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A Royal Turnaround: RBS Reputation Recovery

At the beginning of 2008, the Royal Bank of Scotland (RBS) held the enviable title of being the world’s largest bank by market capitalisation. In the same year, and after decades of global success, the bank fell to the brink of collapse and had to be bailed out by the UK Government.

While the Global Financial Crisis and UK recession, as well as the bank’s hostile acquisition of ABN- Amro, were undoubtedly major contributors to the collapse of RBS, the collapse itself did not come suddenly. Indeed, the decline of RBS was decades in the making and resulted from ‘an internal culture that put the sale of questionable financial products ahead of concerns about the risk those products would create.

The collapse of RBS was underscored by the governance failure of its board and executives, who adopted an overly ambitious strategy and provided inadequate oversight of the bank’s activities. This included failing to properly assess major financial and reputation risks. These corporate governance failures resulted in a loss of trust by customers and employees, which ultimately led to the bank’s reputation decline. Associated reputation challenges included widespread negative media attention, a slumping share market price, difficult governance and leadership changes, the need to reduce risky assets and close underperforming branches, and ongoing legacy issues associated with the government bailout.

In order to restore the bank’s reputation, RBS focused its activities on core areas :

1. Leadership and Culture Change

RBS acknowledged and apologised for its failures and embarked on a long-term strategy to change its culture. This occurred under the direction of a new CEO as well as a renewed board and senior management team. The bank removed bonuses for executive directors as well as sales incentives for thousands of branch staff.

2. Customer-Centric Value Proposition Refinement

Under its new strategy, RBS placed increasing emphasis on serving its customers in an attempt to rebuild public trust. This included improved customer support systems, a new complaints process, the removal of many account fees, and extended branch operating hours.

3. Innovation and Technology

Under its new strategy, RBS placed increasing emphasis on serving its customers in an attempt to rebuild public trust. This included improved customer support systems, a new complaints process, the removal of many account fees, and extended branch operating hours.

4. Corporate Social Responsibility

RBS also committed to becoming a more socially responsible employer. For example, the bank committed to employing at least 30 per cent senior women in each business area by 2020 and to achieving full gender balance by 2030. RBS also set an ethnicity target to employ at least 14 per cent black, Asian and minority ethnic (BASME) people in leadership teams by 2025. More broadly, the bank increased its funding in the sustainable energy sector and became one of the

UK’s top companies for disability performance. In 2016, for instance, RBS’s mobile app became the first app in UK to be accredited by the Royal National Institute of Blind People.

Conclusion

While RBS’s reputation recovery has been hampered by ongoing challenges, the bank has nevertheless started to slowly rebuild public trust and consumer confidence. The bank’s efforts to align its strategic direction with a new focus on organisational culture, its customers and corporate social responsibility, has been key. The bank has also sought to be at the forefront of innovation, both as a means to distinguish itself as a hub for entrepreneurs and business and to better meet customer needs and expectations.

 

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