What does the term “conflict of interest” refer to in banking?

The term “conflict of interest” in banking refers to a situation where an individual's personal interests may improperly influence their professional responsibilities and decision-making. This could occur when an employee has a financial stake, personal relationships, or other commitments that might compromise their objectivity and performance in their official capacity.

In banking, maintaining integrity and trust is paramount, and conflicts of interest can undermine these values by leading to decisions that favor personal gain over the best interests of clients or the organization. Recognizing situations that might create a conflict of interest is essential for upholding ethical standards, ensuring transparency, and maintaining customer confidence in financial institutions.

Understanding this concept is crucial for banking professionals as it guides them to navigate scenarios that may otherwise erode trust and compliance with regulatory frameworks.