This week, my concluding article reiterates the need for a paradigm shift toward the practice of more ethical banking to eventually stem the tide of losses in financial institutions. Instead of the usual fracas between Bank of Ghana and Banks, bank staff and management or inter and intra-departmental frictions, shareholders and Board of Directors etc., the blame-game should end with the slogan ‘all hands-on deck’.
Before then, let us examine a few critical functions in the banks which need a more ethical approach:
Lending or Credit management – Bank collapses are underpinned by weak lending practices and the deliberate unwillingness of borrowers to fulfil their part of the bargain. Bad loans granted in the banks which have collapsed indicate that over seventy percent of their assets being bad caused them to gradually grind to a halt. Non-performing Loans have been the biggest challenge for banks to address in their financial intermediary functions. The banks have huge default risks that cause liquidity issues which erode their capital for smooth running. These defaults occur as a result of borrowers failing to comply with credit terms and contracts. Most of the loaned funds are not usually returned within scheduled terms and times of repayment.
Based on the above, let us continue the self-audit approach.
- How conversant are you with credit analysis?
- Do you forward loan applications which are faulty and not feasible?
- Do you pretend you have visited customers’ business premises and houses and forge stock positions while manipulating customers’ cash flows and budgets?
- How strong-willed are you in avoiding bribes? How do you handle customers who offer you money even before you examine their proposals, as they hint that they have already ‘finished’ with your boss?
- How assertive are you in finding a nice way to inform your boss about your reservations about suspicious characters and accounts that you suspect carry all the signs of non-performance even from day-one?
In my opinion, the Credits or Loans Department is one of the most sensitive, difficult, interesting, and craziest places to work in. It is a place of mixed emotions because you meet or process applications from all types of account holders, each with its own account track-record. Loan officers have to try and understand the customers’ business operations to appreciate their needs and determine whether they should be granted the loan. In addition, try and withstand pressure from both internal and external sources. When they go bad, you will be blamed since you are the technical person.
Human Resource Director
- Do you recruit people with the required skills and competencies or only from friends, families and loved ones? You cannot punish them when they deviate.
- How fair is your reward and sanctions policy?
- Are you leading by setting an example or by divide and rule tactics?
Don’t be used as a channel for pursuing personal agendas by powerful persons. Remember that many staff leave because of their immediate bosses. What kind of leader are you? Are you a boss or a leader?
Sales and Marketing
- Do you accept any Tom, Dick or Harry into your bank just to meet the targets given you?
- Do you follow-up on your customers to confirm the information given to you during the account opening process?
- Do you understand the products you are selling? Are you selling a product or a relationship?
- Are you cross-selling bank products the right way, or just ticking the boxes. Remember, the foundation of an account should be based on a solid Know Your Customer process. Remember the Wells Fargo Bank case in the US. Customers will never forgive when they are taken for granted. Truth always stands.
Please know your customers well so that they will stand by you even when you face problems.
Police and Private Security Guards
- How alert are you on the job; are you mostly on your phone chatting away divulging bank and customer transactions unknowingly to the public, giving indirect information and access to fraudsters?
- Do you turn a blind eye when some properties are being moved out of the premises without documents?
- Do you leave the bank without notice, or record your name in the register without working?
- Do you notify the bank manager about suspicious persons and their activities?
- Are you working with integrity?
- Do you suppress customers’ credit and divert to other accounts and repay only when you have made a cut, or do you grant ‘soft loans’ to your friends? Remember, ‘one day for the master’.
- Do you short-pay customers or insert lower denominations into the packets?
Please stop, because these small beginnings eventually become big losses to the bank.
Do we learn from History?
I do not profess to know all the reasons behind the closure of banks. My opinion is about general causes of bank collapses from history, both local and global. In my previous articles, I have regularly mentioned history as a good teacher as well as a good reference point. From the risk point of view, it is the cataloguing of risk events over a period of time that facilitates grading of risk events and risk appetite for the bank. Learning from history is just to plan well for the future and manage unforeseen events.
My Final Words – Stop the Blame-Game and get all hands on deck
Dear bankers, whatever role you are playing in your organization, the deciding factor for your success may not be your accolades and titles but rather how you apply the God factor in your work. Dear borrowing customers, remember that willful default in repayment of your loans is also ungodly.
It is hard to work for God, but posterity will judge you in whatever decisions you take as you face the pressures of the work. The pressures, both internal and external, are meant to polish you to withstand the shocks from the banking business’s nature. Let’s look at a few final reminders:
- Decline unhealthy advances from customers and seniors with professionalism. It is commonly human, but must be handled with diplomacy and tact so you will always be friends.
- If you have to review a loan application, think twice. Are you working for the customer or for the bank, or even for your boss? Sometimes a few words of prayer can do the magic. In five-years’ time, will you be blamed for obeying your boss instead of the bank’s policy?
- If you start witnessing your customer’s diversion of funds meant for his business into other events, will you pull the trigger or look the other way quietly because you are related to him or her?
- If you are a Teller or Vault or ATM Custodian in financial distress, will you fiddle with the bank’s money and give yourself a ‘temporary loan’? Don’t forget, auditors can spring a surprise cash count on your branch. Ask for a loan from the right places and pay honourably.
- Are the PEPs demanding too many favours from your bank to help this and that person with a loan, at whatever cost? Use your spiritual intelligence on them. Work harder…genuine customers will come as you make service delivery your priority.
- Are you always the one who detects frauds and potential losses? You are a wanted man or woman (according to the devil!). Pray for more wisdom of revelation. God reveals to redeem.
On this note, I pray that all stakeholders in the banking process will play their roles in a more ethical way and leave a good legacy for the next generation.
REMEMBER, The motto of the Chartered Institute of Bankers, Ghana is still HONESTY AND INTEGRITY
ABOUT THE AUTHOR
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, training young bankers in operational risk management, sales, customer service, banking operations and fraud.