The value of transparency in business practices
According to business.com, “transparency is defined as a lack of hidden agendas or conditions, accompanied by the availability of full information required of collaboration, cooperation and collective decision-making.”
Financial institutions that embrace transparency find this practice leads to customer trust … which leads to customer loyalty … which leads to business success. Internal transparency with employees is a must to enhance trust.
According to Entrepreneur, “Internal transparency – the practice of maintaining open lines of communication with employees and remaining honest about company operations – is positively correlated with higher employee morale (and therefore, productivity).
Research firm Forrester’s reveals that people tend to assess a company’s trustworthiness on the basis of three things: integrity, competence and transparency.
How to become more transparent
Transparency in business leads to growth, as many customers today only want to support organizations they trust. That’s why firms perceived as deceitful fall off the map so quickly.
In this Information Age, customers demand stronger communication and transparency. If you don’t provide it, they’ll move on to an institution that does. This goes for financial institution employees as well.
You want to hire and retain employees in a relationship of mutual trust.. With the stakes so high, here are some tips on how financial institutions can enhance a culture of transparency from both internal and external perspectives.
Communicate your mission and core values
Many financial institutions go to great lengths to develop concise mission statements and company values to help guide practices, policies, and employees.
Often these values are not communicated with frequency and broadly to all stakeholders. Regular reporting on a bank’s sustainability and transparency actions in the form of newsletters, website/intranet updates and annual reports can accelerate the sharing of important actions and achievements.
Don’t mask pricing
Pricing policies can often lead to misunderstanding and confusion. It goes without saying bankers are required to be up-front on lending and deposit product pricing. It’s understood that pricing can vary based on relationship parameters, but banks should strive to disclose everything reasonable regarding how much services and products will cost all-in. No surprises is an important element of trust.
Avoid using confusing language or a complicated system that may in fact withhold price information. If an organization’s prices are higher than other organizations in your market, be up-front about your pricing. Explain the value and what is included in bank pricing.
Look beyond pricing
While pricing creates an important consideration for transparency, don’t overlook other areas of information flow within your bank. Consider transparency in areas such as customer information security and exchange, employee governance, and financial reporting. These are important factors that can increase trust in a financial institution.
Review best practices
When it comes to overall transparency objectives, it can help to take a step back to learn how other trusted organizations enhance information sharing. How do your competitors disclose information? What types of reporting helps drive home missions, values, and your transparency best practice? Look outside the banking industry to see how organizations such as technology firms and government entities build trust with their customers.
Communicate succinctly and clearly
Some executives, uncomfortable with transparency, may beat around the bush before getting to the point regarding a critical outage or pricing concern. Whether you are updating your employees on new systems, revealing financial information to investors, or raising your prices, get to the point. People prefer organizations that do not hesitate to share information, and value their time by doing so clearly and precisely.
One recent example of increased transparency
Data transparency is another key aspect of information-sharing financial institutions will be dealing with in the near future. One example of this is the Consumer Financial Protection Bureau (CFPB) considering several proposals to implement new rules around data sharing and transparency. Data providers directly affected by the proposals include depository and non-depository financial institutions.
The CFPB’s proposals would address a covered data provider’s obligation to make information available upon request to consumers and what the CFPB refers to as authorized third parties.
This instance shows a possible directive to further share a customer’s information with both the customer and other authorized entities. Banks practicing transparent policies and practices will be better equipped to deal with the coming expansion of open information exchange.
In the new future, the forward-thinking organizations that transparently share data, information, pricing, and negative events will fare better than their peers. As one leading technology firm notes in an external sustainability report:
“This report reflects transparently where our organization is today on its long-term sustainability journey and points to where we want to be in the future. We view corporate transparency and sustainability as a team sport, and it has become part of the DNA of our employees.”
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- Source: https://www.finextra.com/blogposting/23634/transparency–transformative-for-todays-banks?utm_medium=rssfinextra&utm_source=finextrablogs