This year, we are advancing to a deep dive into the incentive systems of front offices in retail banks. 16. Based on what we have learned from the self-assessment exercise, we noted that banks’ culture effort in the area of incentive systems is still very much an area of “work-inprogress”. And having appropriate incentive system is such an important piece for inducing desirable behaviour that we have decided to intensify our efforts on this theme. 17. Up till now, we have not seen any guidance published on stylised approach to incentive systems, I guess because the design and implementation of such systems are very much dependent upon the characteristics of individual banks. But we have decided to take up this challenge by looking into the incentive systems of front offices in 20 retail banks, and aim to provide some useful guidance, or at least reference points, to the industry. 18. As you can imagine, the Focused Review on this subject is a very large-scale exercise. We are examining the front-office incentive systems, as well as analysing the perception and behaviour of front-line staff, in 20 retail banks in Hong Kong. So far, as a key component of this review, we have completed an industry-wide employee survey to gauge frontline employees’ views on their banks’ incentive systems and culture. We are encouraged to see the active participation of surveyed bank staff, with an overall response rate of around 70%.
But overall, we encourage banks to focus on three fundamental elements in their culture efforts: (a) A strong “tone from the top” supported by a sound governance framework; (b) An appropriate incentive system that induces desirable behaviours at all levels; and then (c) We also need an effective “echo from the bottom” on actual outcomes on the ground. 12. This is clearly not the occasion to elaborate on each pillar here, and we have already communicated a lot with the industry on that in the past. Instead, as a reminder that the 2/4  BIS central bankers' speeches  HKMA is not reducing our focus on this matter, let me give the audience a quick snapshot of our ongoing efforts in promoting bank culture reform. 13. Based on our bank culture supervision framework announced in 2018, we have spearheaded several initiatives in the past two years, including in particular selfassessments on banks’ culture, as well as culture dialogues with banks’ leadership. 14. Regarding self-assessments, in May 2020, the HKMA published a “Report on Review of Self-assessments on Bank Culture”. This report covers insights drawn from 30 banks, including quite a number of ASIFMA member institutions, in the self-assessment exercise. I am delighted to see that banks have subsequent to that taken actions and made reference to the range of good practices shared in the Report when further devising their culture enhancement measures. Focused Review on Incentive Systems 15.