Ethics in Banking – The True Key to Banking Success (2)

“Wisdom stems from personal accountability. We all make mistakes; own them… learn from them. Don’t throw away the lesson by blaming others.” – Steve Maraboli

Last week I looked at the sad reminders about current developments in the banking industry and reiterated my belief that the best key to success in the banking sector is Ethical Banking. Whether local or foreign banks, the same applies to both. The collapse of seven banks in one year is not only history repeating itself, but this time in gargantuan proportions as a result of the sophistication in financial engineering.

Instead of the blame-game, I concentrated on the need for the conduct of a self-audit by all stakeholders in the banking sector. This applies to several groups of people shouting “Murder, Treason, Crucify Them, Jail Them, Shame Them”.  While letting the law takes its due course, what are we all doing to contribute our quota to the solutions?

The Stakeholders

In simple terms, the stakeholders encompass everyone that is part of the process of financial intermediation in the basic functions of banking business. This involves collecting funds from surplus units to deficit units to make a margin, pay off all operational costs and make a profit for retention into the business or payment of dividends. Stakeholders include creditors, directors, employees, government (and its agencies), owners (shareholders), investors, suppliers, unions, and the community from which the banks draw their resources:

  • Bank of Ghana: Provides licences to banks
  • Shareholders: These are investors who provide initial capital to set up the bank
  • Depositors/ Creditors: They provide additional funds to boost the banks’ business. Without depositors, a bank cannot function
  • Board of Directors: They formulate policies and strategy to ensure that the interests of all stakeholders are secured
  • Executive Management: They provide leadership to manage the funds and implement policies to achieve the aims and goals of the bank
  • The General staff: They provide products and services to the clients and customers as per prescribed standards of the bank
  • Service providers: They provide various services to ensure a smooth delivery of the banking system (IT, Training, Consultants, Auditors, Adverts etc.).

The list goes on.

Self-Audit (contd.)

While the blame-game goes on, let us continue the self-audit approach that all stakeholders can conduct on themselves, and appreciate it should be an all-hands-on-deck approach. Let us examine the various control functionaries in a bank. These are gatekeepers of the bank such as auditors, risk management personnel, branch control, and compliance personnel.

The Internal Auditor

  • Do you have the requisite training?
  • Do you work a bit outside the box and ask questions after identifying weaknesses in the system?
  • Are you sometimes uncomfortable with the heads of units that you audit?
  • Do you find yourself sometimes treading on dangerous ground? What does your boss say when he sees you being assertive and asking many questions? Does he feel you are ‘too known’ for flexing your small muscles?
  • How far do your audit reports go? Do they reach the Board? Any concrete feedback and results from your recommendations?
  • Do you feel your department is the lone-ranger in the bank?
  • Are you assertive enough to make proactive recommendations for the bank’s processes and policies?
  • Do you just audit to catch a thief, or is it the risk-based approach to get to the root-causes of events?
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Please, don’t smoothen the rough edges and create an impression that all is well when it is not.

Risk Managers

  • Do you assess new products designed and sign-off before they are implemented? Do you check their feasibility and offer recommendations before signing-off?
  • Are you waiting with folded arms for the products to flop and say “I told you so?”
  • Are you sometimes intimidated or massaged to make you look away even when you detect anomalies?
  • Do you always sit back and complain instead of offering good solutions to problems?

Get involved. After conducting several root-cause analyses of risk events, you may have the key to unlock the door to success.

Finance Director

The Finance Managers’ role is one of the most stressful in the bank. It is similar to the Minister of Finance in Ghana. All of the bank’s problems lie on their shoulders. Everyone blames them for the bank’s woes. How can he help when there is no money? If the FC says there is no money, he will sometimes be coerced into looking for funds at whatever const – some of which are sought using unethical methods.

When it comes to financial engineering, it amounts to aiding and abetting the Treasurer. It is sometimes unfortunate to hear of very highly-regarded Chartered Accountants and Risk Professionals being used to massage figures to keep banks afloat in the industry.

  • Do you declare fit and proper results in the preparation of the financial statements?
  • How symmetrical are the reports that you submit to the EXCO and the Board?
  • Are you serious with the cost-cutting measures of your bank? How assertive are you in management of the bank’s funds?
  • Do you watch the figures closely enough to identify any income leakages and expenditure over-runs? Please don’t be tempted to manipulate figures for Management or the Regulator.
  • Are your general ledger accounts properly reconciled, or do you have many accounts being suspended for long periods? How are you treating your ‘toxic assets’ and off-balance sheet items? Are they being disclosed to your Management and Board? Please investigate.
  • What happens at MPRs, Management and Board meetings? Do you declare the true state of affairs? If so, well done and keep it up. If not, I hope you know the implications.

Compliance Managers

The final gatekeepers. Since implementation of the global Anti-Money Laundering laws and Anti-Terrorist Financing laws, Compliance professionals have been tasked with gatekeeping duties to ensure funds in banks remain safe and untainted. The most important issue is that banks should not be used to launder ‘dirty money’. In performing their role as gatekeepers, they deal with every department of the bank, from suspicious account opening, suspicious significant movement of funds, suspicious inward foreign remittances etc.

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They are to ensure that all transactions in the bank are guided by rules and regulations from government and the Bank of Ghana. One major concern is that many compliance staff are labelled ‘enemies of progress’ because they ‘seem to find fault” in many transactions. Funnily enough, some senior management personnel sometimes feel the compliance staff are spies for the Bank of Ghana! How absurd. It is another stressful role.

A few self-audit questions are:

  • Are you a certified compliance professional?
  • If not, are you well-versed in all the laws and regulations governing the business of banking?
  • Are you assertive enough for staff to feel your presence?
  • Do you conduct compliance training for the staff to make them appreciate the legal implications of some transactions?
  • Do you report all fraud cases to the Bank of Ghana or suppress some when they involve big names in the bank?
  • How do you manage the influence of ‘big men’ when you are being forced to allow some suspicious foreign remittances to be released?
  • Do you often face role-conflict in your duties – to report or not to report? Do you sometimes look away to save your job?
  • Do you sign-off new products and services before they are approved and launched?
  • What is your relationship with the Financial Intelligence Centre? Do you ensure privacy of the reports sent, or do you sometimes tip-off customers with ‘big’ names?

Systems Managers

  • How robust is your IT system?
  • Was it purchased out of duress? You know Ghana has many allegations of cases involving purchases of computer software which are not appropriate. I hope it is scalable and can be integrated with other systems easily with minimum cost.
  • Is your system strong enough to withstand hackers and denial of service attacks? Are your users able to access many applications easily? I hope not.

From the above, you can see that every stakeholder has a part to play in the banking process. Stay tuned for more next week. Meanwhile, please remember the motto of the Chartered Institute of Bankers is ‘Honesty and Integrity’.

To be continued…



Alberta Quarcoopome is a Fellow of the Institute of Bankers, and CEO of ALKAN Business Consult Ltd. She is the Author of two books: ‘The 21st Century Bank Teller: A Strategic Partner’ and ‘My Front Desk Experience: A Young Banker’s Story’. She uses her experience and practical case studies for training young bankers in operational risk management, sales, customer service, banking operations and fraud. 



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Tel: +233-0244333051/+233-0244611343

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