Page 43 - Banking Finance October 2023

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Cheating customers with unfair practices/pricing Conveying the information of product or service clearly
Dishonest/misleading advertising Information that helps customer's buying decision

Breach confidentially of customers/clients Advertisement should contain true and honest
information of the product or service
In the recent past, it can be observed that there has been Advertisement should not be deceptive
an increasing gap between customer expectations and the Advertisement should not exploit emotions
banking services. Post 2008 global financial crisis, regulatory
Advertisement should respect human values
measures held in regaining customer confidence. However,
instances of ethical problems and dilemmas continue to
shake the customer confidence. Abuse of Official Position
Employees are advised to follow Code of Conduct laid down
Ethical considerations begin with every stage of managing by the bank. Abuse of official position for personal gains or
a customer. One should not entertain customers based on providing gains to friends, family members and others with
their affinity with caste, religion or economic status in the selfish motive, amounts to violation of employee's obligation
society. Bank staff should be trained in such a way that they to the bank. Examples of abuse of power can be:
understand the adverse impact of one dissatisfied customer Bank employee goes for a personal travel and claims
that can create a negative image for the bank. reimbursement as official
Showing discrimination to the customers based on their
Ethics in marketing mix proximity to the employee (his/her relatives, friends etc.
showing special preference)
Ethical marketing is aimed at promoting honesty, fairness and
responsibility in advertising based on set of laid down Use of official resources for personal use
guidelines to ensure that the right communication is taking False claims beyond the fixed perquisites
place. In practice, it is necessary that banks use fair practices
to compete with each other. Ethical dilemma arises while Insider trading: Employee trading based on the internal
providing after sales service to the customer. During the sales, information of the client which is not available to the public
one may promise some benefits of the product and does not amounts to insider trading.
provide any after sale service. If the banker is not able to
provide the required service to the customer, he/she has to Proprietary data: Proprietary data refers to the information
explain the customer well in advance what to expect and relating to the intellectual property rights and trade secrets
what not so that customer is clear about the facts. of any company.

Unethical marketing practices can be observed in cases of Bribes: Bribes refer to paying money or gift to person with
managers having negative personality traits that prompt a motive of getting some favour done.
from self-interested manipulation in interpersonal
relationships and may lead to an ethical behavior. Aggressive Employees as Ethics Ambassadors and
mis-selling of banking products like interest rate and foreign
exchange derivatives, to small and medium enterprises Managers as Ethical Leaders:
without making them aware of the inherent risks involved, The ethical culture from the senior leadership percolates
have caused losses not only to the businesses but also to the down in the bank. However, the employees do not personally
bank as most of such became NPAs. know the senior leaders. They form their opinions based on
what they come to know through others or when they listen
Ethics in advertising and product pro- to the top leaders. Therefore, the senior leadership should
convey the importance of ethics in a variety of ways and in
motion such a manner as to reach to every employee in the
Banks are expected to follow the laid down ethical organisation. If senior managers talk about ethics regularly
framework in advertising and promoting their products and and also put their words in action, without exception, they
services. Ethics in advertising refers to will develop a reputation for their ethical leadership.

BANKING FINANCE | OCTOBER | 2023 | 43