One of the oldest and a bit boring industries in the world is banking. However, with the current boom of technology, the banking industry has been adopting new technologies and employing them for their existing services. Banks have also ventured into other avenues where financial support or consultation is needed.
Bank stocks are among the things in the industry that are hard to analyze. A lot of banks possess billions of dollars in assets and own shares in different businesses. It implies ownership in a corporation’s earnings and assets. It also has separate subsidiaries in a wide variety of companies which makes it the most transferable form of personal property.
The monetary system is created to cater to the creation of the public’s monetary supply. It is intended primarily by private financial institutions to establish elasticity to financial ventures. Hence, bank deposits are a way to gain money, and market exchanges are the process through banking. That’s why public money plays a facilitating role in the cycle of the financial industry. Any money rules the day to day functioning of the modernized fiat monetary systems.
The Different Types Of Bank
One of the most complicated features of any financial industry is the commercial bank. It is a type of bank that offers services such as trade finance, corporate credit, and project financing. It also deals with deposits and loans and does it for small to medium enterprises and corporations. Private Banks on the other hand exclusively serves high-net-worth personalities and requires a minimum amount of assets under management. Not everyone can sign up with this type of bank. Some of the features of the private bank are investment portfolios and financial planning services. A retail Bank, also known as the friendly neighborhood bank, is the most common type. It deals with simple deposits and loans and most standard products and services. Investment Bank is one of the most secure forms of banks. It deals with asset classes like bonds, equities, derivatives, funds and more. Investment banks are considered as the manufacturers of investment products and tend to sell them to other financial institutions that have access to a broad network and customers.
Parts Of A Bank
A bank typically consists of three parts; front, middle and back offices. The front office is where the customer is entertained. This section offers services to the customers in real time and can answer questions regarding the clients’ accounts. The middle office handles the check and balance process. Every time a customer wants to open a private bank account or open a credit line, the middle office handles this kind of transactions along with the validation of the orders of the customers. The engine room or HQ of the bank is called the back office. Clients’ statements, IT systems, interest accrual and another day to day operations are processed in this office as well as trade settlements, accounting, and reconciliation procedures.
Types Of Clients
Every bank handles different kinds of clients. These clients are grouped into categories such as corporate clients, private clients and affluent mass clients. The average man on the street is referred to as an affluent client. Mass affluent clients have a more disposable income, and banks tend to offer priority banking services to them with better credit terms and vouchers. Corporate and private clients, on the other hand, are considered big-ticket customers. Banks tend to give them more attention than those with affluent status. They are deemed high-value customers, and banks give them one or two relation managers to process their transactions.
These essential topics should be included in the study to understand banking. The factors such as opening an account, lending services benefits, the trade lifecycle, customer relationship management, services and products offered by the bank must be considered as well.