Fintech Companies Can Have Culture Problems Too
The typical scenario when describing culture problems in bank-fintech relations blames the banks – legacy financial institutions are slow and backward-looking, while the fintech companies are agile and future-driven, and this disparity of outlooks leads to problems, and it’s the banks’ fault. A major reason for this is because typically the bank is the senior partner or acquirer in the relationship, though in rare cases, as when Green Dot bought Bonneville Bank a decade ago, it’s the other way around.
Cultural problems at banks are well-documented – the lines of business are siloed, and instead of cooperating, they compete with each other. One large bank looking to hire an innovation executive recently had multiple groups making offers to the same candidate, causing the bank to literally compete with itself and drive the price up. Incentives are misaligned – look at Wells Fargo’s sales culture that led to CEO John Stumpf agreeing to never again work in banking and pay a multimillion fine. Banks are inherently conservative and stifle innovation – the list goes on.
But fintech companies of all sizes can have cultural problems too, and when bank cultures don’t line up with the culture of the fintech in question, it’s not necessarily the bank’s fault. There have been numerous cases of startups with hostile workplaces, from Uber to SoFi to others discussed in the fintech community, if not yet known to the general public. There are also cases where two companies don’t work well together due to cultural issues, but it doesn’t mean one of them is wrong – it’s just a good match.
When a larger company acquires a smaller company, the larger company’s culture tends to predominate, but in a merger of similarly sized companies, a new culture needs to be created from the two existing ones. This can be an organic process, taking the best pieces of the two companies, or a deliberate process of consciously laying the groundwork for a new culture that fits the larger company.
What is Culture?
The word culture masks a tremendous amount of complexity. Culture can refer to a company’s mission, its work environment, its customer relations, or something less defined like the feeling a customer or employees gets when they walk in the door. These may not be consistently expressed. For example, a company may be forward-looking and put the customer first while also maintaining a work environment that is hostile to employees, a charge that has been leveled at Amazon, one of the most trusted and beloved of consumer brands.
A “fun” workplace environment including ping pong tables and free snacks and beer may make many members of your staff happy but be off-putting to the rest. As ideas about propriety in the most fundamental social interactions shift frequently today, projecting a strong workplace culture for employees is not a simple proposition. A culture that worked years ago may not fly today. What’s a company to do?
Accountability at all levels
Culture can flow from the top down, from executive direction and attitudes, as well as from the ground up, from back-office employees and customer-facing staff. Regardless, the overall company culture must be a safe and comfortable place for all employees, and everyone from the CEO on down must be held accountable for actions or attitudes that violate the trust necessary to a healthy culture. Executives must listen to feedback, and follow the guidelines of HR as well as legal and compliance.
Broadcast your values
The company’s core values must be clearly defined and every employee should know what the company is trying to do and why. What does the company believe? This should be made explicit and not left to employees to guess. The company’s values should be part of the employee experience. If employees are confused or unhappy, customers will know this. It is not always simple to get employees to swallow the company pill, but they must be given the opportunity to understand it and not behave in a way that violates it.
Clear communication is vital to employee productivity and happiness. Employees that know what they need to do will lead to a less stressful environment. If employees feel they cannot communicate with a superior, problems that can be identified and corrected will instead persist. Channels of communication must be open up and down the lines of reporting.
When employees are healthy in body mind and finances, the entire company will benefit. Employees should be encouraged to care for themselves, which may mean a better work-life balance. Burnout is real and helps no one. Hiring the right employees is also vital. And this doesn’t mean hiring people who will toe the company line. While all hires must respect the company’s core values, a diversity of outlooks and opinions will create unexpected connections and encourage innovative ideas.
There are as many different kinds of company culture as there are companies, but for your company to excel and innovate, you must have a healthy culture that serves both customers and employees well. Banks and credit unions have reputations for being dull and conservative and the cliché about startups is they are creative and full of energy. This may be true but is not so in every case. There may be boring banks that treat employees better than sexy startups.
When banks and fintech companies come together, the first step must be respect for each other’s culture and mission. If the culture doesn’t work, all the legal and compliance work will be wasted. From that foundation of mutual respect for cultures, even if the two companies are not identical in mission and goals, great things can happen.
CCG Catalyst can help develop an innovative culture — contact us here.
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