Innovators - Rogues - and Strategists Rebooting Banking

Question: Discuss about the Innovators, Rogues, and Strategists Rebooting Banking. Answer: Introduction: This category of banking is also known as consumer banking. Retail banks provide financial services to individual persons only with companies, corporations and other organizations not being part of their clients. Some of the services offered by retail banks include; issuance of personal loans, issuing debit and credit cards, taking customers money as savings, and offering mortgages to its clients( Berger, 2014). There are also three sub-categories of retail banks; Private Banks-these are types of banks that offer financial services to specific customers. These specific customers are mostly the wealthy individuals in the society who decide to come together and form a bank. Not every person can be allowed to bank in these types of banks. Offshore banks-these banks are located outside the country which its customers are citizens. These banks are mostly opened in countries or areas where the tax system is favorable or where there are tax havens. The advantages of these types of banking to customers are that there is a lot of privacy, little regulations as well as low taxes. Postal banks- this banks are usually formed by postal corporation of a particular country in order to back up its postal business. It offers customers who use postal services convenience since they can access financial services at the same place. The size of retail banks ranges from banks to banks. The table below shows the list of top four retail banks in US in terms of assets. Table 1.2: table showing the largest retail banks in US depending on value of assets(June 2015) (JD power retail banking study, 2015) Bank name Assets ($billions) JPMORGAN CHASE 2,577 Bank Of America 2,144 Citigroup inc 1,832 Wells Fargo co 1,738 The common emerging trend in retail banking is the increased use of internet banking and tailor made products aimed at achieving customer satisfaction. There is also increased use of technology in retail banking. Central banking This is the type of bank charged with the responsibility of putting regulations in the financial services industry. Central banks are also expected to oversees and supervise the activities of other banks. Central banks of different countries have different mandates depending on the legislation of that particular country (Cull, Kunt, Morduch, 2013). The following are some of the basic roles of any central bank; Regulation of countries` interest rates by controlling the amount of money in the economy. This is done through implementation of monetary or fiscal policies. It acts as a lender of last resort for commercial banks Central banks act as the governments` banks. This means that money collected by the government from its citizens and other sources are deposited in the central bank. Some examples of companies participating in central banking include: Bank of England, the US Federal Reserve Bank, Bank of Japan, European Central Bank, Bank of Canada and the Reserve Bank of Australia. The size of central banks of various countries in US$ varies from country to country. The size will depend on the size of the economy of that country e.g. the balance sheet balance was 4473860USD million as at February 2015. An increased reserve requirement by central bank is a trend seen in central banks all over the world. Commercial banks Commercial banking is also referred to as wholesale banking. Commercial banks are a type of banks that provide banking services to businesses ranging from small to medium businesses. Commercial banks also include corporate banking which offers banking services to large business corporations. The major function of commercial banks is provision of loans to businesses and companies which helps the in expanding in order to increase profitability (Bessis, 2014). Other functions of commercial banks are: They accept money deposits from customers Offering financial advice to clients They help in making payment transactions between companies as well as offering internet banking services which helps clients to access their account information. Commercial banks also offer some retail banking services The commercial banks exist to help businesses in expansion through providing them with small, medium and large amounts of loans and other credit facilities. Although commercial banks provide retail banking services, their major focus is on business organizations. The emerging trend in commercial banking is the provision of credit facilities through the mobile phone as well as internet banking. Examples of companies participating in commercial banking are; bank of Montreal, B2B bank, JPMorgan Chase bank, Wells Fargo Bank and Citibank Table 1.1: The four largest commercial banks in U.S ranked by consolidated assets (as at 30th June 2016) (Federal reserve statistics, 2016) Bank name Bank id Consolidated assets(millions $) Domestic assets(millions $) JP MORGAN CHASE 852218 2,051,004 1,542,630 WELLS FARGO BANK 451965 1,699,435 1,645,291 BANK OF AMER NA 480228 1,657,878 1,551,334 CITIBANK NA 476810 1,365,660 824,668 Investment banking These are banks that are involved in the share trading business. Investment banks are usually private companies which are involved in trading securities in financial markets. They act on behalf of clients in the issuance of shares. Investment banks do not take deposits or give out loans like other banks do (King, 2014). The following are the roles played by investment banks: trading of shares on behalf of a client, they participate in initial public offer of companies by offering underwriting services, they offer advice to investors on best investment opportunities, and they manage assets on behalf of a client and facilitating mergers and acquisitions. Examples of investment banks are; Miller Buckfire co, Morgan Keegan Co and WR Hambrecht Co. Trends in investment banking include changes in risk processes which call for the banks to adopt strategies that will adapt to the regulations. There is also increased demand for investment banks customer focused which have products tailor made for specific customers. The size of investment banks is not as large compared to other banks. References Cull, R. J., Demirgu?c?-Kunt, A., Morduch, J. (2013). Banking the world: Empirical foundations of financial inclusion. Cambridge, Mass: MIT Press. Bessis, J. (2014). Risk management in banking. Hoboken, N.J: Wiley. King, B. (2014). Breaking Banks: The Innovators, Rogues, and Strategists Rebooting Banking. Hoboken: Wiley. Berger, A. N. (2014). The Oxford handbook of banking. Oxford [u.a.: Oxford Univ. Press. Somashekar, N. T. (2009). Banking. New Delhi: New Age International (P) Ltd. McMillan, J. (2015). End of Banking: Money, Credit, And the Digital Revolution. BookBaby.