Globalization in general is defined as “a process of decreasing constraints on the interactions among the nations and people of the world” (Campbell, 2019). There are three specific types of globalization that we will be focusing on in this blog:

1. Economic globalization which is “the integration of fragmented markets into a global economy” (Campbell, 2019)

2. Political globalization which is “the process by which world power relationships change, and there is a loss of sovereignty by the states” (Campbell, 2019)

3. Social or cultural globalization which is “the emergence of a worldwide cultural system” (Campbell, 2019)

In this blog we will uncover the ways that the financial services industry has an impact economically, socially, and politically, in the host countries they operate in and keep their headquarters, by their economic actions. 

Many financial services companies in Canada have branched out into the global economy through foreign direct investing activities. Foreign direct investments by foreign countries can benefit the host countries. Those “benefits stem from efficiency gains brought about by new technologies, products and management techniques as well as from increased competition stimulated by new entrants. Moreover, as foreign banks may have greater access to resources from abroad, they have more stable funding and lending patterns than domestic banks” (Cárdenas, Graf, & O’Dogherty, 2018). Through banks moving into the host countries, they see social benefits of new jobs and more options to business clients. This social globalization allows both countries to share in new technologies and ways of business which is the start of a worldwide cultural system. However, politically foreign banks in host countries must abide by their rules. Notwithstanding, there are different governance regulations. For instance, an example quoted here is from Australia:

“In words of a former Governor of the Reserve Bank of Australia addressing the Overseas Banker’s Association: an Australian subsidiary is a separate bank in its own right, and not a branch of the overseas parent. The policy of the subsidiary will necessarily be set by the overseas parent, but it is reasonable that there be some independent minds on the board prepared to speak up, should it be necessary, for the interests of the local depositors. While the independent directors will usually be in the minority and can be outvoted, in extreme cases they may well take more radical steps, such as resigning and explaining their positions to the central bank. I see nothing wrong in that situation” (Cárdenas, Graf, & O’Dogherty, 2018)

This essentially solidifies that foreign banks must follow political regulations to be able to run in the host country. Moreover, in some countries, they may have more political power through economic actions but there is always a chance they can be overruled due to their legal systems. However, the loss of power that the foreign country can experience can be eased by the host country as they deepen their relationship socially, economically and politically.

Headquarters are normally located back in the foreign country at the beginning of a foreign direct investment project. The host country has a say in how the new company is regulated and “Conflicts of interests among parent companies and their subsidiaries may arise from management actions –on the host country- seeking to pursue solely the interests of the former” (Cárdenas, Graf, & O’Dogherty, 2018). This can be overwhelming as the coordination of the foreign companies is through distance. If they do choose to have a headquarters located right in the country they are investing in, they can face issues such as communication with main headquarters and the expatriate managers may not understand their new social environment as well as the locals do. Therefore, making it a tough decision to either send experienced people abroad or to hire locally.

The globalization strategy in the bank industry is a win-win situation for both foreign and host countries with a number of reasons. When considering this circumstance with a lens of utilitarianism theory, this could be viewed as not only economically and socially beneficial, but also an ethical situation. This is due to the fact that, by establishing branches globally, the headquarters will be able to boost up their profits through numerous aspects including – attracting more business customers abroad, which otherwise, would have been impossible if they remained only in their home country. Furthermore, opening up new branches in a new area would lead to the creation of new employment opportunities for those residing in this area. This then, helps the host country to ease the unemployment issue, hence, benefiting the economy significantly. Therefore, a utilitarianist, who considers generating the greatest happiness for a great number of people as ethical, would argue that the current move of globalization in the financial industry is an ethical situation.

In conclusion, the economic decisions of financial services companies expanding globally have social and political impacts. Socially, it can be a great thing for the host country with increased choice for business clients. Politically, each country is different which makes it very difficult to run a subsidiary of a Canadian financial institution in a foreign country for the impacts of the economic decisions are always tied to social and political globalization decisions. Furthermore, with respect to the implications on economic aspect, adopting globalization strategy in financial industry is an ethical phenomenon from a viewpoint of utilitarianism as it brings several benefits to the home country with increased profits, as well as to the host country with decreased unemployment rate.

References

Campbell, Dr. S. (2019). UR Courses. Retrieved from Business 306: Ethics in Decision Making.

Cárdenas, J., Graf, J. P., & O’Dogherty, P. (2018). Foreign banks entry in emerging market economies: a host country perspective. Retrieved from https://www.bis.org/publ/cgfs22mexico.pdf

Tittle, P. (2017). Ethical Issues In Business. Broadview Press.

The Code of Conduct we chose to analyze is from Royal Bank of Canada (RBC). The Code of Conduct incorporates a variety of aspects that are commonly found in other industries, such as Respectful Workplace, Occupational Health and Safety, Environmental Sustainability, and Compliance with Government Regulations. However, it was particularly intriguing to find that the code puts a significant emphasis on how to handle and protect confidential information relating to clients, transactions, or any other monetary related activities. In the section of Integrity in Dealing with RBC Business Clients, Communities and Others (Section 3), the first thing they have written is protecting RBC business client information. It states that “business clients care deeply about the privacy of the information they share with us. Protecting their information and keeping their trust is integral to the financial services industry” (Royal Bank of Canada, 2018). Confidentiality is a key aspect with respect to the culture of their organization, as they see that it is their duty to keep such information secure, and protected from undesirable incidents, such as theft, fraud, loss or any other misuse or inappropriate exposure. For instance, in an article written by the Canadian Press, RBC fired the head of U.S capital markets who “did not comply with our disclosure and conflict of interest policies relating to workplace relationships” (The Canadian Press, 2018). This example depicts an utilitarian perspective as RBC’s strict implementation of their Code of Conduct shows how they do not tolerate any form of noncompliance which benefits all stakeholders. In addition to that, considering the fact that this is an organization involved in the financial industry where it is inevitable to deal with a large volume of personal information and handle transactions with a significant amount of capital on a daily basis, integrating trust and protecting business client information through the Code is RBC’s responsibility. Moreover, the strict implementation of the code was expected due to the fact that this industry heavily weighed on the privacy of individuals, therefore the policies and practices around their Code of Conduct are significant and in accordance with the culture of the organization. Notwithstanding, by learning that employees are educated with emphasis on such matter, business clients would be able to trust their service, which will then help attract more business clients, while achieving a robust rate of business client retention. 

On the other hand, some of the aspects presented in the Code of Conduct that deal with ethical practices in unexpected ways are the ways on how their practice has changed and adjusted when doing business in other countries. RBC complies with the legal and regulatory obligations of the country as well as they have very personalized services for business in accordance with the geographical area in which they operate. This is a deontological way of making sure business is done ethically according to the law. RBC is required to follow the law which is a social contract “we ought to follow, even when it does not promote happiness” (Campbell, 2019). Doing business this way is very important as every country is different in all aspects, especially when dealing with financial services. Thus, this not only respect each business client but also allows RBC to be able to fully serve them. Another unexpected way that RBC has incorporated within their code is how they operate on a “need to know” basis instead of “nice to know” basis resulting in the sharing of information only to those who need it for an appropriate business purpose. Thus, allowing full privacy for business clients. 

In conclusion, with RBC’s Code of Conduct as well as their unexpected, yet effective ways of dealing with ethical issues in the financial services industry, they are creating efficient ways of setting out rules and standards in the company which allows them to have better decision making and builds a respectable, positive image for the company while providing security and high quality services that caters to the varying needs of their business clients.

References

Campbell, Dr. S. (2019). UR Courses. Retrieved from Business 306: Ethics in Decision Making.

 Royal Bank of Canada. (2018). Code of Conduct. Retrieved from: http://www.rbc.com/governance/_assets-custom/pdf/RBCCodeOfConduct.pdf

The Canadian Press. (2018, June 08). RBC fires head of U.S. capital markets over workplace relationship. Retrieved August 5, 2019, from https://www.citynews1130.com/2018/06/08/rbc-fires-head-of-u-s-capital-markets-over-workplace-relationship/

Unions in Canada have a purpose “to ensure some level of participation and to define and protect employees’ rights through the collective agreement, management/union issues overlap with union issues” (Tittle, 2017). Although unions are a source of protection to employees when it comes to their rights, not all unions benefit everyone. This blog will answer how unions play a role in the financial services industry, how they protect the rights of employees and how their ethical behaviours can be improved to respect employee rights to a greater degree.

In the Canadian financial services sector, there is a low penetration in the market of employment unions. The financial services industry is only about 7.7% unionized as per statistics Canada (Canada, 2019). In Quebec, “approximately 38 per cent of Montreal-based Laurentian’s employees are unionized, making it the only bank on the continent with organized labour” (Post, 2017). At Laurentian, the union plays the role of the employment protector.  As banks become more digitized, they do not require as many front-line staff as they did in the past. The union is currently protecting Laurentian employees and tellers from losing their roles due to the advice-only branch initiatives. This is not necessarily in the best interest of the bank as the business stated in its results of the re-negotiating the collective agreement, “[it] could result in higher costs which could have a material effect on our business, results of operations and financial condition.” (Post, 2017).

As of April 2019, Laurentian has come to a collective bargaining agreement. The union has protected the job transition, as well as the working conditions for employees. As stated, “we can now focus fully on realizing our strategic plan and continue to transform our branch network while providing jobs of the future and becoming more competitive” (NEWSWIRE, 2019). The collective bargaining agreement has included:

• giving access to positions focused on financial advice;
• replaces job security with personalized transition measures, including severance packages;
• prioritizes individual performance and qualifications as key decision-making criteria for appointments, promotions and career progression opportunities for professional positions;
• allows flexible working conditions based on the needs of customers while promoting a better work-life balance for our employees.

This new agreement protects employee work-life balance and career success, while not limiting the business’ success. The union is doing a good job of protecting employee rights as they have not only taken into account workplace issues, but also allowed individualized flexibility for employees. This agreement follows utilitarian ethics as it is set out to benefit the greatest amount of people. The employees that are not able to move forward with the new business direction are being offered severance to ensure their ability to move onto another career opportunity.

Furthermore, the new agreement is also deemed ethical with application of rights theories, especially from the social contract theorists’ viewpoint. As Tittle argues, the rights are guaranteed, and should be ensured, because “[the employees] have done something to acquire those rights” (Tittle, 2017). In other words, as the employees provided services and labour that are required for Laurentian to run the business, the above-mentioned conditions in the agreement are what must be assured.  With this new agreement, the union has not only protected the employee’s rights, but also made an ethical decision by doing so.

Unions in the finance industry are very rare. The example of the Laurentian union shows that unions can help both the business and employees be successful. The ethical behavior of businesses can be closely monitored with a union, as they have more of an ability to make a change than when a single employee attempts to take on business alone. Unions can ensure that employees interests and issues are heard and taken care of in a timely and official way.

In conclusion we can now answer how unions play a role in the financial services industry, how they protect the rights of employees and how their ethical behaviours can be improved to respect employee rights to a greater degree. The role unions play in the financial services industry is to ensure fair working conditions for employees and also continued success of the business. The union protects employees by ensuring their voices are heard. In the Laurentian case, employees were looking for advancement opportunities and work-life balance which has now been incorporated in their collective bargaining agreement. The ethical behaviours of all unions can be improved by ensuring they create a fair and just environment to negotiate and hear their employees.

References

Canada, S. (2019). Union status by industry. Retrieved from https://www150.statcan.gc.ca/t1/tbl1/en/tv.action?pid=1410013201&pickMembers%5B0%5D=2.5&pickMembers%5B1%5D=4.1

NEWSWIRE, G. (2019). New collective agreement between Laurentian Bank and its unionized employees in Quebec. Retrieved from https://www.globenewswire.com/news-release/2019/04/01/1790520/0/en/New-collective-agreement-between-Laurentian-Bank-and-its-unionized-employees-in-Quebec.html

Post, F. (2017). Laurentian is the only North American bank with a labour union — and it’s clouding their outlook. Retrieved from https://business.financialpost.com/news/fp-street/laurentian-bank-labour-union

Tittle, P. (2017). Ethical Issues In Business. Broadview Press.

Financial reporting is an essential piece of information that all businesses disclose at year end. In this blog, we will be exploring who is responsible for issuing the reports and what the leaders in the organization say about the compiled information within the reports. We will then move onto the third party options. In addition to that, we will tackle issues that outsiders identify about the company and if they are complete reports. In essence, we will be focusing on answering the question: Is the report considered ethical and how is it determined? 

Profit

Company Opinion:

The first quarter of 2019 financial reports is made by the department of Management’s Discussion and Analysis and Consolidated Financial Statements at TD Bank. This report is prepared for the organization’s investors and discloses the revenue, net income, expense and a breakdown of their earnings through their many services. The report is just a highlight of the more detailed, complete report which can easily be accessed through TD’s company website. Leaders in the organization are happy with their results as one of the fastest growing banks. They believe they can withstand the rapid growth as they are always forward planning. TD has a focus in helping small business clients build their business, this in turn brings in large volumes to TD.

Third Party Opinions:

According to an article by The Wall Street Journal, TD Bank’s first quarter profit rose by 2% after their investment in TD Ameritrade. In addition to that, it also states that the company is doing well for they announced a 10% increase in dividend in their share prices. The company has seen a solid increase of 2.4% in net income (St, S. W., 2019). In a statement by Riaz Ahmed CFO at TD Bank, he stated that, TD’s newest investment in the US has shaken up the US Banking market as of late February. TD has become big enough that it doesn’t need to rush to dominate the banking market (Prang, A,. & Monga, V., 2019).

In a similar way, another article by Yahoo Finance states that, TD Bank has become one of the fastest growing corporations. They have shown a growth rate of 12% increase in earnings per share of the past three years. However, sustainability still needs to be taken into consideration to see if they can manage to sustain and even increase their growth rate while balancing expenses and services. Their current revenue and growth trend is displayed in the chart below. This article closes off by stating that current outlooks in TD Bank would be desirable investments and that many are considering purchasing shares (St, S. W., 2019).

As can be seen from the chart below, revenue is increasing at an exponential rate; however, earnings are experiencing a more stable growth. Moreover, TD is retaining their earnings after factoring out payables and expenses. Thus, allowing them to use the surplus of money on investments which they have currently invested towards purchasing other financial service businesses (St, S. W., 2019). Therefore, this would be an example of ethical relativism where in the company can invest their money where they see fit – investing socially, environmentally or corporately.

Planet

Company Opinion:

In TD’s financial statements they include a section for responsible financing and operational footprint. Leaders in the organization believe they are meeting their corporate responsibilities by ensuring they care about the environment. They have set out a set of policies to ensure they are lending to socially and environmentally friendly companies. This is a benefit they believe they provide to all business clients who are environmentally responsible as they are prioritized. 

Third Party Opinions:

As stated on the Mediacorp Canada site “TD’s longstanding TD Friends of the Environment Foundation has provided over $80-million to over 24,000 local environmental projects since 1990 — employees are actively involved in numerous initiatives every year, including TD Tree Days, having planted over 300,000 trees since 2010” (Yerema, Leung, & Mediacorp Canada Inc., 2018).

The numbers that are mentioned in the article above are slightly different from what TD’s website discloses, but nonetheless, the information is in line with the programs and projects that TD invests in order to improve the public’s general living. TD is not only investing in cash profitable investments, but they are also investing money to live up to their commitment of integrating environmental responsibility. In addition to the environmental projects stated in the article, TD also practices carbon-neutrality in order to effectively reduce their environmental impact through reduced energy use, greenhouse gas emissions, paper use, and many more (TD Bank, 2019). All in all, these practices would be an example of the utilitarian ethical theory for the environmental investments and practices that TD implements are all for the greater good of the planet. 

People

Company Opinion:

TD has earned its place as one of Canada’s top 100 employers as of 2019. Leadership includes in their statements the efforts they make to ensuring employee satisfaction as well as business client satisfaction. They highlight their employee incentives such as benefits and pension plans to ensure they retain their talent. For business clients they always ensure to treat them as “VIP” clients. This is done by ensuring the branch is laid out in a productive way to make sure business clients do not waste time in line!

Third Party Opinions:

TD Bank treats their business customers well and makes them feel special. The article by customer guru has enumerated various ways on how TD Bank, over the years, thanked their business customers in unique ways. For instance, TD gave trip to Disneyland Tickets, Blue Jay’s game tickets, and many more (Jaiswal, 2018). 

TD would not be what they are now, if not for their loyal business customers – making them a vital part of the company who deserve to be thanked. In addition to that, TD aims to deliver exceptional business customer service. It is a bank who is willing to cater to the varying needs of its business customers. For instance, TD offers efficient and accessible services for visible minorities, the LGBTA community, people with disabilities and many more (TD Bank, 2019). This is a great example of the Kantian ethical theory as TD delivers excellent business customer service by respecting individuals in the small businesses and treating them equally.

Corporate Responsibility:

As a corporate citizen, TD, as well as other businesses, have a corporate social responsibility. TD has put into place various programs and policies in order to address these responsibilities. For instance, TD practices corporate sponsorship through their TD Forests program where they have “worked with the Nature Conservancy of Canada and The Nature Conservancy in the U.S. over the past five years to protect over 60,000 acres of critical North American forest habitat in 25 properties” (TD Bank, 2019). In addition to that, TD also participates in corporate voluntarism where they have established TDVN or TD Volunteer Network which “is an interactive online database that allows charitable organizations to post their volunteer opportunities to be viewed by more than 85,000 TD employees across North America (TD Bank, 2019). Moreover, employees with over 40 hours of volunteer time is eligible to earn a $500 donation for the charitable organization they choose. In essence, these initiatives that TD puts forth are a great way to encourage not only their employees, but as well as their customers to be aware, get involved, and help make a difference.

Conclusion:

In conclusion, TD does not only focus on increasing their profits, but as a corporate citizen, they are aware of their corporate social responsibilities and are committed in maintaining sustainability by investing socially, as well as, being environmentally responsible. Going back to our main question: Is the report considered ethical and how is it determined? We have concluded that TD’s reporting is considered to be ethical as they consider the triple bottom line; profit, planet, and people.

References:

Bank, T. (2019). Financial Reports. Retrieved from https://www.td.com/investor-relations/ir-homepage/financial-reports/quarterly-results/qr-2019.jsp 

Jaiswal, S. (2018, April 15). AMAZINGLY Shocking Customer Experience Story: TD Bank Thanks its Customers! Retrieved July 26, 2019, from https://www.customerguru.in/amazingly-shocking-customer-experience-story-td-bank-thanks-its-customers/

Prang, A., & Monga, V. (2019, February 29). Toronto-Dominion Bank’s Profit Rises Despite Expense Growth. Retrieved from https://www.google.ca/amp/s/www.wsj.com/amp/articles/toronto-dominion-banks-profit-rises-despite-expense-growth-11551355993 

St, S. W. (2019, July 15). Here’s Why I Think Toronto-Dominion Bank (TSE:TD) Is An Interesting Stock. Retrieved from https://finance.yahoo.com/news/heres-why-think-toronto-dominion-113108759.html 

TD Bank. (2019). Eco-Efficiency. Retrieved July 26, 2019, from https://www.td.com/corporate-responsibility/environment/eco-efficiency.jsp

TD Bank. (2019). Environmental Protection, Awareness & Conservation: TD FEF. Retrieved July 26, 2019, from https://www.td.com/corporate-responsibility/fef.jsp

TD Bank. (2019). Serving Diverse Needs. Retrieved July 26, 2019, from https://www.td.com/corporate-responsibility/diversity/serving-diverse-needs/index.jsp

Yerema, R., Leung, K., & Mediacorp Canada Inc. (2018, November 08). Canada’s Top 100 Employers. Retrieved July 26, 2019, from https://content.eluta.ca/top-employer-td-bank 
TD, B. (2019). [online] Td.com. Available at: https://www.td.com/document/PDF/ar2018/ar2018-Complete-Report.pdf [Accessed 27 Jul. 2019].

Unpredictable interest rates, rising cost of technology!! What will this mean for the business to business financial services sector and its small business clients? More importantly what will this mean for the current and future global economy? 

But before that, let’s take a look at sustainability in a business context. Well, according to the Brundtland Report, “Sustainable development is a development that meets the needs of the present generation without compromising the ability of future generations to meet their own needs” (Brundtland Report, 1987). So, going back to the main point of this blog, is the fluctuation of interest rates and the cost of technology sustainable into the future?

Interest rate fluctuation, “is a significant risk that can arise from banking activities. When interest rates change, the present value and timing of future cash flows change. These changes can affect the underlying value of an institution’s assets, liabilities and off-balance sheet items” (Office of the Superintendent of Financial Institutions, 2019). In other words, banks play a crucial role in the fluctuation of interest rates in the economy as a whole. The way they carry out their key production processes determines whether their business model will be sustainable in the future or not.

It is known that interest rates are easily affected by various economic activities and their trends are difficult to predict. Fluctuations become prevalent as more and more business clients take on loans from banking institutions, the demand for money supply increases thus increasing the interest rates. However, banks have a method to assist small businesses when interest rates increase and this is done by allowing them to sign on to a fixed interest rate contract. This assists those businesses to not get burdened with unpredictable costs and allows them to continue doing business with those banks. One particular example is when “ Bank of Canada holds interest rate steady at 1.75%, citing trade tensions” (The Canadian Press, 2019) This shows how the bank is attempting to stabilize the interest rate to slow the rapid increase that has been in progress. Moreover, this example explains how an unforeseen increase in interest rates can affect the cash flow of business clients making it difficult for them to repay the loan. “Outlook clouded by trade, central bank says, lowering global growth forecast” (The Canadian Press, 2019) This will help other countries and big businesses but not small business. If in the future this trend of increasing interest rates continues, not only will the banks and business clients suffer, but it will also affect the entire global economy. 

Technology also plays a key role in the sustainability of the business model of the financial services sector 

Technology is ever-changing at a fast pace. In order to keep up with this pace, the financial services industry is pursuing advancements in technology and adopting digital platforms to enhance the services provided to their business clients. Technology has changed the way businesses bank; for example, banks have relocated many of their services on to an online platform to enable business clients to have more conveniences. This allows small business owners to save their most valuable asset, their time. Efficient operating system also benefit small business clients as it can help organize spending and identify gaps in their financing. However, considering the environment and its negative implications to the future generation the usage of computers in financial services are overall damaging. Computers are widely used in order to manage databases, keep track of all sorts of transactions, expenditures, as well as, to maintain accuracy. Despite these benefits, one large drawback of this is the fact that it requires updates and replacements in order to keep its capability at its best status. This is due to the planned obsolescence of software which is always being updated and therefore requires new equipment periodically to keep up creating pollution through manufacturing. Furthermore, when in use computers also generate a huge amount of energy waste which is turned into excessive greenhouse gases resulting in global warming and climate change. Therefore, when considering the environment we will be passing down to our future generation and the consequences they will have to burden, increasing the usage of technology, especially computer, is not a sustainable strategy. 

In the end we think that the fluctuation of interest rates and the cost of technology is not sustainable into the future. Having known the unpredictability of interest rates, business clients need to be smart when it comes to borrowing and lending money. This is a crucial determinant to the economy, financial situation, and purchasing power that is passed down to our future generations.  

Here is another interesting article on how to protect small businesses when interest rates rises: https://www.canada.ca/en/financial-consumer-agency/services/interest-rates-rise.html

References:

Blackwell, R. (2017). Remember When: What Have We Learned from the 1980s and That 21% Interest Rate? Retrieved from http://www.theglobeandmail.com/real-estate/the-market/remember-when-what-have-we-learned-from-80s-interest-rates/article24398735/.

Office of the Superintendent of Financial Institutions. (2019). OSFI Guidance Addresses Interest Rate Risks at Deposit-Taking Institutions. Retrieved from www.osfi-bsif.gc.ca/eng/osfi-bsif/med/Pages/b12-nr.aspx.

Brundtland Report, Our Common Future, 1987 World Commission on Environment and Development

The Canadian Press (2019) Bank of Canada holds interest rate steady at 1.75%, citing trade tensions | CBC News. Retrieved from https://www.cbc.ca/news/business/bank-of-canada-economy-interest-rates-1.5206389

Attention to potential harm is a utilitarian characteristic (Tittle, 2017). In other words, this characteristic occurs when the interests of others are placed in first position. There are two ways to look at rights-based analysis: Buyers rights and sellers rights (Tittle, 2017). Buyers rights include ensuring all buyers (Customers) have adequate information to make an educated decision on what benefits them the most. Sellers (Service Providers) rights answer questions, such as what services to provide and what financial products meet their goals. Some businesses run on “Caveat emptor (buyer beware)” (Tittle, 2017), but is that ethical or fair? Below are two examples, one of a positive externality and one a negative externality.

Throughout this blog we will find out if this is a fair statement: “if you want the sale, you should have to tell – tell me what I need to know. Well, but if I want the product, I should have to find out!” (Tittle, 2017).

A positive externality is an effect or benefit that is realized by a third party who does not have anything to do with the initial transaction (Dictionary, 2019). Many financial institutions have taken environmental steps. RBC has published a blueprint and has stated that “As a large financial services institution, RBC uses a great deal of paper, both internally and in client materials. Well managed forests are a renewable resource, and we will do our part to conserve forest resources and support sustainable forest management” (Footprint, 2014). The positive externality from this is the environmental impact. Companies such as RBC use less paper to help reduce the amount of forests that need to be cut down. This, then, benefits all of the animals living in the forest and the air quality, as trees help clean our air. The clean air and animal protection are third-party to the reduced paper transaction, but they reap the benefits. In this case, we can say that a utilitarian approach was taken when preparing this environmental analysis. Also, in this case, RBC is conducting a cost-effective approach by reducing the paper usage, while making a positive impact to the environment at the same time.

A negative externality is the exact opposite, causing detrimental byproduct to a third party who does not have anything to do with the initial transaction. With financial institutions becoming more digitalized, there are many examples that indicate negative consequences, such as when a fraudster takes hold of the clients online banking information and steals money. In this case, the police would have to get involved, and the society as a whole suffers from this use of police resources. The police resources could have to be utilized for more meaningful cases.  Therefore, the bank’s action of taking services to digital platforms is derived from a good will and the desire to achieve more convenient customer service.  However, the end result leads to unforeseen and negative consequences of potential scams. On the other hand, the buyers’ rights in this case would be the ability to get their money back based on the bank’s policy. For example, the CIBC website states that “if you’ve been a victim of fraud, and you’ve met all of your responsibilities, we promise to return 100% of the money you’ve lost from your CIBC accounts” (CIBC, 2019). In this case, the utilitarian approach is used as CIBC is not the victim, but they are willing to protect their clients and put their interests ahead of the business. 

To answer if the statement: “if you want the sale, you should have to tell – tell me what I need to know. Well, but if I want the product, I should have to find out!” (Tittle, 2017) is a fair statement, we have determined that this is not a fair statement according to buyer rights. Buyers (Customers) have the right to know all the details about the product they are using or thinking of using. It is the responsibility of the financial institutions to educate clients, as they are in a position of trust.

References

CIBC. (2019). Fraud Protection Guarantee. Retrieved from if you’ve been a victim of fraud, and you’ve met all of your responsibilities, we promise to return 100% of the money you’ve lost from your CIBC accounts.

Dictionary, B. (2019). Positive Externalities. Retrieved from WebFinance.

Footprint, R. E. (2014). Retrieved from http://www.rbc.com/community-sustainability/_assets-custom/pdf/RBC-Environmental-Blueprint.pdf

Tittle, P. (2017). Ethical Issues In Business. Broadview Press.

The financial services industry is one that can have many different focuses. How financial services firms market, compete, and work together will be the focus of the blog. In the business to business line of financial services, we will discover the ethical implications when conducting business, as well as, its impact to all those involved. Furthermore, as we move forward, we will consider various ethical theories we learned from the class, and apply them to the real-life examples that are discovered in the financial services industry, when applicable.

Within this industry there are, banks, credit unions, payday loan companies, insurance and many individual investment firms

Stakeholders in the industry include but are not limited to:

Type 1: Those involved directly: Owners, directors, managers, and employees

Type 2: Those who monitor the business: Shareholders, customers, competitors, and society at large.

Type 3: Those who do not support the business and who we have to defend our ideas to: Government and Media 

Type 4: Those who we can collaborate with: Lenders and creditors, suppliers, and insurance companies.