The al-Qaeda terrorist attacks on the US in 2001 and global financial crisis of 2007-2008 both left deep scars, cutting through social and political systems and their economic output.
The world had not yet recovered from these apparently epoch-defining events, when most countries were forced into lockdown from early 2020, due to a global pandemic caused by Covid-19.
The US has already recorded 100,000 deaths and the UK well over 40,000. Many fatalities in both countries have been avoidable. People from black and Asian ethnic backgrounds have been among the hardest hit. This is not because they are weak and medically susceptible. Rather it is because they are more likely to work in front-line health and public service jobs exposed to infection, live in more crowded conditions and suffer discrimination.
To add insult to injury, when US citizens of colour and their supporters protested across 350 US cities against unlawful deaths and discriminatory treatment caused by law enforcement officers, a failing president has labelled them arsonists, looters and killers.
Many in the UK have been quick to show their solidarity, organising marches and bringing down a statue of an infamous slave trader in the ethnically-mixed port city of Bristol. The UK’s governing politicians have also shown little solidarity with their own people, already divided by a deeply damaging Brexit fiasco.
These protests are no flash in the pan. We are seeing real, almost revolutionary change in Western societies. While politicians live in denial, the business world is at least taking some notice. Within days of the demonstrations beginning, many big brands, including Goldman Sachs, Citigroup, John Lewis, Apple, Lego and YouTube had voiced their support. Some turned previously vague ‘equality’ and ‘diversity’ codes into real policies.
Employers, recognising a seismic shift in the public mood, are at last beginning to acknowledge vast deficiencies in racial equality, set targets of recruitment for employees from ethnic minorities and donate sums to human rights movements.
Moreover, they are being persuaded by some forward-looking people on their boards that more diversity will lead to better profitability.
The upshot of this has been immediate. Those firms which are not vocally defending minority rights and condemning racism are being asked by their employees: “Why are you keeping quiet during these dramatic days?”
These unprecedented admissions from some of the largest firms means there will be fewer places to hide for imposter companies, who promise one thing with their brand and deliver an opposite outcome. Financial firms can no longer follow the adage that clients will cling on to a bad advisory experience until they feel safe to transfer their loyalty, which could be way down the line, if at all.
“Brands seen as disingenuous will get found out. People have had enough,” argues Anant Deboor, a Hong Kong-based brands expert. “The ‘you need us today more than ever’ message is false, pretentious and flawed.”
He predicts a move away from aggressive posturing by grandiose brands to those with a more humble, empathetic, listening image and a local message. Consumers are looking for protection, connection and intimacy, argues Mr Deboor. He also expects a new set of heroes to emerge, with those involved in justice and public service in the ascendancy.
Time for a change
Private banks, along with other institutions, have much to learn from this transformation in the zeitgeist. They need to reform their employment, investment and communication practices, all of which are connected with a digital glue.
Reforming recruitment procedures will not only leave banks more respected within their communities, it will also broaden investment perspectives as wealth managers seek staff to match their prospective clientele as well as their investment targets. Increasingly, these are in developing countries with majority black and Asian ethnic populations.
This is also the perfect time for inspirational leaders – particularly those from ethnic minorities – to emerge from the financial community. Talented investment managers, business heads and digital team leaders can inspire societal change as well as motivating their own workers.
The paucity of high quality political leaders globally – demonstrated by a callous and indifferent US president and an incompetent, elitist UK prime minister – has highlighted this vacuum. The financial world, its sophisticated digital and data-led milieu in particular, is the perfect learning ground for new leaders.
Investment priorities for clients of private banks and family offices are already moving towards ethical, social and governance (ESG) criteria. This trend is accelerating, with investors realising those firms which genuinely behave ethically are more likely to be responsibly managed, profitable and long-lasting. What recent developments will do is encourage analysts to look deeper and ensure the behaviour of firms actually matches their paper policies.
Demand for customised ESG portfolios is on the rise, but not properly deployed says Doug Fritz, founder of the F2 consultancy in San Francisco. “Specialist players are leaning heavily into this space and will shine over the next year or two.”
Communication, and finding the blend between digital and human-led channels is also key. Education and insight in content related to ESG agendas will be the most compelling. Clients are crying out for tenderness. They need the emotional support and empathy today that only human beings can provide, although these enlightened advisers will need more digital support to free up their time.
Yet we must also be realistic about our expectations. The huge fall-out, consolidation and wholesale change we will see in commercial activities is unprecedented. Many players will fall by the wayside, no longer economically viable in a social-distanced, ‘new normal’ where globalisation and cross-border communication of ideas may be retreating, if divisive, populist leaders carry on advancing.
“The main driver for collaboration between banks, fintechs and software providers has been survival,” says independent consultant and long-term wealth management commentator Seb Dovey. “To a much lesser extent, it has been about building a better vision for tomorrow.”
