Ethics in banking often conjures up images of Mr. Potter from It’s a Wonderful Life, but there are many other challenges of ethics and moral philosophy that banking and lending leadership face on a consistent basis. It is easy to view ethics as relative to the individual or the institution, but there are intersections that create their own ethical quandary.
Enterprise content management platforms can help the financial industry address some of its ethics questions that arise as certain parts face deregulation, but regulations are increased in other elements.
Moral Philosophy and Protection
The main goal of the financial industry as a whole is to grow and protect people’s finances. This includes finances of shareholders for publically traded institutions. So where do ethics and moral philosophy guide these two — sometimes competing — goals?
Where do financial institutions set the rates they charge in order to make money but also assist those who use their products? At what point does a mortgage APR move too far into making money for the institution and cross an ethical line that harms the public — the public that should be protected and supported by financial institutions?
In essence, in spite of increased scrutiny or large deregulation, banks face ethical challenges, as opposed to ethical failures, of being fair[1].
Part of this fairness comes from understanding where the market stands and providing similar products to similar consumers across your financial settings. Raising rates on loans to less educated people who have the same finances clearly crosses into ethical failings.
One way to address this inconsistency is through the adoption of an enterprise content management platform. Specific guidelines can be presented to all agents, mortgages can be grouped for proper review and escrow waiver agreements can be delivered to customers by making them part of a checklist that the customer sees.
Proper documentation and requirements for staff can be a top way to ensure that ethics guide your business at every level.
Balance Morality and Legality
A moral action is not always legal, and vice versa. Ethics in finance must look at the intent behind regulation and customer benefits in order to determine if actions taken violate them or are simply a smarter way to do business.
The financial sector must do more than adhere to the letter of the law. It must address the concerns that guided those laws and led to their development.
Santa Clara University presents a very compelling discussion about differences in legal and moral behaviors. In essence, if there is a chance to avoid taxation by performing an action that has “no legitimate business purpose,” then you’re not only trying to work around the spirit of the law but you’re committing an ethical failing — whether or not it actually violates the letter of the law.
Ethical Challenges as Opposed to Ethical Failures
Financial institutions and their employees often find themselves in a fight between ethical challenges and ethical failures. Client and company demands can often place a banker, lender or other practitioner in a position where their ethics or moral philosophy is compromised.
In this light, consider promoting a financially risky vehicle to an elderly customer. The payoff may be larger, which would generate a more significant windfall to the financial agent, but the customer is at a stage of their life where they cannot take major risks. When someone is past the majority of their working years and operating on a fixed income, their best interest is to be as risk adverse as possible while still maintaining the finances they need.
Adequate training is the best way to help employees manage this debate — which is often an efficiency vs cost savings question — and an ECM allows them to use proper documentation to back up their decision or record the concern.
Technology actually frees the individual to be more ethical in these situations because it not only supports decision-making processes, but it can allow for institutional leeway as well. When a brand adopts an ECM across all of its operations, it can achieve significant cost savings that can be passed on to customers or used to invest so that morals do not have to be compromised.
Ethical Training Is a Necessity
The banking, lending and financial sector requires a stronger emphasis on ethics training and education that evolves with each new piece of technology. Enterprise content management systems represent the next wave of education that’s required, because it can ease many moral decisions.
The abilities to integrate customer data with sales information while also serving as an information hub for invoices, notes, certificates and more creates a need for due diligence. This new development in documentation removes many of the risks financial service providers faced and allows for centralized management.
Eliminating time through ECM adoption and narrowing sales funnels to specific documents that can be shared at any level can help any financial institution ensure its workforce adheres to the moral guidelines they set forth.
[1] http://www.fidelisinstitute.org/article.php?se=13&ca=22