What can SMEs learn from the Royal Commission?

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The Royal Commission into the Misconduct in the Banking, Superannuation and Financial Services Industry released its final report last month, including 76 recommendations intended to address significant problems that were illuminated during the Royal Commission’s review process.

It’s been an interesting (and, at times, tumultuous) journey for the financial services sector. Time will tell how many of the report’s recommendations are eventually adopted by policy-makers and regulators, especially with a federal election on the horizon.

While the review and the content of the report is specific to finance, the learnings are actually much broader – there’s a lot that small businesses can learn from the past 12 months, regardless of what industry they operate within. These learnings include:

Put the client’s interest first

We recognise that, like all businesses, banks and wealth management institutions operate to make a profit and create value for shareholders. However, this should always be achieved by putting the client’s best interests at the centre of an institution’s activities and providing demonstrable value-for-money. Ultimately, this will create long-term client relationships that lead to greater value for the business over time. As noted in the final report: “Providing a service to customers was relegated to second place”. Being transparent and customer-focused are traits every business should aspire to.

Embrace change

Fundamental change can be uncomfortable and sometimes costly at the onset. This needs to be recognised and embraced, as the eventual outcome will usually be a healthier, more stable, more productive and/or trustworthy business. Of course, this is easier said than done. It usually requires a significant shift of cultural mindset.

Be open-minded about technology

We’re already seeing, in the case of the financial sector post-Royal Commission, that technology will play a very important role in creating new, ethical, transparent solutions. Fintech is an emerging industry in Australia that aims to use technology to address many of the problems in the financial services industry. This technology leads to services and products that either compete with, or complement, traditional ways of delivering financial services, leading to increased competition that typically stimulates change from existing providers. The fintech industry is responsible for many of the transformative innovations we’re already seeing (and using) in wealth management, from new methods of payments to digital “neobanks”.

See a setback as an opportunity

In the US, the Global Financial Crisis was a catalyst for change within the financial services industry. Consumers demanded better investment services, and innovative companies stepped up to respond. The same trend here in Australia has been accelerated by the Royal Commission, and businesses that can pick themselves up, listen to the needs of their customers and proactively shape new ways of providing their services will thrive. This is a great reminder for anyone in business.

Pat Garrett, CEO, Six Park