Why the Banking Industry Must Adopt a Spirit of Quality

In all my years in the banking industry, I’ve never met an executive or front-line employee who deliberately wanted to defraud clients. 

Yet, a Spirit of Quality in the industry seems like just an apparition… 

Banking Dive, on the other hand, portrays the not-so-good, the bad and the ugly of the banking business on a weekly basis. 

Recently, the leading industry publication brought attention to yet another episode regarding a financial institution doing something wrong and headlined their story: “Bank of America fined $250M over fake accounts, junk fees.” 

Things have gotten so bad the federal government found it necessary to create the Consumer Financial Protection Bureau (CFPB). Unfortunately, fines and bureaucracies will not solve the problem. It may actually make it worse.  

How can I make such a bold statement?  

Because it has all happened before, albeit in a different industry: the automotive manufacturing industry.  

What Banking Has to Do With…Auto Manufacturing? 

Let’s turn the clock back a few decades and time travel to the 1970s. 

Along with Watergate and an oil crisis, newspaper headlines boldly told of deadly cars, nonreliability, product recalls, bad sales practices, and a host of other woes.  

Many states and the federal government passed laws to protect the customer. But as usual, nothing changed.  

That is…not until Toyota adopted a “Spirit of Quality” philosophy. That gave the big three automakers some real competition. As a result, by the 1980s Ford’s motto was “Quality is Job One.” 

Now fast forward to today. It is rare to read an automotive quality problem headline. 

Yet sadly, lack of quality is an on-going problem in the banking industry.  

Listen Up, Banking Industry! 

In the 1960s, a leading thinker in the field of quality was speaking – but the big three automakers weren’t listening. 

William Demming, a US intellectual (engineer, professor, statistician and management consultant), was finding no support for his radical quality theories among US auto manufacturers.  

And anyway, why should they listen?  The US auto industry was the envy of the world:  dominant in every way, including what passed as quality.  

Meanwhile, the Japanese were desperately seeking a way to compete with GM, Ford & Chrysler on the world stage.  

One fateful meeting between William Demming and Toyota changed everything.  

Radical quality became the “Toyota Way.” That philosophy catapulted Toyota and Japanese manufacturing into the world’s markets.  

Today, Toyota sells more cars than GM and Ford. Chrysler no longer exists. It is now Fiat.  

The Need for a Spirit of Quality in Banking 

Accountability and Authority go together in the Spirit of Quality:  

• Every employee from president to teller should have a transparent view into the banking system and understand their accountable roles within that system.  
• Every organizational layer should have authority via peer groups to make improvements to the system.  

Quality demands you look at every system – from the discrete parts to the whole, and every effort from multiple viewpoints: customers, company, and markets. Four areas to note: 

#1- Customer focus: Customer relationships, trust, confidence, and engagement.  

#2- Company unity of purpose and direction: competent, empowered and engaged people.  

#3- Constant improvements: always improving, always striving for better. 

#4 – Efficient and effective processes: consistent and predictable results, transparent decision making based on facts. 

But what’s missing?  

Financial outcomes and goals. Why?  

Profitability goals are not noble goals

Profitability must be earned through the Spirit of Quality.  

A bank with the spirit of quality will be able to: 

• Deliver excellent customer service 
• Offer reliable and trustworthy products at much lower costs 
• React to the market with consistent, predictable decisions results based on facts 

Internal transparency combined with employee engagement at every level will eliminate headline-worthy bad behaviors.  

Imagine the impact to bottom line profitability if Bank of America didn’t have to pay a $250 million dollar fine. Image one loan officer producing what a whole loan department produces today.  

Spirit of Quality consistently and predictably produces profits. The noble cause is quality and the earned value is profits. 

Stay tuned! Next, I will break down each of the four areas of quality and how these may be applied in banking. I will also provide the greatest secret of success for all quality initiatives.  

So…how mobilized is your organization for the BIG changes already knocking at your door?

Contact me today to find out how I can help.