Monday, 25 July 2011

THE IMPACT OF MAINTAINING ETHICAL STANDARD IN DAILY BANKING OPERATIONS

1.1   Introduction
From time immemorial, ethics has been recognised as the foundation of individual and collective success and even, the building of a nation. An important approach to exploring values is ethics. In the banking industry and financial sector, there had been a rising interest in ethical behaviour. The Nigerian standards of banking practice which is highlighted in the Chartered Institute of Bankers of Nigeria code of conduct stress ethics and professionalism, observance of the law, honouring of commitments and fairness in dealing with customers. Apart from this, the Bankers’ Committee also issue the Code of ethics and Professionalism in the Banking and Finance Industry.
The focus of this paper is to look at the conceptual issue of ethics and professionalism in the Nigerian banking industry and how the maintenance of these ethical standards can impact banking operations and bank service delivery in Nigeria.


2.1   What is Ethics?
The word ‘ethics’ is derived from the Greek word ‘ethos’ which means the distinctive moral ideas and attitude of people (Okoduwa, 2007). Ethics means moral principles that control or influence a person’s behaviour. Webster Dictionary defines ethics as ‘the disciplined dealing with what is good and bad and with moral duty and obligation.’ According to Advance Learner’s Dictionary, ethics are ‘moral principles that influence or govern a person’s behaviour.’ In the Chambers Dictionary, ethics is defined as ‘the science of morals, that branch of philosophy which is concerned with human character and conduct; a system of morals or rules of behaviour.’ Synonyms for the word ethics include values, morals, ideas, principles, standards, beliefs and codes etc. 
Drawing from the above, we can see ethical conduct as the aggregate of social behaviour measured against a set of guiding beliefs, standards or ideals that are operatives in a group, community or profession like banking, accounting, law etc. Therefore, ethical conduct in a profession refers to conduct that is morally correct or acceptable as determined by guiding standards in the profession.
For the purpose of our discussion, concept of professional ethics is very relevant. In the banking professional ethics may be defined as the standards of competence and practice or code of conduct required of the banking profession. Applying this to daily banking operations, professional ethics encompasses the combination of written and unwritten norms and best practice such as trust, honesty, integrity, fairness, competence, loyalty, transparency, self-discipline, compliance, accountability, social responsibility etc. (Odozi 2007).


3.1 Code of Banking Practice and the Code of Ethics and Professionalism in the Banking Industry
The Code of Banking Practice which affects daily banking operations is issued by the Chartered Institute of Bankers of Nigeria (CIBN). The standards set by the Code are as follows:
·          Bank and bankers alike will operate within the legal environment;
·          Banks and bankers will follow the best professional practice in the global industry;
·          Banks will always place their depositors’ interest above others;
·          Banks will always meet their obligations. Such obligations will not be lightly given, and should   never be broken;
·          Individual bankers should not ask for ,nor ever accept any form of gratification, either in cash and in kind, for performing their normal services;
·          Banks should not pay brokerage to members of their staff.
We see from the above that the Nigerian standards of banking practice stress professionalism, observance of the rule/law, honouring of commitments and fairness in dealing with customers.
Another set of ethical standards which are equally important to note are the provisions of the Code of Ethics and Professionalism in the Banking and Finance Industry. The code which was issued in 2001 by the Bankers’ Committee seeks to draw the attention of all practitioners in banking and finance industry to unethical practice and unprofessional conduct and provide framework for addressing them in the business of banking and finance. Particularly, this Code deals with malpractices like: non-disclosure of information, deliberate rendition of inaccurate returns, non-conformity with standards and guidelines.
4.1 Ethical Standard and Banking Operations
The provisions of the Code of Banking Practice and the Code of Ethics and Professionalism in the Banking and Finance Industry are ethical standards set for banking and finance. These standards are expected guide behaviour and attitude of bankers and bank workers in the performance and discharge of their official duties in more professional ways. If the provision of the Code of Banking Practice and the Code of Ethics and Professionalism in the Banking and Finance Industry are adhered to, they will positively impact banking operations on daily basis.
Banking operations as we know it is core in the range of banking activities, if not the backbone. Banking operations cover a wide area of bankers’ activities which include the following, just to mention a few:
(a)  the establishment, maintenance and termination of banker-customer relationship;
(b)  maintenance of other special relationships involved in mandates, appropriation of payments, powers of attorney, set-off, secrecy, bankers’ opinion, indemnities etc.;
(c)  collection and payment of cheques and other negotiable instruments;
(d)  the practice of opening, conduct, stopping and closing of accounts in credit and debit for all classes of customers;
These are activities in which bankers and bank workers involved themselves in daily banking operations.
For efficient daily banking operations in our banking halls, bankers and bank workers must abide by the provisions of the ethical standards. Efficient banking operations in our banks will ensure good time management of service deliveries and reduction customers waiting time, excellent and good quality customer service, provision of error-free service and the enhancement of customers’ delight with is caused by total customer satisfaction. These are some of the impacts of the maintenance of ethical standard in banking operations. Furthermore, there will be improvements in the quality of daily banking operations which will cause customers to make repeat and sustained patronage when bankers and bank worker directly and indirectly maintain the ethical standard stated above by;
(i)            cultivating friendly relations with customers;
(ii)          relating faithfully with the customers;
(iii)         ensuring that customers’ secrets are not divulged;
(iv)         tolerating all customers;
(v)          making service to the customer a duty and not a favour;
(vi)         developing relations that deserve remembrance;
(vii)        treating all customers (big or small) equally;
(viii)      wearing charming face at all times;
(ix)         striving to be lovable by the customers;
(x)          using persuasive and impressive language;
(xi)         striving to share the customers’ feeling.
Apart from excellent and courteous customers services that could result from the above, If standards of banking ethics as prescribed by the Code of Banking Practice and the Code of Ethics and Professionalism in the Banking are reflected in daily operations in our banks, they will lead to the prevention of fraudulent activities, ensure sound and transparent corporate governance in our banks, bring about good customer relations due to the high hope of fair and honest banking business transactions, there will be an expansion in the deposit and customers’ base of the bank while resultant efficient and effective banking operations and customer service will add value to the bank through improve earnings /profit and enhancement of the bank’s corporate image.
5.1 Conclusions
No doubt, this paper has revealed some of the positive impact of maintaining ethical standard in daily banking operations. If there are negative impacts they should very minute. If all that were discussed in this paper are all what is required of an efficient, effective and honest banker of integrity, then we (practicing bankers and bank workers as well those who desire to be professional bankers and bank workers in the future) must all embrace the Code of Banking Practice and the Code of Ethics and Professionalism in the Banking and ensure that we abide by them now and then.


Being a paper presented at the annual symposium organised by the Dynamic Bankers’ Club of the Federal Polytechnic, Ado-Ekiti, Nigeria on 19th March 2010.

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