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Guest Blogger – Mike Lawrence

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Gateway’s CEO, Paul Thomas, is currently on annual leave. In his absence, this week’s guest blogger is Mike Lawrence. Mike is CEO of the Customer-Owned Banking Association - a position he has held since December 2017. He has over 30 years’ experience in financial services, primarily gained with AMP Bank and National Australia Bank. Mike was Managing Director of AMP Bank for eight years and prior to this, Mike undertook senior roles in all distribution channels of banking, namely, corporate, commercial and retail and having done so across three continents - Australia, UK and USA.

Restoring trust

There is a lot of talk about trust these days, especially in financial services. When I began in banking some 30 years ago, banking was a trusted profession. The local branch manager was a trusted source of advice. For the newly married couple anxious about whether they would ever be able to pay off the mortgage, for the young person seeking to get a loan to buy their first car, or for the woman who worked hard to squirrel away money each week to put in a term deposit.

Fast-forward to 2018 and trust in institutions, especially financial services, is in decline. According to the Edelman Trust Barometer, Australia sits just four percentage points above the world’s least trusted country, Russia. More people now distrust financial services than trust them.

Global expert on the collaborative economy, Rachel Botsman, says that we are in the middle of a ‘trust shift’ where technology is shifting trust from institutions back to individuals. In her book, “Who Can You Trust”, Botsman argues that back when we all lived in small communities, individuals were known and trusted based on the way they behaved. To scale trust, we invented institutions. People stopped needing to trust each other directly and trust started to flow through institutions.

However, this is changing as we move from the industrial age to the digital age. Technology is forcing institutions to be more transparent, revealing their flaws. Technology is also creating new communities online. We no longer live in small communities, but the internet has created communities of users that help us understand who to trust. For example, we are confident staying in an Airbnb apartment because we trust the reviews of other users. According to Botsman, this is ‘distributed trust’ – replicating the old village model, but with a global community connected by technology.

It’s a similar idea put forward by Jeremy Heimans and Henry Timms, in their book, “New Power”. The co-authors argue that power is moving from a “jealously guarded, closed, inaccessible and leader-driven” model (exemplified by powerful institutions and individuals) to one that is “open, participatory and peer-driven”, typified by the #MeToo movement. Institutions must embrace “new power values” such as online crowd sourcing, radical transparency and leaderless structures to survive.

Social researcher Hugh MacKay has a slightly different take on the decline of trust in institutions and what can be done. He doesn’t dispute the fact that we are creating online communities, but he argues that we are kidding ourselves if we think that online communities are the same as real ones. In fact, he argues that this is creating a whole swathe of social problems.

In his book, “Australia Reimagined”, MacKay points to the fact that Australia is experiencing an epidemic of anxiety. Two million Australians suffer from anxiety in any one year, and over 65,000 Australians attempt suicide each year. Despite experiencing an unprecedented run of economic growth, income inequality is growing, cultural diversity is under attack, individualism is rampant and we’re deeper in debt than ever.

He argues that this emotional breakdown is connected to the breakdown of traditional notions of community. The notion of the digital community is not a replacement for actual community. In fact, reliance on digital communities is creating social dislocation and community disintegration. As society becomes more fragmented, the pressure on our emotional life and our sanity becomes more intense.

The solution he offers is a simple one. MacKay says that we must look to our local communities first and we must make compassionate a way of life. We should engage more with our neighbours, embrace diversity, and favour face-to-face rather than digital interaction.

Maybe there is something in all this for the banking industry. Interestingly, our sector seems to be bucking the trend in terms of declining trust. A recent independent Essential Media poll of 1000 people found that because of the Royal Commission into banking:

  • 47% have less trust in big 4 banks
  • 18% have more trust in Credit Unions
  • 17% have more trust in Mutual Banks
  • 15% have more trust in Building Societies

I suppose it is not surprising. Customer owned banking institutions were founded on notions of community and despite embracing digital and technological innovations, we have not loss the importance of the human connection. Because 100% of profits are used to benefit customers, our focus is firmly on what people want. And when making major financial decisions, people want the reassurance of human contact. Getting the balance right between the digital and human touch points may well be the key to survival for many industries in the new world order.

Mike Lawrence


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CEO Paul Thomas