The long litany of scandals suggests that bankers believe it is simply to make as much money as possible by any means possible. Yet surprisingly, they also have a social purpose.
Given the banks own the primary mechanisms that facilitate economic activity, there are quite a lot of ways for them to make money. That includes charging people for insurance they don’t need, selling them mortgages that seem cheaper because they can never be paid off, fixing in their favour the core interest rates that control the economy, inventing financial products so complicated that customers can’t understand them or the risks they will be running, short-term lending to people who can’t possibly afford to repay, taking businesses into intensive care only to pull the plug so they can purchase the assets cheaply…and so on.
On the other hand, imagine a modern world without the convenience of a payment system that allows you to go to the other end of the country and still be able to pay a shop for what you want to buy, without carrying the cash. Or having to keep your savings under your bed.
Most businesses have a social purpose. And in general, those that focus on their social purpose, rather than only on their profits are the same as those that succeed in the long run.
But if you are a bank, perhaps it is easy to get confused, since your product – money – goes by the same name as what your profits are measured in, ie money. But if they are to succeed and especially if they are to gain back the trust of society, they need a rather smarter take on their purpose.
They need to remember what they are really for.