| Global banking involves similar operations as | | | | requirements. The restrictions on |
| local banks do. However, global banking | | | | |
| usually deals with money and foreign | | | | interests can be leapfrogged in the same |
| exchange; whereas local banks concentrate on | | | | way.With innovation the arrival of new |
| lending, asset management and consulting | | | | products is inevitable. Banks are |
| services.There are numerous ways in which you | | | | |
| could segment the banking | | | | engaging heavily to attract customers with |
| | | | their new products and |
| industry. One of the ways could be the | | | | |
| sector in which the bank | | | | opportunities. Retail and clients' services |
| | | | are listed right at the |
| operates. For example, you could have | | | | |
| agricultural banks (Credit | | | | top of a modern banks priority. As said |
| | | | before clients are becoming |
| Agricole) or employees bank (any credit | | | | |
| union). You could also do the | | | | more and more demanding and force the banks |
| | | | into finding new ways of |
| segmentation by fields of activities. Such | | | | |
| as commercial banks | | | | satisfying them. What is new today is |
| | | | standard tomorrow. Such new |
| (Citibank) or investment banks (Goldman | | | | |
| Sachs). Commercial banking | | | | products include the arriving of ATM |
| | | | machines and their evolution from |
| covers services such as cash management | | | | |
| (money transfers, payroll | | | | cash-dispensing machines into financial |
| | | | service depots, and telephone |
| services), credit services, deposit services | | | | |
| and foreign exchange. | | | | baking, which allows customers to arrange |
| | | | from their phone for account |
| Whereas, investment banking is in charge of | | | | |
| services like asset | | | | balance statements, transfers,, time deposit |
| | | | transactions and |
| securitization, coverage of mergers and | | | | |
| acquisitions, securities | | | | application for a variety of banking |
| | | | transactions. Some banks have |
| underwriting, etc. However, because of the | | | | |
| deregulation of the | | | | even cut the time for loan approval. The |
| | | | Bank of Ryukyus, Japan |
| financial sector, some of the commercial and | | | | |
| investment banking | | | | approves a loan in 15 minutes. Banks are |
| | | | also keeping a look out on |
| institutions are competing directly in money | | | | |
| market operations, | | | | asset management since this is proving to be |
| | | | a rather prosperous |
| private placements, bonds underwriting, etc. | | | | |
| It is, however, believed | | | | market. People of today are much more aware |
| | | | of how they can use their |
| that all these segments are secondary to the | | | | |
| geographical segmentation | | | | assets to create a greater wealth; hence |
| | | | banks need to readjust their |
| of the global banking industry.When defining | | | | |
| the geographical segmentation it is probably | | | | product line. However, there are numerous |
| best to | | | | other products that banks |
| | | | |
| start with the main financial markets on the | | | | are starting to integrate into the markets |
| globe and its | | | | now. Such as trading and |
| | | | |
| corresponding financial institutions. In | | | | positioning (e.g. Commercial Bank), risk |
| Europe, for example, we have | | | | management products or |
| | | | |
| the ECB which is in charge of monitoring the | | | | financial engineering and structured finance |
| monetary policies for the | | | | (hedge funding).Challenges:As clients are |
| | | | becoming more and more demanding, the banks |
| Euro zone. Thus, the initial function of the | | | | need to |
| 12 national banks, that | | | | |
| | | | think today of the challenges of tomorrow. |
| are members of the Euro Zone, is put in | | | | With respect to |
| question. So, it is simply a | | | | |
| | | | centralizing financial institutions, a |
| matter of time until there are some few but | | | | commonly accepted approach |
| powerful financial | | | | |
| | | | needs to be found, because the issue of |
| institutions that are going to monitor huge | | | | giving up sovereignty is |
| blocks of our financial | | | | |
| | | | definitely the issue. On a more micro |
| globe. Even in the USA, where there is no | | | | perspective banks will surely |
| national bank, there | | | | |
| | | | need to start developing their services to a |
| nonetheless is a strong will to centralize | | | | higher level. This could |
| the various commercial | | | | |
| | | | vary from a 24 hour service, more ATM |
| banks, which at the moment are estimated to | | | | machines, international |
| be around 8000. During the | | | | |
| | | | acceptance of credit cards to lessen |
| period 1984-1994, the number of US banks | | | | transaction cost, etc...Furthermore, will |
| decreased by 30% due to | | | | banks need to product profitability in one |
| | | | form or |
| successful mergers and | | | | |
| acquisitions.Moreover, a big change in the | | | | another? A lot of banks are already looking |
| structure of the global banking industry | | | | closely into their hit |
| | | | |
| is the development of world Islamic banking. | | | | ratios while considering the customer |
| 10 years ago Islamic | | | | environment and pensions. With |
| | | | |
| banks accounted for only US $50million, now | | | | the help of this research banks can use the |
| they are spread in 75 | | | | automation to develop new |
| | | | |
| countries and account for US $250million, | | | | products tailored to specific customers.On |
| which represents 15% of the | | | | the marketing side banks have started to |
| | | | really hit it off in the |
| global banking industry.Another trend in the | | | | |
| structure evolution, which is worth | | | | late 90s. The fact that banks are now |
| mentioning, | | | | developing customer Information |
| | | | |
| is the retailers and automobile -makers like | | | | Systems enables them to create specific |
| Mitsubishi that become | | | | advertisement campaigns for |
| | | | |
| banks.Innovation and product | | | | specific clients. This is especially |
| development:Naturally, any change in the | | | | important for smaller banks since |
| financial environment stimulates new | | | | |
| | | | they often don't have the luxury of a large |
| innovations. One of these innovations is | | | | promotional budget. On a |
| increasing liquidity. When a | | | | |
| | | | similar token banks are also forced to use |
| bank decides to go global, it is naturally | | | | customer databases to |
| catering to needs and | | | | |
| | | | minimize their loan risk. Especially in |
| demands of more customers. This induces a | | | | times of economical hardship |
| greater demand for | | | | |
| | | | banks need to be extremely careful to avoid |
| liquidity. Yet, another change is the | | | | bad debt. Hence the |
| reduction of agency and | | | | |
| | | | Customer Information Systems will need to be |
| transaction costs. As market size increases, | | | | integrated into the banks |
| the cost of transactions | | | | |
| | | | loan system.Furthermore, banking should be |
| increases as well. Thus, minimizing costs | | | | following the pace of globalization of |
| will be a major issue for | | | | |
| | | | the world. Banks are expanding |
| banks. One of the ways in which this might | | | | internationally by creating branches in |
| be achieved is by economies | | | | |
| | | | host countries. However, there should be a |
| of scale. This means bundling together basic | | | | better coordination between |
| instruments such as funds | | | | |
| | | | home and host country branches to make |
| of investors (creating mutual funds). | | | | financial processes more |
| Another way is to computerize | | | | |
| | | | effective and efficient. With the increase |
| majority of the systems. This falls under | | | | of international trade, the |
| the Business Process | | | | |
| | | | banks, as an intermediary, should develop |
| Re-engineering. Virtual banking is also a | | | | instruments to better serve |
| big part of the cost cutting | | | | |
| | | | exporters, importers and shipping |
| innovations.Another innovation that banks | | | | companies.Although, some of these points seem |
| need to use is circumventing regulations | | | | pretty obvious, they are none the |
| | | | |
| and internal constraints. One way to bypass | | | | less points that need to be thought about, |
| the reserve requirement | | | | especially when penetrating |
| | | | |
| constraint was to establish money market | | | | new marketsThe article was produced by the |
| mutual funds. These are not | | | | member of |
| | | | |
| considered as deposits and thus require no | | | | Sharon White is a senior writer and writers |
| interest payments. Hence, | | | | consultant at term papers. Get some useful |
| | | | tips for thesis and term paper writing . |
| they are not subject to reserve | | | | |