This year’s Tacitus Lecture, delivered by IMF Managing Director Christine Lagarde, sprinkled a little magic dust over a packed Guildhall as the speaker delivered an uncompromising but deeply human and engaging analysis of the financial services industry in 2019. The audience included Mark Carney, Governor of the Bank of England; heads of some of the UK’s financial institutions; the international press; Tacitus sponsors; World Traders and their guests, and school and college students.
Taking as her title The Financial Sector: Redefining a Broader Sense of Purpose, Mme Lagarde showed how the modern perception of bankers is exemplified by the new ‘baddie’ in Mary Poppins Returns: modern finance industry professionals are seen as self-interested and often immune from real scrutiny.
Calling for an ‘ethics upgrade’ for the financial services sector, Mme Lagarde explained that the industry has important role to play in serving ordinary people. She emphasised a “deeply felt sense of unease about the role of finance in today’s world” and believes that it is possible to build a better financial sector: “one that is safer, more sustainable and ethically sound.”
The pillars of a safer and more respected system were, Mme Lagarde suggested, better regulation, better incentives and an ethical overhaul which needed to involve a complete change of mindset at every layer of an organisation: “For financial professionals, it simply means doing the right thing – even when nobody is watching. It sounds so simple, and yet it is perhaps the hardest thing to do.” Trust, she said, “cannot be manufactured or mandated. It must be earned…” She highlighted the role of corporate social responsibility, to create a more sustainable and inclusive culture.
Mme Lagarde views FinTech as a force for good, unlocking the capability for an “inclusion revolution” among the 1.5 million UK adults who still have no bank account and the millions of others across the developed and developing world. She explained the important role of diverse leadership in the finance sector as a guard against group think and as the pathway to a more ethical society. She mentioned that just 2% of Banking CEOs are female. Echoing the experience of millions of working women, she described how the progression of women is about more than making board appointments and requires a fundamental review of working hours and other practical considerations.
The need to develop Sustainable Finance was a key tenet of Mme Lagarde’s view of a more ethical and socially responsible industry: “shifting to a more sustainable form of finance that is grounded in better risk management and longer-term thinking”, to avoid what Mark Carney has described as “the tragedy on the horizon”.
Mme Lagarde’s speech was followed by a short Q&A which included insightful questions from school students. The event was for the first time live streamed on YouTube and the recording of the event is available here.
The full speech may be downloaded here.