Following ethics is key in building trust from customers, BoU tells banks

The Central Bank of Uganda has urged commercial banks to ensure they don’t compromise on following ethics or else they will lose the trust of customers who are key for their survival and profitability.

“Without ethics, you don’t have governance and when you don’t have it that is the beginning of the failure of the bank. If you don’t have ethics you can’t build trust yet the financial sector doesn’t sell loans or services but rather trust,” said Dr. Tumubweine Twinemanzi, the Executive Director Supervision at Bank of Uganda.

Ethics are central to how financial institutions build trust. Despite what everyone thinks, banks sell trust that customers will be sure that by leaving their money with you, they will walk in tomorrow and it is still safe. This can only be built if the bank follows ethics.”

Tumubweine was on Tuesday speaking during a workshop on conduct and ethics in the financial services industry at Protea Hotel in Kampala organized by Absa Bank Uganda.

The official from BoU said that before thinking about anything else, banks and other players in the financial sector ought to ensure they follow ethics to the dot.

“Ethics set the tone for the governing culture in a financial institution. Imagine a situation where there are no ethics and you fail in regards of trust and governance component.”

The Executive Director in charge of supervision at BoU said emphasizing ethics is crucial at such a time when financial institutions are under pressure from stakeholders to make profits following the Covid pandemic period that hit them badly.

“The economic circumstances we are in show that economic recovery is very slow , we have inflation, geopolitical tensions in Russia and Ukraine and the war in DRC all hitting the economy. Remember for the past two or three years, shareholders in these banks were not earning anything. They are putting pressure on these institutions to generate revenue for them but in an environment where you have pressure from employers to deliver in numbers and uncertain economic environment, there is a tendency to want to sidestep ethical conduct to try and meet your targets. This needs to be dealt with,”Tumubweine noted.

He however warned that financial institutions whose employees are engaged in sidestepping ethical conduct risk losing trust of customers.

According to Mumba Kalifungwa, the Absa Bank Uganda Managing Director, the workshop on ethics was aimed at reminding players in the banking and financial services sector of their core duty to follow ethics to ensure a healthy sector.

“The banking sector is built on trust and the need to show customers that their deposits are safe with us is key. We think it is our duty to play a shaping role in our society by reminding players of their duty to ensure they follow ethics and create awareness in this industry,”Kalifungwa said.

He noted that players in the financial sector have the power to make decisions but the same should have a positive impact towards the individual players and the entire sector at large.

“Whenever you are in a position of trust or authority, what you are directed to do should be the right thing with a positive impact on the industry and the particular customer you are serving. As human beings, there are points where we are put in positions of compromise but ethical guidelines will always save the situation. When you choose  ignore ethical guidelines there will always be consequences like people being jailed, losing source of livelihood and all sorts of negative connotations.”