been researched and described in my publications on this Research Gate portal. I invite you to research cooperation in the field of conducting joint research projects and publishing in co-authorship in the field of the above-mentioned issues.
Best regards,
Dariusz Prokopowicz
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