My how banking has changed over the years. What once was an integral part of a dynamic community that knew their role in creating wealth, protecting assets and helping communities grow, now seems to be a hard institution to deal with with no personality or local spirit. Perhaps it’s time to look at Banking Ethics from a different light.
My first banking experience!
I was 18 years old (now 40 year ago) and I walked in to Northwestern Bank in Valdese, NC to apply for a car loan. That was normal then. Now car loans are dominated through the dealership.
Allen Duncan took my application and said he’d get back with me. As I stood up from his desk the City Exec – a gentleman named Bullet Walton walked up and put his hand on my shoulder. I’ll never forget – he looked up at me and said, “Son, if I make you this loan are you going to pay me back?” Surprised by his question, I responded: “Yes Sir, Mr. Walton.” Bullet then looked at Allen and said, “Make him the loan. He’ll pay us back. I know his mama and all his aunts and uncles. No worries here!” And with those words he walked away and I got my check to pay for my first car!
Then decisions were made based on character not credit scores. You assessed the moral situation of the borrower or saver. You knew them and you were loyal to them. There was a relationship and bond so to speak.
Contrast that with today!
Now some 40 years later I walk into Bank of America to discuss a change in my online banking – a change that had not been communicated to me and one I was not happy with.
The lovely lady I was introduced to went online to view my account and asked about the problem. I shared my frustration and she acknowledged that she couldn’t help me, but I could call online banking located somewhere in the US and perhaps they could help. Now off you go with an 800 number on a card from a bank representative that has no clue about who you are or what you need. Just a smile with an impersonal approach to help.
Of course I called online banking and talked with a representative in Phoenix – I’m in SC – who basically told me that if they overburdened in one area the system changes which caused my problem. So I said, “Because of your processing problem I have to experience a change in my online banking that is most displeasing?”
Simple reply – no emotion just an answer.
“Perhaps I should change banks if you are unable to process online transactions in my account the way you have done it for years.”
“I’m sorry he replied, but there’s nothing we can do!” – With that I thanked him and drove to BB&T to check on their system and change banks.
Banking Ethics: 5 Suggestions for Change
Be Transparent! Crap that has been going on for years has reeked havoc in financial markets. It time for banks to provide relevant information beyond what’s required by legislation. When loans local loans were no longer a determinate of the financial strength of the local bank we lost something. Packaging good loans with bad loans then selling them to minimize risk might make sense in the broad sense, but is it ethical. Seems to me that this is like a farmer hiding bad apples in the middle of bushel of apples where the good ones are on the side and top. Show the best and hide the rest. Banking ethics? I don’t think so. Be transparent!
Help Me Grow my Wealth – no Pressure Please! A normal bank service is investment advice – although over time it seems that there is less and less of that as the bankers aren’t fully prepared to deal with the complexities of good investment advice. When the bank pushes or has a banking investment advisor push specific products that are in the best interest of the bank, but maybe not mine, we have in my opinion a banking ethics issue. A good friend of mine spent time in federal prison for fraud related to investment advice offered while he was a Wells Fargo employee. To be clear, Wells Fargo didn’t support, suggest or condone his behavior, but in talking to him it was clear that Wells Fargo was far more concerned with promoting their products than selling what was in the clients best interests.
Find Moral Solutions to problems: A person (customer of the bank) finds themselves unemployed and in financial troubles. They fall behind on their house payment. What would good banking ethics dictate? To me the answer is simple – help find a solution. Instead banks seem to lack the agility or creativity to find a win-win for the customer and the bank. Really…the bank would rather have a troubled asset and put a person out of their house, instead of becoming creative and making lemon aid out of lemons.
Don’t Condone Unethical Practices or Behaviors: As a business owner it’s easy to be lulled into dealing with clients that can be profitable, but not project a good image on the institution. For example: how would you feel if your bank was the primary banker for a kingpin in the porn industry. Now that is not an illegal industry, but does it place you in the light you want you business to be in? If the answer is yes, then you have drawn an line in the sand when it comes to your banking ethics – business of moral standards. On the other hand, if standing with your community morally is valuable, then make that a part of the foundation of your success which for many is banking ethics at it’s best.
Sense of civic responsibility: I started with a story where Northwestern bank was the civic standard bearer in the community. Yes, they donated to benefit social organizations and activities, but more important they were actively physically part of the fabric of the community. Do more than donate, become a valuable part of the community.
I’m not so dumb as to notice that times have changed. Today I can deposit a check into my account with my cell phone – a great convenience. I appreciate those changes, but at the same time, those changes have moved us further away from dealing with our banks as humans (vs credit scores dominated by three agencies) with decisions made of our character. I admit I long for those days. But for now, I’ll just accept the five items above as a step in the right direction toward more appropriate banking ethics.
YOUR COMMENTS ARE WELCOME!