Matt Young is corporate affairs director at Lloyds Banking Group, the UK financial institution that was bailed out by taxpayers following the 2008 financial crisis.
Young joined Lloyds in 2011 as part of a new management team that is intent on turning around the bank's troubled reputation. As part of this strategy, Llloyds has made a very visible commitment to social enterprise, through a programme that funds social entrepreneurs around the country.
Young outlined the benefits of this approach at a PR Guild seminar earlier this year. Later on, he caught up with the Holmes Report to discuss how "responsible" banks can reconnect with a sceptical public.
Why does Lloyds support social enterprise?
I joined Lloyds as part of a new management team to make sure that the integration with HBOS went through smoothly and the bank had a secure future and a vision for ultimately paying back taxpayers and doing that profitably. Which meant we needed a new way of doing things. I use the phrase CSR tentatively as I think it’s a hackneyed old phrase. We talk here about being a responsible business. We essentially linked our future very much to the UK. And that means the prosperity of households, individuals but in particular business. From small startups to social entrepreneurs to major corporates.
Supporting social entrerprise is a natural extension of what we want to do as a business. Our support for the School for Social Entrepreneurs programme, which we started three years ago, is a significant investment for us. We provide mentors, actual experience and expertise. Our monetary and human support is probably going to help about 800 social entrepreneurs this year, and we’re going to take that to 1000 by the time the full programme rolls out. It’s the seed that is helping communities and helping us ultimately reform ourselves in the eyes of the public.
How do you measure the success of this investment?
I’m of the opinion that you need very public commitment about these things. We’ve enshrined a 'Helping Britain Prosper' plan — it’s a public document. At a very high level it’s about the number of social enterprises we will support. At a much lower level, we are very conscious that we want to measure the impact of that across the UK. That’s where it starts to get difficult and there’s lots of science and pseudo-science about these things. I’m of the opinion that there is a huge impact you can make if you start supporting social entrepreneurs at a seed level. We are finding ever more granular ways to measure that impact — in terms of economic and social prosperity.
You mentioned this will help reform you in the eyes of the public. Is it something your shareholders support?
It’s more fundamental than that. It reforms us in the eyes of the public because it’s the right thing to do. If banking lost its way, it’s because it lost sight of its purpose. Its purpose is to support people and their aspirations. If you get back to those fundamentals, and say a bank is part of that journey, you can’t go too far wrong. Banks lost sight of that. They lost sight of those principles and put profits in front of their customers.
So, broadly speaking, you think this support will help improve Lloyds' reputation?
Yes, but much in the way that supporting startups, social businesses, individuals and households, in the right way, will rebuild trust with the public. Fundamentally, banks only work if people trust us. Trust is fundamental for us to have credibility with our stakeholders. Social enterprises are small businesses — they just have that social purpose. Trying to view them as small businesses is very important — therefore you start to break into things like the supply chain. If you start to view them as something advantageous to your supply chain, then you start to change people’s perceptions.
Why don’t you like the phrase CSR?
It sounds too philanthropic, like something corporates have to do. How you do business is innate to your strategy. We want to be a responsible business.
How would you respond to the view this as a cynical ploy to deflect attention from bad behaviour by the banks?
I think the fact that trust is denuded to the state that people make those statements and believe them show how far the banks have fallen. There is a belief in this organisation that if we do the right things by our customers we will rebuild trust to the point that those questions no longer get asked. It is a long journey. There is no cynicism on our part here. If you have a healthy economy, ultimately you have healthy banks.
Do you think there are things banks can learn from social enterprise?
Yes, agility. Effectively proving to banks that they can be as agile and competitive and creative as a startup. They can be price-competitive and deliver to our specs. At the end of the day, longer term, it also builds social impact — there is a cost saving there as well. Social prosperity is as important as economic prosperity. If you have a healthy economy that has to be of enormous impact to banks in the future as well.
Do you think the banking industry, as a whole, understands the argument that a healthy economy is better for them?
I know we understand that at Lloyds. I wouldn’t want to speak for the rest of the industry. I do appreciate that the rest of the industry needs to get this as well. I am a great believer that you rebuild things slowly, incrementally, in what you say and do. If people are looking for magic bullets to rebuild trust and reputation overnight, them things don’t exist. This is a generational issue — it will take a generation to fix it.