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Stuart Gentle Publisher at Onrec

Creating winning culture essential if financial services firms are to flourish, says PwC

Cultural change in the financial services sector is destined to fail if players continue to focus on it primarily as a compliance requirement, says a new paper by PwC

Cultural change in the financial services sector is destined to fail if players continue to focus on it primarily as a compliance requirement, says a new paper by PwC.

The paper, ‘Forging a winning culture’, advocates a new take on culture that focuses less on change as a bureaucratic distraction within businesses and instead as a crucial source of competitive advantage.

Regulators in many parts of the world want financial services organisations to tackle what they see as a dysfunctional culture, which has had its most extreme manifestation in recent scandals such as LIBOR and Forex manipulation.

Christopher Box, UK partner with PwC’s financial services HR consulting practice, said: “It is clearly important for financial services organisations globally to be able to demonstrate to regulators they are seeking to enforce appropriate and sustainable behaviours.

“However, if culture is viewed as a ‘problem’ to be fixed, then it is also likely to be treated as a compliance rather than competitive opportunity.”

The paper points out that until now, behaviour has proven difficult to adjust, and whilst institutions have invested in cultivating a culture that promotes risk awareness and ethical behaviour, challenges persist.

PwC points out that in a global financial services sector facing major transformation, culture is set to play an even more important role in the ability of financial services organisations to attract top talent, sustaining profitability and growth.

The paper says a strong culture is more correlated with sustainable high performance than strategy, operating model or product coverage.

It highlights that this need for change comes at a time when established business models in the financial services sector are already challenged by accelerating technological change and shifts in customer expectations.

Christopher Box, said: “Ongoing changes in the way we work make it even more important for financial services firms globally to think about what aspects of their culture might need to be reshaped, and to establish how willing their employees are in embracing the new ways of working needed to compete.”

The paper sets out the different starting points and objectives for cultural change within specific financial services sectors:

  • For hedge funds and other alternative investors, the cultural challenge is how to retain the entrepreneurial spirit in what are becoming less intimate and more regulated businesses, as they continue to expand.
  • Asset managers, meanwhile, have largely been spared the culture spotlight to date. However, the need for more transparency on cost and comparative returns is starting to drive more focus, especially for those expanding into new markets.
  • Within investment banking, there remains the urgency to ‘win’ by exploiting the benefits of informational arbitrage, which must now be balanced with more challenge and collaboration to bring a broader perspective and avoid narrow decision making.


The key to effective change says PwC, is in being able to hone in on and adjust specific critical behaviours that need reinforcing within respective financial services firms. 

www.pwc.com