Ethics in Finance Robin Cosgrove Prize 2014-2015

By Carol Cosgrove-Sacks, Director, Ethics in Finance Robin Cosgrove Prize

How can robust ethical standards and integrity be boosted in the finance sector?

All financial firms depend on maintaining trust with their clients. Without trust, the public value a firm possesses quite simply disappears.

So I want to start this blog by posing a series of questions that I hope get you thinking about trust and ethics in finance:

Would you put your money in a bank you don’t fully trust? Would you give your confidential financial information to an accountancy firm if you feared they might reveal your data to a competitor? Why would you insure your life or your assets with a group if there were doubts about its trustworthiness? Would you invest in an enterprise if you doubted the credibility of their accounts? What responsibility does younger staff working in the finance sector have for promoting stronger commitment to trust, ethics and integrity.

To address these questions, and to hopefully find solutions, the Ethics in Finance Robin Cosgrove Prize has launched a global debate on these issues, and is seeking fresh ideas to inspire young people working — or hoping to work — in the financial services sector.

A recent study by economic scientists from the University of Zurich in Switzerland looked into business culture and dishonesty in the banking sector. Published in Nature magazine, the report revealed that “prevailing business culture in the banking industry weakens and undermines the honesty norm, implying that measures to re-establish an honest culture are very important.”

The Prize has become an iconic influence in stimulating innovative approaches to ethics in finance. Doing the right thing because it is the right thing to do may sound simple, but there seems to have been rather a lot of confusion in recent years about what is “right” in terms of corporate and personal ethics and integrity.

The Prize was first launched in 2006 to promote the sustainable and responsible future development of young finance professionals, consistent with the vision of Robin, a young investment banker who died in an accident on Mont Blanc.

The book TRUST & ETHICS IN FINANCE (2012) brought together the best papers submitted for the first three Prize competitions, and it is now recommended by the IMF to promote awareness of Ethics in Finance.

The 2014-20145 Prize – An agent of change

The prestigious Prize now enters its 5th edition, with $20,000 to be awarded to young finance professionals writing about their “Innovative Ideas for Ethics in Finance”. The Prize was launched in London by ACCA Global and the closing date for the 2014-2015 competition is 15 April 2015.

The 2014-2015 Prize is supported by the global Association of Chartered and Certified Accountants [ACCA] and by the CFA Institute. The Prize competition is open to those aged 35 or less, and papers may be submitted in English or in French.

The Ethics in Finance Robin Cosgrove Prize is proving to be an agent of change going beyond compliance issues and promoting a refreshing approach — look at the website, see how you might contribute to this important debate, and write about your ideas to make a difference and promote innovative ideas for ethics in finance – you should complete an Expression of Interest and obtain the rules from

Please get involved and add your voice.

Public sector services are entering an era when they need to change more radically than before to meet the complexity of a highly networked world that is making it harder and harder to find a one-size-fits all approach.  At the same time, increasing demands and expectations make expanding existing ways of providing services difficult to afford.

The Auditor General for Wales hosted a conference in Cardiff on 5 November 2014, at which ACCA participated, which brought together public sector delivery officials to consider key issues.  Two major factors were highlighted.  First, the so called ‘Chart of Doom’ forecasting UK population demographics over the next few years, which shows an ageing population coupled with an increase in the number of children under working age.  The net result is a squeezed working population who will be required to pay taxes to support the provision of public services facing greater demand.  Second, an expected continuation of austerity over the next parliament (5 years) which will restrict the ability to potentially fund service needs.

Clear messages to emerge were that the government should concentrate on those services it excels at delivering or is otherwise the only possible source.  Otherwise it should act as an enabler to support local delivery of services. The latter would involve greater involvement with local communities who are best placed to understand local needs and conditions, and consequently come up with innovative solutions.  Such an approach would require a change of focus from:

  • Target setting to outcome delivery;
  • Direct delivery (i.e. top down driven policies) to local need approach (i.e. bottom up driven policies);
  • From state to the third sector service provision;
  • Public sector agencies working in silos to everybody working together;
  • Delivery of services to preventative measures to reduce the need for services.

The day was structured around three key themes identified as being important to customer services. Highlighted at the event, a survey of those currently receiving public services had emphasised the importance of listening thereby opening up communication, being clear about what needs to be achieved and how to go about adding value, and the benefit of closer working together.

The conference was not intended to come up with quick answers, but forms part of a series of events aimed at looking at how the transformation required might be achieved in Wales.  ACCA will continue to participate in this important initiative which has wider implications for everybody involved with, or in receipt of, public services.

As part of Margot James MP’s Aspirations Programme for young people in the West Midlands in the UK, ACCA was invited along to tell them about a career in accountancy. We also held a blog competition about why ethics is important to business. The winner was Guvan Singh Riar, 16 years old, from West Midlands. Here is his blog

Ethics concern an individual’s moral judgements about right and wrong. Decisions taken within an organisation may be made by individuals or groups, but whoever makes them will be influenced by the culture of the company. The decision to behave ethically is a moral one; employees must decide what they think is the right course of action. This may involve rejecting the route that would lead to the biggest short-term profit.

Ethical behaviour and corporate social responsibility can bring significant benefits to a business. For example, they may:

  • Attract customers to the firm’s products, which means boosting sales and profits
  • Make employees want to stay with the business, reduce labour turnover and therefore increase productivity
  • Attract more employees wanting to work for the business, reduce recruitment costs and enable the company to get the most talented employees
  • Attract investors and keep the company’s share price high, thereby protecting the business from takeover.

Knowing that the company they deal with has stated their morals and made a promise to work in an ethical and responsible manner allows investors’ peace of mind that their money is being used in a way that arranges with their own moral standing. When working for a company with strong business ethics, employees are comfortable in the knowledge that they are not by their own action allowing unethical practices to continue.  Customers are at ease buying products or services from a company they know to source their materials and labour in an ethical and responsible way.

For example, a coffee company which states all their raw beans are picked from sustainable plants where no deforestation has occurred, by people paid a good living wage, in an area where investments have been made to ensure that producing the coffee for a foreign market has not damaged the local way of life, will find that all these elements of their buying strategy becomes a selling point for their final product.

A company which sets out to work within its own ethical guidelines is also less at risk of being fined for poor behaviour, and less likely to find themselves in breach of one of a large number of laws concerning required behaviour.

Reputation is one of a company’s most important assets, and one of the most difficult to rebuild should it be lost.  Maintaining the promises it has made is crucial to maintaining that reputation.

Businesses not following any kind of ethical code or carrying out their social responsibility leads to wider consequences. Unethical behaviour may damage a firm’s reputation and make it less appealing to stakeholders. This means that profits could fall as a result.

The natural world can be affected by a lack of business ethics. For example, a business which does not show care for where it disposes its waste products, or fails to take a long-term view when buying up land for development, is damaging the world in which every human being lives, and damaging the future prospects of all companies.

Ethics is important to businesses for many reasons. Businesses can increase sales or increase their reputation.

By Andrew Burgess, Director, Source

As a sourcing advisor, I’ve been telling anyone who will listen that the robotic automation of business processes is set to fundamentally change the nature of the BPO market. The stark truth is that, to date, most of the real-life success stories have been in industry verticals such as telecoms, so, if robotic automation is to really live up to its full potential, then it should be able to have a significant impact on those generic business processes that are carried out across all industries, in particular finance and accounting, specifically accounts payable (AP).

To date, the biggest improvements in AP processing have been down to three approaches:

  • Getting manual information into the system electronically e.g. scanning and optical character recognition
  • Automating the processing as much as possible through workflow
  • Standardising the data fields to improve interfaces e.g. electronic data interchange

Through our research at Source, we believe that robotic software automation presents significant further opportunities in a number of areas, including: cross-system manual processing, data gathering and reporting, reconciliation of matching errors, monthly account closure, bulk data updates and ERP IT processes. Some of the key ones are discussed below.

Cross-System Manual Processing

Typically, humans are used to providing a flexible interface between a number of different systems that are used in a process – this is colloquially referred to as ‘swivel chair processing’ – data is read by the human on one system or screen and keyed into another system, sometimes with additional steps inbetween.

Middleware can provide solutions to these interfaces but they are typically expensive and complex to implement. Software robots provide a much simpler implementation of the interface, carrying out exactly the same steps as the human but at a fraction of the price. This requires no or minimal system intrusion and provides 100% consistency with the process requirements.

For example: Barclays Bank work with robotic automation software has resulted in a £175 million p.a. reduction in bad debt provision in their Accounts Receivable function and over 120 FTE saved.

Reconciliation of Matching Errors

One of the most manually intensive processes in the finance function, and in AP particularly, is the reconciliation of errors due to incorrect matching of data between documents. Because this process requires inputs from different systems is inherently non-standard in each case and can require some judgement, it is usually carried out by humans.

By using inputs from other data sources, processing different matching options far faster, and applying semantic reasoning, robotic software automation can replace much of the reconciliation task, thus significantly reducing the number of people required.

For example, the excess queue procedure at the Co-operative Bank is carried out daily to accept, reject and return direct debits, cheques and standing orders. Overnight BACS (Bankers’ automated clearing services) processing results in a daily ‘queue’ of customers with payments due to leave their accounts and with insufficient funds to meet these payments. A nine-person team in the bank would have the daily responsibility of manually reviewing the 2,500 or so higher risk accounts. The automation of the entire procedure means that the bank now has a ‘virtual’ team of 20 people completing the workloads by 11am each day instead of a team of employees working to meet a 3pm daily processing deadline.

Monthly Account Closure

The monthly account closure is typically a complex process involving many data inputs, plenty of reconciliation and some elements of judgement. The number of people involved in the process is typically very high, and the time taken to close the accounts has a direct impact on the financial position of the company, but must be 100% accurate.

Previously, much of the reconciliation work has required human input across many data sources – robotic software automation combines a number of the approaches already mentioned into one critical process. By being able to access multiple data sources, make fast but relatively complex decisions (and to do that 24×7) software robots can significantly reduce the labour required, and the time taken, to close monthly accounts.

For example: a group of 250 NHS trusts have automated their month-end-close process. The process initially took 15 people 12 days; but it is now down to 2 people and half a day through automation.

With a software agent costing around one-third of a typical offshore Business Process Outsourcer FTE, and one-ninth of an onshore FTE, there are clearly some significant benefits to be gained from exploiting this new technology. Therefore, I would suggest a consumer of BPO services should be considering an ‘automation strategy’ as the best way forward. At the same time, I would urge the software vendors and BPO providers themselves to focus attention on this potentially huge opportunity. If you’d like to attend a free event on 27 November 2014 and hear from four speakers who have implemented RPA in their own organisations, then visit:

Palma Michel

By Palma Michel, former CFO headhunter and founder of the Mindful Leadership program at BeYoCo 

As our modern worklife environment is dominated by information overload, 24/7 connectivity, multitasking and back-to-back meetings, the ability and space to focus has become a rare good for CFOs.

While you are reading this, chances are high that your attention will be distracted by an incoming email, a text, a colleague, a thought about the budget meeting or a ringing phone. Research also shows that you will most likely follow the distraction and find yourself caught up in something else other than finishing reading this post.

In his latest book Focus, Daniel Goleman states that while the link between attention and leadership excellence remains hidden most of the time, it ripples through almost everything we seek to accomplish.

Scientific research also shows that deep thinking requires sustained attention; the more distracted we are, the more superficial and trivial our reflections are likely to be. The ability to control our impulses and focus our attention has even been found to be a better predictor of academic success than IQ.

The 2010 Science article “A wandering mind is an unhappy mind states that nowadays our attention is wandering involuntarily 46.9 percent of our waking hours. Neuroscience also shows that multitasking is a myth and actually makes us less productive, more susceptible to errors and increases stress. The results of this have shown to be decreased performance, wellbeing and productivity.

So what can we do to improve our ability to focus?

Janice Marturano, former General Counsel of General Mills and Founder of the Mindful Leadership Institute, states that improving focus starts when we begin to notice more and more that our ability to sustain attention even when we have time and even when we intend to be focused is becoming more and more limited.

Harvard Professor Ellen Langer advises to become a first class noticer by bringing a finely honed attention to every situation and a constant infectious sense of fascination with what is going on in the moment. According to Langer, first class noticers also question assumptions, previously relied-upon rules of thumbs and averages.

For neuroscientist Richard Davidson, contemplative practices such as mindfulness meditation can strengthen areas in the brain that are responsible for our ability to focus. The way he explains it, we all know that if we engage in certain kinds of exercise on a regular basis we can strengthen certain muscle groups in predictable ways; strengthening neural systems is not fundamentally different, it’s basically replacing certain habits of mind with other habits.

If you are still reading, well done, you managed to stay attentive.

Practical tips for improving your ability to focus:

  • Manage your technology instead of being managed by it: turn off instant email and text notifications.
  • The next time you receive an invite to a meeting, pause for a moment and reflect if you really need to be there and create space in your diary.
  • Cultivate a finely tuned attention to every situation by constantly applying a “fresh perspective” through questioning, inquiry and probing what´s going on in the moment.
  • Start training your muscle of attention through concentration exercises or contemplative practices such as mindfulness meditation.