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This post by Dave Curran originally appeared on Thomson Reuters’ Legal Executive Institute on June 2018.

The banking industry and regulators are using behavioural science tools to help improve the ethical cultures of financial services firms on a worldwide basis. At a recent panel forum held in New York and sponsored by Thomson Reuters, regulators and industry leaders discussed how behavioural methods from fields such as organisational psychology are being combined with sophisticated technology to fight misconduct and encourage ethical cultures.

For example, behavioural science tools and techniques can give firms an insight into who in an organisation wields considerable influence. In some cases, it’s not always the most obvious people. Often mid-tier employees have considerable influence over a group’s behaviour, something that can be detected and observed by using such tools.

“We can actually find signals on who are the key influencers in the organisation, who are the most deeply trusted people,” one panelist — Stephen Scott, Chief Executive of Starling Trust Sciences, an applied behavioural science technology company — told the gathering in New York. By analysing the metadata of employee communications, one can uncover patterns that demonstrate which individuals wield greater influence and trust.

Taking the analysis a step further, if a key influencer is shown to lack necessary skills or ability or appears to have bad intentions, that individual then poses a greater risk to his or her group, and the larger organisation as well.

“We can actually find signals on who are the key influencers in the organisation, who are the most deeply trusted people.”

“The moment we know that (an employee) operates with bad intent or is incompetent, or he actually doesn’t know what he’s doing, he’s quite likely to have a disproportionate effect on the institution,” said Mark Cooke, Global Head of Operational Risk at HSBC, another panel member at the New York event. “You start then to think about how you can react and drive a progressive organisation.”

Following the enthusiastic response in New York, financial professionals will have a chance to join the discussion in London on Thursday, June 28. This practical real-world conversation will examine the progress in cultural reform within banks and other financial institutions, with a particular focus on the tricky issue of cultural metrics and the impact of behavioural science.

Topics are to include:

  •        Enforcement culture: Has it been effective in curbing misbehaviour?
  •        Employee surveillance and monitoring: How much is too much?
  •        Data science and predictive analytics: What are banks doing?
  •        Building trust with employees: Can behavioural science help re-establish trust?
  •        Regulatory view: What’s the role of bank supervisors in cultural reform?

At the London event, our esteemed group of panelists are set to include: Wieke Scholten, Head of Audit for Behavioural Risk at RBS; Orlando Ruiz Fernandez, Technical Specialist for Governance, System and Controls at the Bank of England; and Alex Viall, Head of Regulatory Intelligence at Behavox. The panel will be moderated by myself, Dave Curran, Global Director in Risk & Compliance at Thomson Reuters.