Lucky Clover is on a mission to change the traditional way of banking. Lucky Clover Corp. was established in the 1980s, expanded into retail banking in early 2000s to reduce its dependency on credit cards from approximately 90% to 50%. Lucky Clover Bank is a medium to large sized US bank with its total assets of close to $350B, company has corporate offices in US, Canada, and United Kingdom. The Bank’s stock has been steadily on the rise for past few years and Lucky Clover’s stock price is higher than most of its direct competitors. Because, the value of its share is high, Lucky Clover is experiencing is in strong position to experiment in different ways to improve. The employees were contented and new recruits were eager to get a job at Lucky Clover Bank. However, this did not last for long. Lucky Clover’s primary concern is customer service; upper management are very keen on providing customers with exceptional service. The employees are rewarded based on their CEMP survey scores.
Lucky Clover decided to transition into opening up cafés (branches that are part cafés part retail bank) The goal of the transition is to do away with conventional tellers and bankers, and transform the roles into Lucky Clover Bank’s “Ambassadors” where each employee will be able to complete any transaction from a regular deposit to opening a business account/wire transfers. The cross-trained employees at the “café” will reduce the average time spent by customer waiting in the line and better able to assist customers to better understand online banking. With the new changes, Lucky Clover bank transformed its retail organizational structure by laying off more experienced employees, in all levels off the company and hiring new people. Some of the new employees are given opportunity to make decisions that could directly affect the organization. The reward system within the company is also changing, when the customer opens up an account whether it will be in person with an employee or via online, it will be recognized as a collective effort of Lucky Clover rather than an individual effort.
Division of Workers and Manager: The Culture at Lucky Clover Bank
The main issues at the branch stems from the manager and trickles down to rest of the employees. As new hires settle in the branch they want to be accepted by their peers. Group acceptance is perhaps one of the reasons why people acquire habits that are acceptable by their peers. Thus, ethical norms at the branch are absorbed by the new employees and are conducting their daily operations with what is “acceptable”. An ethical manager is compelled to set the expectation that any ethically wrong practices are not acceptable. In essence, anybody that either conducts or detects similar action has a responsibility to outline and address through the appropriate procedures.
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Since the top performers at the bank were given recognition for their achievements, the new hires tried hard to perform well and made many mistakes on their way. This is produced individualism and perfectionism at Lucky Clover Bank. This culture led to socialization being rare and mentoring being nonexistent. There was unethical corner-cutting, no teamwork, and there was too much competition. In one of the branches the manager was not reliable when it came to overriding transactions that exceeded the teller limits, which is $1,500 for the beginner tellers, or enforcing the corporate governance regulation or code of ethics. Over time this caused the tellers to cut corners when it came to large deposits or withdrawals. This was done by splitting one large transaction into multiple transactions so the system wouldn’t ask for an override. furthermore, when a large cash transactions are split and each transaction becomes less than $3,000, system doesn’t require to fill out CIW form, a compliance form that protects the bank from money laundering, falsified transactions in customer’s accounts and other fraudulent activity, which automatically pops up before ending the session to fill out the information of the person who is conducting the transaction.
When customers are opening accounts at the branch, the banker is mandated to let the customer sign a signature card, a form that finalizes the opening of an account. Later that day the form is faxed to the back office, in order the customer information to be uploaded into the transcend system. Furthermore, signature card helps the employees at the branch to identify the customer information and check for the customer’s signature for withdrawals or large cash transactions. On several occasions the bankers forgot to let the customer sign the form. Subsequently, instead of calling the customer to come back and sign the papers, some bankers forged customers’ signatures, in order for them not to get in trouble by sending the form without a customer’s signature. The bankers would then set appointments with those same customers for them to sign a new form, and then the customers real signature would be updated in the system.
In a work environment where there is no leadership, collaboration or trust, it is bound to fail. There were many instances when customers accounts were exposed to fraud, due to lack of oversight and neglect. Mr. E’s checking account was used for fraudulent withdrawals and transactions that lasted for over several months before it came to light, amounting to total loss of little over $20,000 to the branch. The manager at the branch did instruct the bankers or the teller on what steps to take to prevent this type of fraud in the future or even to escalate the situation to her so she could take proper precautions. It was to try and prevent a recurrence of this situation that Mr. E and his wife asked for the savings account to be set up so that both of them had to sign for all withdrawals.
Unfortunately, the banker ignored these instructions when setting up joint savings account for Mr. E and his wife. Mr. E and his wife were each able to withdraw money from the account using just their own signature. And in few months, Mr. E’s account was hacked again. This had only been possible due to, lack of leadership at Lucky Clover’s branch and inability to follow the regulatory procedures. The branch became an easy target for people to cash fake checks or conduct other fraudulent activities. The branch manager did not set an example or gave the tellers or bankers proper guidance, and isolated her self from every one and did not contribute to any of the bank’s daily operations. Thus, the new tellers and bankers became easy targets for fraud. In time, these mistakes accumulated and caused the branch tens of thousands of dollars.
With internal fraud, the actions taken may not be so clear-cut. Many employees will hesitate to accuse others of illegal or unethical behavior. It is manager’s duty to build an environment of trust by establishing a confidential way for employees to share their concerns. Confidentiality protects the informer and the suspected wrongdoer; if the allegations are baseless, there is no need for any one to know that there were ever suspicions to begin with.
Opportunities
Lucky Clover Bank’s organizational structure was different and it based its ideas on success and constructivism. The new hires do not have any real knowledge of the company’s culture and are given a great deal of control before they can develop the core company values and norms. Additionally, the employees are not given sound training and education on ethics and regulations, this leads the employees to make numerous unethical decisions that cost the Lucky Clover’s branches thousands of dollars.
Lucky Clover is relatively a young bank, successfully overcoming all hindrances in the market. It is notable among other public banks and although competition is tough in this field, it has an edge on their competitors in many key aspects. In particular, Lucky Clover relies on constant innovation and offers greater reliability than its competitors. As Lucky Clover’s employees are transitioning into their new roles, every associate at the branch will get cross training in order to successfully complete both teller’s and banker’s work. Waiting time for customer will be substantially reduced and improve overall customer service. The employees will feel more fulfilled at their jobs as they acquire and implement their new skills.
The focus of training employees to identify external sources of fraud, including identity theft, not only is doing so a good practice to help protect your business and your customers, but creating procedures to stop identity theft is the law. Training helps employees to prevent setting up accounts based on stolen identity or personal information, identity theft, credit card fraud, check fraud, and phishing a fraudulent attempt to get personal or company information that can be used to perpetrate identity theft. Developing these skills will better facilitate the employees to prevent any future fraudulent transactions.
Business ethics incorporates the core elements of ethical philosophy into business activities and organizations. Institutions place a considerable amount of trust in their management. From the CEO on down, managers are accountable in ensuring that both they and their subordinates work ethically. It is essential for managers to understand Codes of Conduct, Codes of Ethics, or any other official set of rules and keep records of related documentation laying out the expectations and guidelines for ethical behavior. Managers also have a responsibility to ensure that those who report to them understand these rules. Effective approaches to instilling ethics and integrity, and using codes of conduct, are key elements of ensuring sound corporate governance and management control.
Setting the tone at the top. The managers at the bank must demonstrate through their directives, actions and behavior the importance of integrity and ethical values to support the functioning of the system of internal control. The branch managers should measure associates’ knowledge of ethical and regulatory standards and determine whether the employees follow the protocol. When the manager ascertains any deviation from code of conduct or from other regulatory rules, he/she should address and resolve in a timely manner before it escalates and becomes a systemic issue at the branch.
