In conversation with Finextra TV, Antony Jenkins, founder and executive chairman of 10x Future Technologies and former Barclays CEO, highlights that the single most important factor in the push toward sustainability is transparency.
“The rabbit hole that people fall down is that it’s impossible to make everyone happy. You must select the things that you’re committed to delivering, be transparent about where you’re delivering and where you’re not, explain why not, then run the business on this basis.”
Jenkins notes that even when areas of disagreement are reached on the allocation or deployment of resources toward sustainability projects, what is important is the ability to point to the reasoning behind decisions that have been made. This ability to be transparent, by nature, relies on reporting processes and clear-cut data sets.
Reporting inconsistencies have been an underlying issue in efforts to improve financial sustainability, as firms attempt to determine which reporting standard they will adhere to, implement necessary operational and investment changes while continuing to generate sufficient financial return.
This lack of consistency proves not only to be a hindrance to ensuring that firms are reporting data that is indeed relevant, but to consumers on both ends of the investment spectrum who need consistent and trustworthy data sets to be able to make educated decisions.
Noting this challenge and the clarity deficit on behalf of regulators and governing bodies as to a definite framework and enforcement strategy, Jenkins speaks to the actions that banks are currently able to put into practice: “Banks need to ensure their customers, who are often not well versed on the financial sector, are able to understand the business practices of the bank.”
For the bank to demonstrate that they operate fairly, the ability to transparently identify and explain their key behaviours and actions is critical. Developing a strategy to tackle this should be front of mind for financial institutions which, as guardians of vast amounts of data, have huge potential to leverage the resource to their advantage.
Jenkins comments that while machine learning, artificial intelligence and blockchain can all be powerful tools in the management of this data, “what is problematic is that this data sits in distributed systems which don’t talk to each other."
Customers are portrayed as an entity in banks’ data hundreds of times in different digital guises. This is a problem for banks which have to aggregate the data back up the chain in order to form a complete view of the customer.
“Fixing this data problem must be the first step.”
Jenkins draws on the integral position financial services hold with respect to achieving sustainability objectives across the board: “The banking system sits at the heart of the economy, and the economy sits at the heart of our society. If we want prosperous, growing, stable societies, we need to have growing, stable economies. To do this we need to have a functioning, effective and fair banking system.”
He believes that banking is particularly important because banks are the multiplier for all other activity that happens in the economy: “We have to get banking right if we want to get the economy and society right.”