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More engagement needed from banking sector, says report

Banks should be more transparent, contribute more to the real economy and improve dialogue between each other and external stakeholders, according to the conclusions of a new report into the sector.11 Jul 2017

The Banking Futures project, which involved a number of senior industry leaders and banking organisations, made five recommendations in its report (40-page / 507KB PDF) which was aimed at identifying and defining long-term value drivers for the sector.

The report said investors should engage better with banks' board and management to explore and challenge on issues providing long-term value, instead of focusing on the short term.

It recommended that banks should work with UK Finance to agree key elements of non-financial information disclosure, and that the industry should embrace non-financial reporting. Connected to this, it said banks should prioritise the strategic reporting element of annual reports, as required by the Companies Act, to include more data-led information on issues such as long-term strategy.

The report said banks should also publish more information to help stakeholders evaluate their long-term health and prospects. This should include employee views and statistics about job satisfaction, training, retention, diversity and inclusion, it said.

Finally, the group said individual bank boards and senior management should provide annual feedback on how they had been influenced by stakeholders.

The Banking Futures group said in the report that the sector was undergoing “immense change” with waves of regulatory reform, new technology and measures to address past wrongdoings all combining.

“As no one can be certain what the future holds, there is an extraordinary opportunity for bank leaders to engage more fully with stakeholders on these long-term value drivers to understand what their stakeholders hope and expect of this economically and socially vital sector,” said the report.

In a separate report (56-page / 2.6MB PDF), the group also looked at how banks should create closer ties with small and medium enterprises (SMEs). This sector is more likely to be affected by the UK's withdrawal from the European Union, and Banking Futures recommended that more data was required to support the relationship between SMEs and banks.

The Banking Futures project was coordinated by non-profit groups Meteos and Leaders' Quest and the Investor Forum supported its work on long termism in the capital markets. Its steering group included senior management from a number of large banks and the incoming chief executive of UK Finance, Stephen Jones. It sought opinions from policymakers, regulators, investment firms, representative bodies and senior leaders from both established and new entrant banks.