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Analysis of Unethical Practices in Banking

The essence of the essay on management and ethics is to analyze the unethical procedures in the banking industry with an goal of assessing the amount of credibility in the bank activities as well as the magnitude to which they affect the ethical atmosphere in bankers. Several bank industry employees were interviewed, and a general conclusion that surfaced in every the interviews indicated that there were various issues that required analysis as well as. Foremost, the banking sector should to adhere to the integrity key points, neutrality, dependability, transparency, social obligation, and lastly on the control on money laundering. However, the way in which in which this conformity is achieved arouses serious concerns concerning whether it certainly exhibits the expected ultimate objective.

Moreover, the management structure of the banking sector, like most other blue chip companies is very rigid and hierarchical. In addition, the strictness results from the root concept of accountability, as well as transparency in the various businesses within the banking industry. Nevertheless, the banking sector pays off close attention to the ethical routines of various employees and customers partially as a way of creating a confident image to the public as well as to their regulators, and partially as a result of need to offer services to customer in a manner that reflects ultimate admiration for our creator (God). For example, make an effort to have a genuine discussion with a worker about the various banking routines. theoretically, the employee in question can show how much he/she prices the ethical procedures been implemented, however in terms of personal opinion, a lot of employees will accept that they perform some of these techniques out of work and not out of care for the world. Therefore, the role of the essay is to explicate the unethical issues in a bid to come up with proper suggestions.

The Problem of information non-disclosure and rates of interest determination

Over the years, bankers have undergone incredible growth in many areas of their operations, starting with the sort of customers they package with to the manner where information is received, saved, transformed, and lastly used. Ultimately, banking institutions have unraveled the complete secret of discrimination as to what customers to offer services to or not by categorizing their clients in conditions with their income framework. This classifying of customers is intended to aid in your choice making process in regards to what customer obtains what treatment, but additionally it is designed to assist the finance institutions in understanding the sort of customers to provide better services to. Therefore, regulated by their plan of information non-disclosure, banking institutions would obtain very crucial information about various customers (their age, sex, race, job position, as well as income level) with a notion they are sticking with the Know Your Customer coverage. This information is meant to be private and confidential. However, on close assessment, one would realize that finance institutions need such information to make decisions targeted at enabling them to remain in the global market while at the same time, preserving their traditional bank principles.

Consequently, the objective of this essay is to investigate the many unethical routines the employees of the lender practice, and their relevance to the community at large. In addition, the unethical methods will be resolved in a manner that relates to honest issue and decisions regarding management. Thus, to understand the conflict in conditions of globalization and traditional procedures, one must call to focus the approach exhibited by Thomas L. Friedman about the Lexus and the olive tree (2000). Corresponding to Thomas Friedman, the Lexus designates sustenance, affluence as well as modernization, development, computer technology, and the burgeoning of the global markets (Friedman 51). Furthermore, all these concepts symbolized by the Lexus are positive and very instrumental in the current global current economic climate. However, on the other hands, the olive tree designates the attachment of people and societies towards their traditional comfort areas, or rather worth of higher course; and this is where in fact the ethical specifications take presidency.

Consequently, finance institutions operate within an current economic climate that is very volatile, plus they need to ensure that various practices are done in the traditional bank manner, provision of financial services in a legal manner. These details is thus democratized, in the words of Friedman (81), and the amount of privacy expressed to customers is thus questionable. This is because, they only manner in which this information can be shielded is by using access codes. However, any staff can be able to access this information predicated on whether he/she has this access rules or not. Furthermore, most employees in the bank industry would like to access customer information based on various reasons. One, employees are evaluated in terms with their performance to the bank; this requires that they obtain important information about customers in a bid to decide on what services to offer them or not. By doing this the employees end up violating the info privacy requirement that clients would want.

Secondly, due to current market fads in the bank industry, services have been offered even to the cheapest income earner in order for bankers to exploit all prospects in terms of lending and customer deposits. In addition, the sales team works diligently to acquire customers both in conditions of deposits taking or loan growth. Furthermore, of great value is the manner where they obtain information about clients before they can impact them to accept the services proposed by the banking institutions. Information is really retrieved from the data source by whoever lays practical access codes, and customers having good credit history, and huge income are approached in order to take up lending options or start other accounts with the bank. Further, these customers are cared for with respect and they're offered what has been referred to as superior services, premium services. These services could range between dedicated management assistance, special distinct banking premises, and other services such as internet, foods, to mention but a few.

On the other hands, those customers with a smaller income level, their treatment is more general and the bank's credit progress to them is highly scrutinized set alongside the high grade customers. A question that arises here's whether these activities are conducted in the view of the Lexus, or olive tree. On the main one hand, the information extracted from customer plays a very significant role in enabling management to understand the nature of these customers in a bid to provide relevant services to them. For instance, a customer that has a higher income level could be given alternative solutions concerning how he/she could better use his/her income effectively in order to generate more money. Well, this attitude implies that the bank would desire to enable the employee benefit from the global overall economy in conditions of investment and financing. However, the way in which in which this technique is accomplished is through personal privacy violation, which again touches on the whole issue of worth; are finance institutions really promoting honest ideals as they relatively purport to show in their terms and conditions, or they are simply just doing seeking to persuade customers? A question such as this one could seem obvious but this is a triple bottom line question. Furthermore, it concerns the total amount that's needed is between being ethically oriented and at exactly the same time acting as a job model in the global current economic climate.

Another facet of information disclosure relates to issuance of bank services to customers. That is done in a manner that customers should acquire full information as to the commitment they can be about to engage in. Besides, some information if well known to customers could send these possible customers away from the banking companies. Nevertheless, withholding this information seems to be the only way out for bankers to keep their customer basic. Therefore, loan company employees have a tendency to give customers critical information only when they obtain it, and in the event they do not, then these details is withheld. Which information could bankers withhold in order to keep or appeal to customers? Information regarding lender charges, loan control fees, salary handling fees, insurance plan fees, loan payment default repercussions, interest computation information, to mention but a few. Most of these details, if disclosed to some customers, could lead to devastating results. Therefore, driven by their desire to generate increased income and reduced costs, banking institutions find it confortable to provide services to customers behind closed doors. Therefore, these manners arouse serious question regarding the role of the banking sector to advertise public wellbeing. Whereby, customers wish to maximize their power of services from the banking institutions, while lenders on the other hand would want to maximize revenue to be able to cater for the expenses incurred in technology and other services rendered.

Information disclosure does not have to relate to customers by itself, but also to competition. Nevertheless, there exists some information which is so important to the progress of banks, and if this information goes to competitors, then the loan company whose information has been violated, stands to loose. There were instances of insider information ending in the hands of competitors without having a clue concerning whoever offered that information, and the impetus for doing so. This example occurs in conditions when a lot of people are employed in a few lenders not because they want to work there but because they would like to obtain important information about the organization in question. This has been deemed that occurs in certain banking institutions, which wrap up loosing customers for their information consumption by the rival financial institution. On the main one side, this practice could certainly be a business strategy, which could provide resourceful information for the management decision-making process. On the other hand, this could be regarded an unethical practice owing to the actual fact that such a practice violates banking practices of fair play.

Another portion of unethical undertaking is on the problem of interest levels determination. Whereby, banking companies usually operate in a fashion that they use the base lending rates that stipulated by the finance institutions' governing body (Central Bank). These rates represent the cheapest value possible for advancing loans to customers. However, banking companies also engender to create maximum income because that is their fact as business enterprises. Nevertheless, because of technical advancement, competition is becoming the most common war in the current society. Thus, for banks to create sound decisions pertaining interest rates, they call to focus many factors, which can be of course rational. For instance, blue chip companies receive lower rates compared to the standard companies. Furthermore, companies are approved based on their performance over the certain time period as well as their level business development. Employees in these banking institutions are encouraged to pursue those high-end customers, more than the others. The banking institutions' management does not straight encourage employees to pursue high-end customers; they somewhat use reduced interest levels to lure these customers to acquire bigger credit from them so that the final interest rate value remains higher.

On the other hands, customers with woeful credit record, low-income level, and undiscovered business practices, are offered highly scrutinized services. For instance, their loan advancements are denied on various bases, however the important thing is that these banks do not want to make commitments to those who might conclude generating losses. However, when evaluating this trend from banks to provide credit to individuals with high credit history, and refuse credit to customer with low-income levels, issues of ethics come in. First, you can see these financial institutions offering services to people who do not have a damn about whether they are offered finances or not, while treating those who actually need financial advice about caution. An institution with greater cultural responsibility shouldn't behave in a manner that contradicts their techniques, but a balance should be maintained between the two factors of ethics and development. Furthermore, too much overreliance to ethics may lead to carelessness on sustenance, opulence, technical progression, and financial progress, which could as well offer more support to the culture through sociable responsibility services. Alternatively, overreliance on globalization could lead to carelessness of the moral standard to treatment that banks are required to follow.

The steps taken up to protect customer information

Information is a robust tool for managing individuals. Once one is in ownership of essential information, he/she can opt to do something major and detrimental to the other get together concerned. Therefore, banking institutions based on the current technological progress have fostered various mechanisms that provide more confidentiality that is appealing to its customers. It has been through installing new management information systems, which are highly set up and monitored. For instance, access codes are provided in a manner that each code offer usage of a certain level of information to the bankers employees. Employees at the top level of management are offered access to a wider range of information access because they are the major stakeholders in the decision making process of the companies. In addition, tactical level managers have specialist to oversee the various progress information of other employees. Thus, this form of management fosters accountability and responsibility in the manner in which employees treat customer information.

Furthermore, this use of gain access to codes has been facilitated by information systems that track and record various problems about the daily operations of the banking industry. For instance, individuals accessing computers are monitored by something that suggests their time of access, the type of information they were accessing, and the reason as to the reasons they were accessing these details. Hence, this management information system causes responsibility and safeguard of customer information, because whoever tempers with information is handled accordingly. Additionally, employees must gain access to only information that pertains to their line of duty.

Another manner in which banks are responding to effective information management is through video tutorial monitoring. Whereby, this way of information insurance plan, employees are supervised by the well-protected computer training video saving system, which records the many employees and their locations as well as time. In cases like this, access to information on various systems is followed back quickly.


According to Thomas Friedman, there should be a balance between spiritual worthiness and the role model, which involves the olive tree and the Lexus (Friedman 512). Therefore, bankers should ensure that all the as they are giving an answer to the changing environment, they should also adopt a strategy that is of communal concern and eventually, of a Godly value. Therefore, it is in the credited course of responding to this ethical problems that banks are anticipated to restructure their strategies in a manner that ensures that they obtain trustworthiness using their major stakeholders, who need high return on investments, and customers who expect good services from the finance institutions.

How responsive are specific banking companies to management restructuring? This question is well determined due to the impetus to discover the way forwards in conditions when unethical tactics are observed. As an example, in most banking institutions, like many other organizations, it's the role of the most notable management to foresee the process of decision-making and insurance plan execution in the banking industry. However, even though other employees down the line are given an opportunity to provide recommendations about the best course of action, their information could only be accepted or declined based on the way where the tactical manager perceives these tips.

Thus, the decision-making process in today's globalized society has been, in what of Friedman, democratized (Friedman 109). This means that the majority of the methods within the banking sector only reflect the perspective of the professionals per se. in which particular case, managers own an obligation to provide results based on the stakeholders' hobbies as well as their hobbies. In addition, this may masses off their judgments because, they might decide to use all means necessary to achieve results without bearing in mind the end result of the means in use. Moreover, employees are governed by their contractual contract to foster the banking companies' missions and objectives. Nevertheless, as they engender to do this contractual responsibility, unethical tactics may ensue as stated above. Thus, there exists need to re-evaluate their actions in order to identify that no subject how much you might wish to preserve his/her job, God prevails, and that He requires that all actions be of value to culture and of value to the higher good.

There are better means of dealing with issues of unethical standard that are more desirable even though risky. For instance, regarding rates of interest disclosure, individual employees in the bank sector could be asked to offer their recommended interest computation strategies that do not represent unethical tactics. These tips could include having hobbies lowered but increasing fines on defaulters, increasing rates of interest and lowering handling fees, offering preferential services to high-end customers as well as ensuring that the typical customers are also given dignified services. Sometimes, issues of portion standard customers are delayed compared to those of top quality customers. This level of discrimination should be reduced since it counters the complete aspect of human rights and fair treatment.

The Impact of Information and Interest Rate Disclosure to the Business World

Ethics plays an essential role in our society today, not because of the immediate feeling that folks feel after experiencing ethical practices, but because of the ultimate role, ethics takes on in the population. Besides, the bank industry plays a significant role in ensuring that business procedures prosper in line with the progress in technology. Thus, it is at the bank sector that businesses derive their standard of operations. Hence, unethical techniques resulting from banking companies signify negative role modeling. Steady business can never operate with no access to bankers. In exchange, these banks acquire important information that pertains to the operations of the businesses concerned. Therefore, the information received should be retained secure and only disclosed to the federal government in instances when you can find dependence on investigations regarding the business tactics as the government deems necessary.

Furthermore, information associated with the various charges the banking companies make on folks are co-operations, the disclosure of such information is very important to business planning and cost estimation. Therefore, it is important that information be easily available so that other businesses may prosper in the global economy.

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