Bank Counseling – Understanding Banking

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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

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.

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Monetary System

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.

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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.

 

 

The Relevance Of Trust To Banks

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The one thing in this world that shouldn’t be broken is trust. According to Javelin Strategy and Research, banking is not about user-friendly applications, mobile transactions, branch locations, even interest rates or savings. It is all about consumers’ trust.

As per recent surveys, the least trusted industry in the consumer’s eyes is financial services. The Global Consumer Banking Survey, which conducted a study on 55,000 clients, said that 60% of global consumers believe that banks play an essential role in helping people achieve their goals. But consumers show a lower level of trust in traditional banks in fulfilling their strategic pledges. Less than 50% or exactly 48% of customers have complete confidence with their banks to keep their accounts safe. Only 26% of customers secure complete trust on their banks to provide unbiased financial advice.

 

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Traditional banks are the sources of foundational financial strength, thanks to their familiar brand and branches. However, survey results show that consumers nowadays are troubled by this financial institution services. It is reflected in the conducted survey that the level of complete consumer trust in different types of banks. There are only 39% of the consumer-trusted banks with physical branches, 44% trusted Internet-only banks and 44% for other existing banking firms. The level of trust in traditional banks is slowly decreasing, and more and more consumers are looking for modern services in newly established financial companies.

Levels In Trusting Financial Institutions

Trust in financial institutions can be divided into three standards; Basic expectations, promises, and core values. Basic expectations show how the bank will protect the clients’ money, identity, and financial information. It is how consumers validate whether a bank is capable of protecting their rights as well as their financial status. Bank promises, on the other hand, talks about the bank’s recognition of its services. Banking intuitions should be able to uphold its services for the benefits of its clients. Core values mean that the bank should always consider its client’s position even if it results in lesser revenue or transactions.

These levels are the ideal requirements for every bank. However, it is not a prerequisite for every consumer. The third level (core values) is a non-negotiable requirement. Core values are the most important, and it drives trust and loyalty. Unfortunately, this is where most banks failed to fulfill. Results showed in the recent EY Global consumer banking survey that consumers trusted new players than traditional banks to provide unbiased advice.

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The Useful Banking Resources

Therefore every data showed that banks have a trust problem, and trust is the ultimate necessity in an institution to client relationship. However, the way that trust flows through society is rapidly changing. Trust should be established through actions and not in words. Banks must take measures to develop a new level of consumer-based confidence to avoid loss. They should encourage a customer-centric culture by setting the right tone and giving the adequate incentives at every level of the organization. Transparency should be practiced by every financial institution and provide an explicit product detail to its clients. Cybersecurity threat is a worldwide problem, so banks should be able to protect its client’s personal information from being invaded by illegal organizations.

Most financial advice hold highly valued these days. Banks should be able to provide high-quality pieces of information to its customers and should have an unbiased overview in every client consultation. Financial institutions should expand into new territory to offer a new variety of safe services to its clients. Through this, clients can attain a certain level of confidence that their financial states are well taken care of.