The financial crisis in 2007/2008 revealed significant shortcomings in bank governance and also raised serious questions about the purpose of banks and their culture, and about bank regulation. Attempts to date to reform governance have focussed on tightening the regulation of bank capital, leverage, liquidity, and pay. However, the reform agenda does not hinge solely on regulation but requires a deeper understanding of governance and cultural influences in a complex and diverse industry. This, and the need for banks to engender and maintain high levels of trust and confidence, is key to preserving the financial system’s support for the economy and society. Only if these things are attended to will another catastrophe be avoided.

Many people have talked about the need to reform bank governance, including the Governor of the Bank of England and the Archbishop of Canterbury. But few have understood, in detail, what will be necessary. A group of us in Oxford think that a key is the rebuilding of trustworthiness of banks. We have already edited a widely influential book on this subject: Capital Failure: Rebuilding Trust in Financial Services (edited by Nicholas Morris and David Vines and published by OUP in 2014).

We have already begun a Pilot Project on this subject, located within the Balliol Interdisciplinary Institute, and have brought together an impressive team, with a very wide range of skills.

In this Pilot Project, we are mapping out plans for a much larger programme of work, and are beginning to lay down its foundations. In this much larger project we will examine the changes in bank governance which will be needed, the alterations in working practices within banks which will also be required, and the changed nature of financial regulation which will be necessary if such changes within banks are to be properly supported. Our aim is to make practical proposals for change.