Africa Banking Economy Finance Opinion Weekend

Point of view: The importance of Ethics and Morals in Banking – Ngunu Tiny

Every recession has its poster child of immoral and unethical practices. We had Bernie Madoff exposed during the 2008 ‘Financial Crisis’, and currently WireCard’s Marcus Braun are all over the headlines. Both are examples of why Ethics is vital for the Financial Services sector and why it must be led from the top down.

Financial services permeates through every aspect of our lives, from when we get our first checking account, buy our first house if we are lucky, all the way through to how we purchases our groceries day to day. The Great Financial crisis really showed us just how reliant we are on the system and just how important it is to keep it functioning and operated by leaders that are focused not just on profits but on adding value to society.

So how do we begin this journey? A good starting point is by defining what ethics stands for and how it can be implemented.

When we talk about Ethics, it is also important to define its difference from morals. Ethics are usually based on a set of rules or beliefs and are written down. This could come in the form of a Code of Conduct, such as we see in Banking or Legal practices or even a set of beliefs portrayed in the Ten Commandments or the Quran. Morals on the other hand are ‘internalised’ principles based on what is right and wrong. These are nurtured and acquired through many years of socialisation with our peers and people of influence.

The reason that I take the time to define these, is because whilst morals can be hugely variable and create confusion in an organisation, having a core set of Ethics cemented in writing and practiced from the top down, helps normalise behaviours within a company or group. You are setting out required standards for those joining, that may have different moral values. Again, this really has to be led from the top and filtered down.

Most successful organisations have Ethics intertwined within their organisations. In Financial Services, this is usually a code of conduct. At Banko, we feel that all our investments should be governed by the same code of conduct and that our standards should be higher than those of other organisations as we are often helping the most vulnerable in society, the un-banked. Therefore, we have the greatest responsibility to those people and to ensuring the organisations they rely on are sustained and well managed.

When investing we also need to take stock of Morals from the leadership. It is very easy to garner insight into these morals in today’s modern society. There is generally a digital footprint we can use to build a picture as to the type of leader a CEO is. It is very hard to build an Ethical organisation if the leader holds immoral values. More time should be spent understanding the importance of this. Then with any luck, we would have fewer examples of men like Madoff and Braun. Men who not only give a bad name to the sector but whom also divert vital capital and resources to their own pockets rather than society.

As we enter yet another recession, one where digitalisation is likely to be pushed further to the forefront and one where bringing banking to the unbanked is even more important, Ethics must further be discussed, talked about and implemented especially within Africa as a continent transitioning to democracy. If we do that, not only will the sector shine, but so will its customers and the continent as a whole. Africa has had a long and winding journey and the years ahead are very exciting, with opportunities for all.

One last point to note, is that we can have a highly ethical organisation that is still highly profitable. In fact, Ethics helps cement reputation and reputation can very much be reflected in share price.

Let’s make sure Ethics and Morals permeate through everything we do.

Ngunu Tiny

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