Analysis of Unethical Practices in Banking

Analysis of Un honest Practices in BankingThe essence of this essay on wariness and ethics is to analyze the unethical practices in the commiting industry with an vex of assessing the level of honesty in the briming activities as sound as the extent to which they affect the ethical atmosphere in banks. A number of banking industry employees were interviewed, and a general conclusion that emerged in all the interviews indicated that at that place were mixed issues that required evaluation as good as. Foremost, the banking sector should to comply with the integrity principles, neutrality, dep oddmentability, transp arncy, social province, and ultimately on the control on money laundering. However, the manner in which this compliance is achieved arouses serious bushels as to whether it really exhibits the expected ultimate objective.Moreover, the management structure of the banking sector, same most some other blue chip companies is very strict and hierarchical. In addition, the strictness results from the underlying principle of accountability, as well as transparency in the various operations within the banking industry. Nevertheless, the banking sector pays close attention to the ethical practices of various employees and customers partly as a way of creating a positive kitchen take off to the public as well as to their regulators, and partly because of the need to offer services to customer in a manner that reflects ultimate respect for our cleric (God). For instance, try to have an honest discussion with an employee regarding the various banking practices. in theory, the employee in question can indicate how often he/she values the ethical practices been implemented, entirely in name of personal belief, a lot of employees will accept that they carry out approximately of those practices out of duty and non out of mete out for the society. Therefore, the role of this essay is to explicate the unethical issues in a bid to come up with proper recommendations.The Issue of entropy non-disclosure and worry rates finisOver the years, banks have undergone tremendous growth in many aspects of their operations, starting with the type of customers they deal with to the manner in which schooling is received, recorded, transformed, and finally used. Ultimately, banks have unraveled the self-colored mystery of discrimination as to what customers to offer services to or not by categorizing their clients in terms of their income structure. This classifying of customers is meant to assist in the decision making care for as to what customer receives what treatment, and it is also meant to assist the banks in understanding the type of customers to offer develop services to. Therefore, regulated by their policy of learning non-disclosure, banks would obtain very crucial information about various customers (their age, sex, race, employment status, as well as income level) with a notion that they are adhering to the Know Your no de policy. This information is supposed to be private and confidential. However, on close examination, one would realize that banks need such information to make decisions aimed at enabling them to sojourn in the global market while at the same time, maintaining their traditional banking principles.Consequently, the objective of this essay is to analyze the various unethical practices the employees of the bank practice, and their relevance to the community at large. Moreover, the unethical practices will be addressed in a manner that relates to ethical dilemma and decisions regarding management. Thus, to understand the conflict in terms of globalisation and traditional practices, one needs to call to focus the approach exhibited by Thomas L. Friedman regarding the Lexus and the chromatic tree (2000). According to Thomas Friedman, the Lexus designates sustenance, affluence as well as modernization, development, computer technologies, and the burgeoning of the global markets (Frie dman 51). In addition, all these principles pretended by the Lexus are positive and very instrumental in the current global economy. However, on the other hand, the olive tree designates the attachment of individuals and societies towards their traditional comfort zones, or rather values of higher course and this is where the ethical standards take presidency.Consequently, banks operate in an economy that is very volatile, and they need to ensure that various practices are done in the traditional banking manner, provision of financial services in a jural manner. This information is thus democratized, in the words of Friedman (81), and the level of privacy expressed to customers is thus questionable. This is because, they only way in which this information can be protect is by using rile codes. However, any employee can be able to access this information based on whether he/she has this access codes or not. In addition, most employees in the banking industry would want to access customer information based on various reasons. One, employees are evaluated in terms of their performance to the bank this requires that they obtain crucial information about customers in a bid to decide on what services to offer them or not. In so doing the employees end up violating the information privacy requirement that clients would wish to have.Secondly, because of the current market trends in the banking industry, services have been made available even to the lowest income wage earner in erect for banks to exploit all possibilities in terms of lending and customer deposits. In addition, the sales team works diligently to acquire customers both(prenominal) in terms of deposits taking or loan overture. Moreover, of great significance is the manner in which they obtain information about clients before they can find out them to accept the services offered by the banks. schooling is actually retrieved from the database by whoever lays hands on access codes, and customers hav ing good impute history, and huge income are contacted in order to take up loans or open up other accounts with the bank. Further, these customers are treated with respect and they are offered what has been termed as superior services, premium services. These services could range from dedicated management assistance, special separate banking premises, and other services such as internet, meals, to name but a few.On the other hand, those customers with a lesser income level, their treatment is more general and the banks credit advance to them is highly scrutinized compared to the premium customers. A question that arises here is whether these activities are conducted in the view of the Lexus, or olive tree. On the one hand, the information obtained from customer plays a very significant role in enabling management to understand the nature of their customers in a bid to offer relevant services to them. For instance, a customer who has a higher income level could be given alternative solutions as to how he/she could better use his/her income effectively in order to breed more income. Well, this attitude implies that the bank would wish to enable the employee benefit from the global economy in terms of investment and finance. However, the manner in which this surgical procedure is attained is through privacy violation, which again touches on the whole issue of values are banks really promoting ethical values as they seemingly purport to show in their terms and conditions, or they are merely doing trying to convince customers? A question alike this one could seem obvious but it is a triple bottom line question. In addition, it concerns the balance that is required between being ethically point and at the same time acting as a role model in the global economy.Another aspect of information disclosure relates to way out of bank services to customers. This is done in a manner that customers should receive full information as to the commitment they are about to en gage in. Besides, some information if well known to customers could send these prospective customers away from the banks. Nevertheless, withholding this information seems to be the only way out for banks to maintain their customer base. Therefore, bank employees tend to give customers critical information only when they request for it, and in case they do not, then this information is withheld. Which kind of information could banks withhold in order to maintain or attract customers? Information regarding bank charges, loan processing fees, salary processing fees, insurance coverage fees, loan payment remissness repercussions, use up rate computation information, to name but a few. Most of this information, if disclosed to some customers, could stretch forth to disastrous results. Therefore, driven by their desire to generate increased revenue and reduced costs, banks find it confortable to offer services to customers behind closed doors. Therefore, these behaviors arouse serious debate as to the role of the banking sector in promoting social wellbeing. Whereby, customers would like to maximize their utility of services from the banks, while banks on the other hand would want to maximize revenue in order to add for the costs incurred in technology and other services rendered.Information disclosure does not have to relate to customers alone, but also to competitors. Nevertheless, there is some information which is so important to the progress of banks, and if this information goes to competitors, then the bank whose information has been violated, stands to loose. There have been instances of insider information ending in the hands of competitors without having a jot as to whoever supplied that information, and the impetus for doing so. This situation occurs in cases when some people are employed in some banks not because they want to work there but because they want to obtain important information about the organization in question. This has been deemed to occur in certain banks, which end up loosing customers because of their information usage by the competitor financial institution. On the one hand, this practice could be considered a production line strategy, which could come through resourceful information for the management decision-making process. On the other hand, this could be deemed an unethical practice owing to the fact that such a practice violates banking practices of fair play.Another area of unethical endeavor is on the issue of affaire rates determination. Whereby, banks usually operate in a manner that they use the base lending rates that stipulated by the banks governing body (Central Bank). These rates represent the lowest value possible for advancing loans to customers. However, banks also engender to generate maximum profits because that is their essence as business enterprises. Nevertheless, because of technological advancement, competition has catch the most common war in the current society. Thus, in order for banks to come up with sound decisions pertaining interest rates, they call to focus many factors, which are of course logical. For instance, blue chip companies are given lower rates compared to the standard companies. Furthermore, companies are approved based on their performance over a certain period of time as well as their level business trend. Employees in these banks are encouraged to pursue those high-end customers, more than the rest. The banks management does not directly encourage employees to pursue high-end customers they rather use reduced interest rates to lure these customers to obtain bigger credit from them so that the final interest rate value remains higher.On the other hand, customers with poor credit history, low-income level, and unknown business practices, are offered highly scrutinized services. For instance, their loan advancements are denied on various bases, but the bottom line is that these banks do not want to make commitments to individuals who mig ht end up generating losses. However, when evaluating this trend from banks to offer credit to individuals with high credit worthiness, and deny credit to customer with low-income levels, issues of ethics come in. First, one could see these financial institutions offering services to individuals who do not take a unsaved about whether they are offered finances or not, while treating those who really need financial assistance with caution. An institution with greater social obligation should not execute in a manner that contradicts their practices, but a balance has to be maintained between the two sides of ethics and development. Moreover, too much overreliance to ethics could lead to negligence on sustenance, opulence, technological advancement, and financial progress, which could as well offer more support to the society through social responsibility services. On the other hand, overreliance on globalization could lead to negligence of the ethical standard to treatment that ban ks are required to follow.The steps taken to protect customer informationInformation is a powerful tool for controlling individuals. Once one is in possession of crucial information, he/she can decide to do something drastic and unhealthful to the other party concerned. Therefore, banks in line with the current technological advancement have fostered various mechanisms that offer more confidentiality that is appealing to its customers. This has been through the installation of new-sprung(prenominal) management information systems, which are highly structured and monitored. For instance, access codes are provided in a manner that each code offer access to a certain level of information to the banks employees. Employees at the slip by level of management are offered access to a wider range of information access because they are the study(ip) stakeholders in the decision making process of the companies. In addition, tactical level managers have authority to oversee the various prog ress reports 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 access codes has been facilitated by information systems that track and record various issues regarding the occasional operations of the banking industry. For instance, individuals accessing computers are monitored by a system that indicates their time of access, the type of information they were accessing, and the reason as to why they were accessing this information. Hence, this management information system leads to responsibility and protection of customer information, because whoever tempers with information is dealt with accordingly. Moreover, employees are required to access only information that relates to their line of duty.Another manner in which banks are responding to efficient information management is through video monitoring. Whereby, in this manner of information policy, employee s are monitored by a well-protected computer video recording system, which records the various employees and their locations as well as time. In this case, access to information on various systems is traced back quickly.RecommendationsAccording to Thomas Friedman, there should be a balance between apparitional worthiness and the role model, which involves the olive tree and the Lexus (Friedman 512). Therefore, banks should ensure that as much as they are responding to the changing environment, they should also adopt an approach that is of social concern and ultimately, of a Godly value. Therefore, it is in the due course of responding to this ethical challenges that banks are expected to restructure their strategies in a manner that ensures that they obtain credibility with their major stakeholders, who need high return on investments, and customers who expect good services from the financial institutions.How responsive are specific banks to management restructuring? This question is well reckon owing to the impetus to discover the way forward in cases when unethical practices are observed. For instance, in most banks, like many other organizations, it is the role of the top management to foresee the process of decision-making and policy implementation in the banking industry. However, even though other employees down the line are given an opportunity to provide recommendations regarding the best course of action, their information could only be accepted or rejected based on the manner in which the tactical manager sees these recommendations.Thus, the decision-making process in the current globalized society has been, in the words of Friedman, democratized (Friedman 109). This mover that most of the practices within the banking sector only reflect the perspective of the managers per se. in which case, managers have an obligation to deliver results based on the stakeholders interests as well as their interests. In addition, this might crowd off their judgmen ts 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 agreement to foster the banks missions and objectives. Nevertheless, as they engender to achieve this contractual responsibility, unethical practices may ensue as mentioned above. Thus, there is need to re-evaluate their behaviors in order to recognize that no matter how much one would wish to retain his/her job, God exists, and that He requires that all actions be of value to society and of value to the greater good.There are better slipway of addressing issues of unethical standard that are more appealing even though risky. For instance, in the case of interest rates disclosure, individual employees in the banking sector could be required to offer their recommended interest computation strategies that do not reflect unethical practices. These recommendations could include having interests lowe red but increasing penalties on defaulters, increasing interest rates and lowering processing fees, offering preferential services to high-end customers as well as ensuring that the standard customers are also given dignified services. Sometimes, issues of helping standard customers are delayed compared to those of premium customers. This level of discrimination should be reduced because it counters the whole aspect of human rights and fair treatment.The Impact of Information and pastime Rate Disclosure to the Business WorldEthics plays a crucial role in our society today, not because of the immediate feeling that individuals feel afterwards experiencing ethical practices, but because of the ultimate role, ethics plays in the society. Besides, the banking industry plays a significant role in ensuring that business practices prosper in line with the advancement in technology. Thus, it is within the banking sector that businesses derive their standard of operations. Hence, unethica l practices resulting from banks signify negative role modeling. Stable business can never operate without having access to banks. In return, these banks receive important information that relates to the operations of the businesses concerned. Therefore, the information received should be kept secure and only disclosed to the government in cases when there is need for investigations as to the business practices as the government deems necessary.Furthermore, information relating to the various charges the banks make on individuals are co-operations, the disclosure of such information is important for business planning and cost estimation. Therefore, it is important that this information be readily available so that other businesses may thrive in the global economy.