LITERATURE REVIEW: BUSINESS CULTURE IN BANKING INDUSTRY

A business culture, in layman’s terminology, refers to a set of unspoken beliefs and

practices that determine the way that an organization interacts with others and behaves towards
its employees, customers, and suppliers. A business culture is also defined as a set of cultural
beliefs and organizational practices or the nature, extent, and/or content of a given business
entity’s internal culture, as revealed through the language, goals, beliefs, and ethos that people in
that entity use internally (Amofa & Ansah, 2017). Business culture is a pervasive form of
cultural construction which has clear impact on different facets of an organization, including
strategic positioning, employee engagement, customer relations, etc. It affects an organization in
three main ways: how it functions, how it markets, and how it communicates. According to
Amah and Nwuche (2013), business culture is defined as an organizational identity and
custodianship of values, attitudes, and practices that lie at the core of the way an organization
operates. Business culture is the kind of structure that makes organizations. The business culture
in banking industry has been numerously studied in previous research with the main themes
surrounding "‘erosion of trust’ and ‘institutionalized dishonesty’", but as the impact of the new
business environment is increasingly becoming evident, it would be prudent to take a more
comprehensive view on the business culture. In this paper, this paper has attempted to break to
review the business culture down into main dimensions as discussed in the next sections.

Individualism business culture dimension stresses the importance of individual rights,

while questioning the compliance to protect the rights of customers. Researchers sugget that it is
okay to do wrong things to people and institutions in private life, because we cannot violate the
individual's right to be treated with dignity and be treated fairly. Previous studies highlight some
of the key findings for individualism and emphasizes that "individualism will make an
organization's culture vulnerable to the risk of failure if managers and workers believe that only
their interests matter and that they can make good decisions without considering the interests of
the broader organization or even society (Taylor & Wilson, 2012).

Behavioral self-interest business culture dimension stresses on the good corporate image
of the organization, and hence stressing the importance of responding to customer's demands.
The author emphasizes that the Company's "status symbol" lies in the way it protects and assists
its customers (Johnsen et al., 2018). This dimension emphasizes on rational decisions to
maximize return on investment. As for behavioral self-interest, it is interesting to note that
"conflict is inevitable between individualism and collectivism." This is because many managers
have a strong desire to bring about improvement, as well as full involvement and understanding.
The author also comments that managing a customer becomes more difficult, as there is a
pressure to keep customers satisfied. This is also the reason why many financial institutions
provide for concierge services.

Resource orientation culture dimension stresses the role of the customer in decision-
making process (Chmielewski & Paladino, 2007). Chmielewski and Paladino (2007) point out
that a customer service organization is more likely to be successful if the customers have a strong
and satisfied relationship with the company. Resource orientation refers to the competitive nature
of financial institutions. While this in itself has been a point of pride, the author suggests that this
aggression leads to resources being consumed rather than being used in the best interest of
customers.

Operational focus business culture dimension emphasizes on the importance of self-

interest but not losing sight of the overall customer's interest (Randheer, 2015). The author states
that most financial institutions have taken several risks in doing business. It also is important to
ensure that the risk takers are rewarded for their hard work. Operational focus stresses on the role
of the customer and his expectations. While many financial institutions have emphasized the
importance of this dimension, there still exist businesses that have reduced customer experience
in favor of providing cheaper products or services.

Business responsiveness culture highlights that failure to respond to customers is a clear

indicator of organizational insensitivity to customer needs. It also stresses on the importance of
remaining responsive to the changing customer needs. While the author notes that both
management and workers have a major role in the success of a company, the author stresses that
managers will have more control over the success of a business if he or she focuses on those two
dimensions: the alignment of management and employees and the development of employees.
According to the author, the employees play a crucial role in the success of a company; a non-
responsive employee is likely to harm a company's image (McElroy, 2000). Other topics of
discussion about business culture in banking include:

In his 1996 book, Victor Lessig listed seven business cultures in banking and offered a
comprehensive analysis of how and why banking industry operates in what he called as "cross-
cultural environment" that incorporates the value systems that, for example, govern values of
honesty, integrity, and fairness. Besides focusing on the problem of lacking standards that govern
banking, Lessig wrote extensively about how business culture can create both opportunities and
challenges for banks in the changing environment.

In a study published in 2008, Barton N. Miller showed that culture in banking influences
behaviour of employees and thus drives the organisation. Following the structural separation of
banking from other sectors in the financial services, cultural issues are the key barriers to
banking industry performance, as illustrated by the literature on banking culture. With the
increase of globalization and internationalisation in the banking industry, there has been an
intense need for business culture practices and strategies in international banking to be
effectively implemented. By building capacity and knowledge on international management,
banking can increase their capability to compete on a global stage.

In a quantitative study, Martino et al. (2017) examined how customer-oriented culture

relates to business outcomes by comparing the financial performance of a bank with that of
several competitive businesses. The study found that customer-oriented businesses exhibited
superior performance. Jäncke and Sink (2012) reported that the impact of culture on the quality
and profitability of a bank is distinct from that of the quality of banking products. Customer-
oriented businesses were those whose employees are highly engaged and actively use the
customer-centered work environment, while non-customer-oriented banks exhibited worse
results on customer-focused measures.

Recent discussions on the impact of the new banking culture shed light on the thought-
provoking points illuminating the mindset of business leaders toward ethics, trust and integrity as
it pertains to both individuals and organizations. With new challenges that arise in a business
world, including regulations, demands from customers and their propensity to ‘buy local’, there
is an increased need for leaders to foster a business culture that maximizes creativity, innovation
and a customer focus while minimizing risk, delays and is financially responsible. The business
culture in banking industry has been numerously studied in previous research and there are
different recommendations for creating favorable environment in bank for improving bankers'
moral and professional perceptions towards themselves (Venegas, 2019). This is very important
in maintaining integrity, as integrity is not only a vital part of the corporate culture of banking
industry but also of the industry's image as a whole. Professional conduct may be at its highest
when the professional interactions are positive and professional behavior of bank employees is
high. Bankers’ perception of each other affects professionalism, and it is the desire of bankers to
attain high professional standards that influences level of moral standards. Agencies responsible
for bank's interaction with customers in customer satisfaction have been established by
regulatory authorities.

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