What are banks for?

Right across the world there is an epidemic of poor behaviour from the banking sector. Facilitating money laundering, interest rate fixing and mis-selling of products are big in the news right now. And these are the activities of organizations that were once known as ‘pillars of the community’, not criminal gangs. Yet there is very little mention of these issues in sustainability and responsibility reports from the big banks. Why so?

The challenge is that these issues go to the heart of the social purpose of banks; they concern its core business. Banks really are supposed to take in money (but not from criminals). They are supposed to set interest rates (but not to fix them). And they are even meant to sell financial products (but not hoodwink people into contracts clearly against their interests).

Being at the heart of their social purpose, you would expect a responsibility report to deal with them. Yet that same fact is perhaps also why they do not.

Some other issues which are important usually are covered to some extent in responsibility reporting. The environment and staff issues come into this category. But then, they are not seen to be integral to the core business of banking. Doing banking, however wrongly, must be part of their core business – and perhaps that is why it is too threatening to talk about.

So it will be interesting to see which banks have the courage to report properly on the problems of the finance sector in the next round of responsibility reports.

5 comments to What are banks for?

  • I think u have hit the nail on the head here. The core problem of profit is that it is purely self serving. As long as there is profit human and environmental concerns come second and banks or big pharma or food companies will have to be ethical to the point of giving up profits to do the right thing. Which is not gonna happen.
    Also as an aside the real issue at the heart of the banking scandal is the fact that the banks get to choice for what purposes money is created. To quote Mervin King the “the “Essence of contemporary banking is the creation of money out of nothing by banks often foolish lending”. If we do not take back the power of money creation and put it into the hands a a democratic body we will have no end of social and environmental problems. Check out positivemoney and thezeitgeistmovement for further info. Thanks

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