Faced with the economic impact of the spread of Covid-19 and national countermeasures, boards, management and staff in the financial services have two choices:

1. Revert to base survival - Take what you can, maximise profit by reducing activities not directly producing revenue and cut the riskier or less profitable customers, while adapting corporate communications to mitigate the longer-term reputational impact.

The calls for a greater focus on ESG standards are growing louder, not quieter. Still indebted to governments that bailed them out in 2008, financial firms have been under pressure to scale back executive pay and suspend dividends.

Financial regulators in the UK and the Netherlands are focusing more, not less, on how financial institutions behave and how they manage and measure culture. If they do not change their approach to all stakeholders, banks may lose their social licence well before any restrictions on authorised activity.

In addition, intense scrutiny by social media and the willingness of individuals to publicise unfair practices make real the risk of being judged to have failed to treat customers fairly, or caused detriment and so be in breach of conduct rules. Focus on short-term profitability, rather than looking sufficiently to the right behaviour to meet the core purpose of the company, will derail the best firms. Regulators may fine and enforce change, yet markets reserve the harshest sanctions as companies suffer and fail commercially. The faltering of Nokia's mobile phone business and Boeing's 737 Max debacle are perfect examples of the judgement imposed by market forces. With the new pressure from the coronavirus pandemic, financial institutions will struggle to escape similar fates.

2. Reassess purpose - with a focus on the future needs of society (and so learn to change your culture for what lies after the pandemic).

This marks a return to the historic role of the finance industry as the lifeblood of economic activity - it requires courage, resilience and reflexivity - and some more uncommonly seen attributes, all of which can be measured and many of which are being explored by regulators.

Courage is key - to admit that the current model no longer works or is good for society and economies as a whole; to do something different, perhaps risking failure or that competitors may not follow; that the astronomical pay packets of those who do not in fact create value are no longer tenable.

Courage is one of the key characteristics that regulators now assess in boards and senior management, together with humility. It should not be left to governments to shore up economic survival but for the industry to rebuild trust, by fostering psychological safety, collaboration, humanity and justice. These build confidence and engagement among employees, regulators and customers that can give any business a lasting competitive advantage. A focus on such underlying behavioural and conduct levers will motivate and create a safe environment for all staff, to innovate or to raise concerns. In this way banks and their customers will be set to grow when the pandemic passes. (NB: the highlighted terms are just part of what the FCA is looking for in senior managers?)

Boards and senior managers in financial services wield enormous influence on how the economy will emerge. Banks, insurers and asset managers should see that this opportunity to rebuild public trust is too good to pass up. Indeed the regulator has described the virus emergency in terms of a second and last chance, after the 2008 crash; a time for ?a real recognition that [now] is a chance to get things right, compared to the past?[1].It is a chance to break the old mould, forge a new purpose and take a leading role to create a more value creative economy based on respect, trust and collaboration, without which there can be little growth.

Our focus at the Conduct and Culture Academy is to show how a healthy culture is the secret to success, not just a way to appease the regulator. If boards and managers can restate a clear, stakeholder-led purpose and learn how to create a healthy culture that supports this, individuals, businesses and other organisations that support and enrich society may not just survive this pandemic, but thrive.

Patrick will be hosting a Q&A on the learning outcomes of the Conduct and Culture Academy on 19 August - register for your free place here.

The latest cohort of our in-depth Conduct and Culture Academy? now delivered to over 100 participants - will run over the course of four virtual workshops (22 September ? 11 November) and will be supplemented by interactive webinars, podcasts, plus e-learning, reading lists and downloadable resources.