Another day, another banking scandal!
Just this week, the New York State Department of Financial Services (NYDFS) hit Barclays bank with a huge fine of US$ 150 million, as a result of the bank admitting it had “engaged in certain misconduct regarding the trading of benchmark foreign exchange (“FX”) rates from at least 2008 through 2012 in violation of the New York Banking Law and other laws” .
In April 2015, two UK subsidiaries of the Bank of New York/Mellon (BNY Mellon) were fined some £126 million for failing to “consider properly the interests of their clients”. BNY Mellon is the largest custodian bank in the world and one of the world’s Systemically Important Banks (SIB).
But has BNY Mellon become Too Big to Care?
A recent research report  suggests that an ethnically diverse group is better at making decisions than a group that are all alike. These results build on other studies that show that diverse groups in general are better at making decisions . Irving Janis, who first identified the concept , argues that ‘homogeneity’ is one of the key prerequisites for Groupthink, which is a bad outcome. So all we have to do to prevent Groupthink is to insist on diversity, especially at the Board level?
Whoa, hold on, it is not as easy as that! It turns out that it doesn’t come down to ‘diversity’ per se but ‘Trust’.
What is Groupthink?
Groupthink is one of the most widely-used but least-understood terms in Business . We all know that Groupthink refers to the tendency of a group to coalesce around a common position, for example a Board of directors on a corporate strategy or senior management on a cost-cutting program. It is what groups do after all, otherwise they will break up in conflict.