President’s profile
Mapping out a steady course

The progression of professional standards and rebuilding trust are the two top priorities for Jim Lindsay, Chief Executive of Airdrie Savings Bank and the new President of the Chartered Banker Institute.

Jim Lindsay favours evolution over revolution. The Institute President feels that the last decade in the banking sector, with its enormous emphasis upon profitability, has come at a cost. That cost, he believes, is neglect of an absolutely clear focus on customer needs. “The key element is the promotion of professional standards. We will see that working through progressively, ensuring that we are addressing the needs of the Institute’s several thousand individual members and caring for their interests and for their customers. Included in the plans is the relaunch of Chartered Banker aimed to reinforce the benefits of professional qualifications.”

Jim joined The Royal Bank of Scotland (RBS) when he graduated in economics and business studies from Edinburgh University in 1973: “I started on their graduate trainee scheme that same year. That was a three-year programme which included working in various areas and provided a mix of experience in branches and head office activities. The scheme carried a requirement to complete the banking qualification.

“In those days, more or less everybody came into banking from school or as graduates and you gradually worked your way up. Now, recruitment is much more specialised with experts in areas like human resources, property, investment and so on.” The benefit of that kind of training, he feels, was that you got the opportunity to see quite a wide range of business activity and to understand the bigger context of banking.

“I learned the core banking skills, and then I had the option to work in the legal side and was Secretary of RBS for a few years. I moved on to take charge of the Glasgow branches in the early 90s until reorganisation led me back into the legal and regulatory area. I was involved there with corporate activity, working, for example, on the joint venture with Virgin on a mortgage-based current account and the establishment of a new global custody operation.”

Jim stayed with RBS for 27 years in all, leaving around the time the NatWest acquisition was completed. In 2000 he became Chief Executive of the Airdrie Savings Bank. A relatively small and very successful institution, it must have been a dramatically different experience from the mammoth corporate world of RBS.

Airdrie Savings Bank is clearly doing well. In 2010, its lending rose to £36 million while deposits increased by 5.4 per cent to £130 million and pre-tax profits grew 21 per cent to £326,000. This achievement is testament to the trust placed in the bank, its trustees and staff in 2010 when prominent Scottish individuals including Sir Brian Souter, Ewan Brown, Ann Gloag and Sir Tom Farmer provided support. Airdrie Savings Bank’s conservative leveraging approach clearly wins professional and customer confidence.

He witnessed major scale restructuring in the 1990s when RBS introduced Project Columbus: “The idea was that the bank would take a radical look at the branch side of things, the organisation and management, the customer approach. The much more sophisticated requirements of major business customers on the one hand, through medium and smaller scale businesses to private customers were becoming too much for any one branch manager to be fully informed about.

“The customer needs had become diverse and sophisticated as banks had moved from the ordinary core retail services into areas like investment, insurance, mortgages and the like, so there was a need to align the bank more successfully. All the major banks followed similar paths.

“It certainly was not without controversy. There was a dissolution of the traditional bank manager role as it was replaced with a range of different experts. It was quite a dramatic change at the time.”

That was a foretaste of the increased professional differentiation that followed. Bankers developed precise specialisms and recruitment procedures altered to reflect that.

“As banking services became more complex, the need for professional education began to evolve. I think what happened was that through the late 90s and early 2000s, things really crystallised in terms of the drive for profitability and that became an almost overriding ethos born out of the early 90s when profitability in the banking sector was very low.

“Professional standards got pushed down the agenda. From a time when they were just part of the culture and weren’t really defined in any way but were taken for granted, there developed across the industry an unfortunate by-product from the intensive competition in the form of inappropriate activity.” Repairing that damage, says Jim, is a vital component in rebuilding pubic trust in banking: “It is important internally first of all. If a bank has an internal professional culture that is looking after customer interests, then that is a good starting point for driving things forward.

“On the other side of the equation, if customers can perceive that they are talking to people who understand their needs, who can explain things fully and who do not indulge in aggressive sales activity, their trust can be rebuilt over time. One of the key elements in moving forwards is to make sure that ethics and professionalism are foremost in the industry and I think there are strong signs that this is being recognised.”

Developments in the regulatory system are an inevitable consequence of the banking crisis. Jim is cautious on the pros and cons: “One of the key and commendable messages coming out is that there will be much more of a regulatory focus on culture and ethos in organisations, and examining and interpreting that. That is where the Institute fits in with those important dimensions of ethics and behaviour and professional standards.

“Whether having a larger and more complex regulatory structure is a good thing is difficult to say. The very large banks will have the infrastructure to cope but smaller institutions like Airdrie Savings Bank and some of the building societies may find the framework disproportionate and very costly. That, in turn, could constrain diversity, development and growth. It will depend very much on how the new regulators behave.”

The year ahead will be one of a steady course with a careful, analytical eye upon the progression of professional standards and the rebuilding of trust.

For the young, new-entrant bankers, his advice is straightforward: “Get the banking qualifications. Equip yourself with that core knowledge of the ethos and of what banking is about. That will stand you in good stead for the future.”

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