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Executive Interviews: Interview with Shantanu Dutta
on Building Trust
January 2011.
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By Dr. Nagendra V Chowdary
Shantanu Dutta
Shantanu Dutta
Vice
Dean for Graduate Programs Marshall
School of Business USC 
The world's financial markets nearly
collapsed in 2008 fall for one reason:
lack of trust. Even big banks refused to
lend to each other because they didn't
trust they would be repaid. What should
the banks, the Fortune 500 companies,
the regulators, policy makers, and the
researchers learn from 2008 financial
crisis? What are the trust-related lessons
from this crisis?
The collapse of the financial markets
certainly highlighted the importance of
trust. This lack of trust arose because
there was lack of transparency amongst
all the key stakeholders: the banks, the
regulators and policy makers. In order to
build trust it is
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important for all the
stakeholders to improve transparency.
While it is not possible for banks to share
specific details for competitive reasons,
it is nevertheless critical for these
financial institutions to recognize that
they are custodians of the livelihood of
many hundreds of thousands of
individuals. The trust that many
individuals and small businesses place
in the banks puts the onus on the banks to
be responsible stewards. Financial institutions can build trust by
proactively educating individuals on the
potential risks of different investment
options. They also have to be transparent
regarding any potential conflicts of
interest. They also have the obligation to
ensure that they properly align
incentives in such a way that their
employees are focused on the long-run
financial health of their customers.
Regulators and policy makers should
also take steps to ensure a high degree of
transparency. They must act in the best
interests of the economy and not merely
respond to the lobbying efforts of various
vested interests.
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