An analysis of challenges faced by the banking sector The WritePass Journal

An analysis of challenges faced by the banking sector Introduction An analysis of challenges faced by the banking sector IntroductionChallenges for Survival based in different factors of Environment ConclusionRelated Introduction Developed and developing economies depend on banking sector for all the financial transactions, be it government or corporate or even citizen. Banking sectors of many developing countries was recently liberalised. One such country is India. The Indian liberalisation took place due to the ineffectiveness of the banking sector. The liberalisation leads to cut throat competition. India has a huge population and the massive development results in opportunity. In order to compete and survive in this competition there is a need for a strong concrete base with loyal customers. This group of customers can be gained through retention programs. Customer retention in Indian banking sector is proving vital with time. There are recent problems like the financial recession, where the banks can rely only on these customers. Many banks in the Indian sector have already experienced the importance of customer retention and are improving in the customer retention activities by increased investments. Ba nk of India was the 1st bank to introduce the 1st online banking facility to more than 100-Thousand customers. The most important factor of any firm is the customer. Without customers, a firm cannot do business, as they are the end users of the products. Peter Drucker in his book The Practice of Management has stated that, ‘the customer is the force who decides the business, the production, and the profitability of the firm (Parasuraman et al., 2006). In today’s world customers are regarded as the king with the status equal to The God. They are not just local but they are all over the world. Banking companies in this era do not just concentrate on the local or host country markets but also the cross border business. For instance ICICI has 25% of its investors who are NRI (ICICI Bank Ltd., 1999). This revolution is due to the major change and development in the field of communication, technologies, privatisation and deregulations in the economies.   As a result of this there is a creation of new market and also rise to competition. The competition is intense even for the survival, and this can be met up by only having good customer relationship. The work does not stop at acquiring customers. The real efforts starts after the customer has been acquired, it is crucial for a company to offer them unique products and maintain a friendly relationship and proper communication channel with the customers in order to make sure that the business is not lost. A healthy and long term business relation will provide a great benefit to banks. It is less costly to maintain any relationship with any existing customer. At the same time, a loyal customer will also gain much more benefits in return such as low rate of interest on loans and credit cards. Businesses use the tool of CRM (Customer Relationship Management) to retain their customers in today’s business. According to Bejou et al, CRM is a process in which companies identify its profitable customers and then shapes its interaction with the customers in a way that increases the current and future prospective of business. (Bejou et al., 2006). The Banking sector is facing rapid changes as a result of the economic reform brought about by the Government of India a decade ago (Kamath et al., 2003). This reform is a result of inefficient way of working in the banking systems (Turner and Arun, 2003). As a result of this everything in relation to banking is changing, right from the ownership patterns, the funding its cost and availability to the prospects of earning. There is a big change in the type of services offered. The reform program also includes the implementation of a prudential approach to bank regulation, which focuses on minimum capital adequacy requirements and supervisory control via on-site and offsite monitoring (Turner and Arun, 2003). Thus there is a feel of control of power, this is a post-modernist view. Apart from all these the banking regulators in India are struggling not because of the slow failure of Indian banks but also due to the rapid growth of the sector. As there is a rapid growth in the Indian ban ks lending pattern. Apart from this there is a continued increase in the consumer credit card sector. The growth of the Indian companies, their expansion and overseas acquisition is resulting in the rapid growth of corporate banking. The next section is the investment banking which is also increasing at a higher pace. These things are resulting in more and more demand for banking products. Banks like ICICI has been growing at very rapid face. Its profit growth in the year ended March 2007 is 22% (Bukoveczky, 2007). There is massive change in this sector in regards to the development caused due to the change or advancement of technology, which has also erased the traditional boundaries of banking and also increased the business geographically. For instance, due to the net banking facilities a customer can view and print its account statement at home and also transfer the money at the same time. There is no need to physically go at the bank. Not only the companies but also the governments are seeking better banking services for their organisational efficiency. SBI has the largest ATM machines; in 1994 it had 200 which rose to 3400 in 2004 (Joydeep and Renny, 2005). The change in the income levels and the cultural change, in regards to westernised lifestyle are increasing day by day. Indian consumers seek more and more finance and are generate more asset creation. This has lead to massive growth in the Indian retail-banking sector. The backbone to serve all these segment of customers is a strong b ack up of technologies. This offers the bank convenience in managing the retail, corporate and government clients efficiently and effectively (Kamath et al., 2003). In some Indian commercial banks like ICICI, Bank of India the stress is more on relationship building with the existing customers. Bank of India advertises as their main mission is to build relationship beyond banking (Bank of India, 2003). Thus in this excessive competition in the banking sector is seen increasing day by day with the advent of various foreign banks like the Duetche, Barclays have brought about a revolution in the customer service, since then not only creation of customer but also retention of customer through customer relationship models have taken pace (Sureshchander, Rajendran and Anantharaman, 2003). Customer retention is a structure of act ions carried out by a firm to augment their process, depending upon the positive position of the customers that result in success through customer purchase. Another definition for customer retentions stresses more on the firm’s commitment in case of customer retention. The companies’ processes should enhance, the constructive outline to shape the behaviour of the customers with the existing pat terns keeping the future objectives of the customers mind set of business with the firm. This is to establish the future relationship with the customer. The banking growth became the heart of the economical growth in India (Prasad, Bhide and Ghosh, 2002).These reform brought a massive growth in this sector and also increased the competition by two fold, this has also brought about a huge pressure to the Indian banking sector (Pauchant and Roux-Dufort, 1993). Challenges for Survival based in different factors of Environment Each bank need’s to provide something which is unique to its customer, so that the customer expectation can be full filled. It’s very important for a bank to keep a continues update in their technology. This will help to retain the old customer at the same time attract and upgrade new customers. With the help of new companies which deal in keeping a track and data base of customers, banks can always take advantages. They can use such technology to keep in touch with the customers and help them to achieve satisfaction. Finlay this is what a bank has to deal with. This will help the bank to retain the customer and achieve huge profit at the same time it helps to get new customers with the help of referring.   With the use of technology such as Telecom and Internet Access the world is becoming a smaller place to live in, which results in tuff competition. Work done by Parasuraman, Zeithaml, and berry between 1985 – 1988 gave us a new tool called SERVQUAL which giv es us an exact graph of what a customer expectation of performance and what has been delivered to them (Parasuraman, Berry and Zeithaml, 1991). Economic and Market plays a key role in making the profit for the bank. There is a direct pressure on the margin of profit due to ever increasing competitor in the market who may have a strong base in other country and strong brand name also. For instance HSBC and Barclays have strong base in Asia and Europe respectively, thus when they had entered in India they had kept very low margin of profit to cut out competition and enter the market. This move has helped them to grow the customer’s up to 120% from 2000 to 2010.   This is causing a bad strain on tradition banks that are located within India’s geographical boundaries. To react this, now days Indian banks are opening their branches in abroad market like China, Japan, Hong Kong, UK, USA, Canada and other countries. These banks have now reengineered there way of process and have reduced the cost of operation with the use of technology (Howcroft and Durkin, 2003).   A drastic reduction of transaction cost has press ured old traditional banks to undergo a change which also deals in ownership of the banks. (Prasad, Bhide and Ghosh, 2002). Economic deregulation in economy has caused free way for banks. Now the other main drawback in traditional Indian banking sector is due to the ownership Government of India owes the most part of banking sector. The Basel Committee on Banking Supervision (1993) argues that government ownership of a bank has the potential to alter the strategies and objectives of the bank as well as the internal structure of governance (Basel Committe on Banking Supervision, 1999). It is suggested that the development of banks can be done by divestment practices in Indian banking sector. (Turner and Arun, 2003). Every bank’s need to always consider the important of market they dealing in. For instance, Indian customers always want to get higher interest rate in there saving account. As a result bank has to compete against each other in this. Whereas, westerners want better service management instead of higher interest rate. The Customer data collection plays a significant role in regards to privacy of the customer. International difference in legal framework are a great challenge and treat for global companies seeking to use CRM to tailor and alter the products as per each customer (McKenzie, 2002).The firms in India don’t feel comfortable in exchanging the customer data with other companies. Where as in US, firm have considerable latitude to collect, store and even exchange sell and buy data on individual customers. The use of direct marketing in USA sometime selling of data can cause a huge penalty (Petter and Rogers, 1993).According to most modernist authors, the legal framework has some limitation’s to the working of the society. Though Indian banking is subjective to sever criticism for its high amount of bad debts and low profit, against this is the glittering contribution to the development and diversification in Indian economy which is witness in the last 3 decade (Prasad, 1997). B anking is no longer regarded as a business dealing with money transactions alone, but it’s regarded as a business related to information on financial transaction (Padwal, 1995). Although the Reserve Bank of India, the country’s central regulatory is trying to ease the legal frame work and is moving towards liberalization and globalization thus helping the nationalized banks to compete against the new foreign banks in the country (Angur, Nataraajan and Jahera, 1997). Conclusion The role of society plays an important role in working of the firm. Different value system such as culture, language, religion plays a significant role in person’s life style and habit. For instance in Islam, excepting any type of interest in form of money is banned under the religious law. As a result bank, have to keep in mind such a strong point. In India, majority of the people believe in keeping money at their home, and if want to keep it in the banks they will always prefer nationalized banks. This could lead to strong competition and can cause a major failure also.

Child Car Seats and Seat Belt Regulations in Canada

Child Car Seats and Seat Belt Regulations in Canada Babies and children are uniquely  vulnerable to injury during automobile accidents, and surveys show that many are not properly restrained in car seats or other devices. The Canadian government mandates many protections for children, including the use of only those car seats featuring the Canadian National Safety Mark. The government also recommends other safety precautions and offers educational car seat clinics nationwide. Canada's Child Restraint Requirements The Canadian government offers specific guidance on choosing and using child restraints, including car seats, booster seats, and seat belts. Transport Canada gives instructions for using car seats, as well as provides car seat clinics that parents can attend to learn more about how to choose and use child safety restraints.   Can I Buy a Car Seat from the United States or Another Foreign Country? It is illegal to import and use a car seat or booster seat that does not comply with Canadian safety standards. Because Canada has stricter safety requirements than the United States and many other countries, parents who use non-Canadian car seats often are violating the law and can be fined. How toKnow If Your Car Seat Is Legal in Canada Like many countries, Canada has its own unique laws governing car seats and other safety restraints for children.  Child car seats must meet Canadian Motor Vehicle Safety Standards.  To ensure that your car seat meets those standards, look for the Canadian  National Safety Mark, which features a maple leaf and the word Transport. The government prohibits the purchase of car seats from other countries, which have different safety standards. Other SafetyIssues to Be Aware Of In addition to the general installation and use guidance provided by Transport Canada, the agency also  cautions against letting infants sleep in car seats or otherwise leaving them alone in their seats. The agency also warns against using car seats past their expiration dates and recommends registering new safety devices so consumers can receive notice of recalls.

Income Protection Insurance Assessment Essay Example | Topics and Well Written Essays - 750 words

Income Protection Insurance Assessment - Essay Example Adverse selection is often referred to as hidden information problem in the market, where for instance, sellers may know more about a product than a customer. In the case of Mr. Farid and Prudent Insurance, Mr. Farid faced different probabilities of his insurable event occurring, some at least under his control. Prudent Insurance, therefore, assumed Farid was either a low risk or high risk of the insured event happening. However, it could not individually classify Mr.Farid. Therefore when he fell sick, Prudent Insurance ascertained truth by sending him a claims form. This was in an attempt to solve the problem of adverse selection. I would not approve Mr.Farid’s claim for insurance for income protection. Mr. Farid had a heart valve disorder and this had the potential to present problems in future. It is an element of risk that I could not afford to look as an underwriter. By accepting his application claim, it means Mr.Farid had the motive of using this policy to claim for healthcare expenses. In other words, there was an element of moral hazard. Prudent Insurance should deny the claim. The reason Mr. Farid could not work a year after taking cover was that of his state of poor health. This was due to the heart valve disorder. This disorder was not covered in the policy given to Mr. Farid and thus, he could not claim. Also, the claims form indicates Mr. Farid spent less than an hour on the activities of lifting and carrying heavy items. These two had the biggest risk compared to driving and climbing ladders. Information about Mr.Green’s earlier convictions are important in determining the underwriting decision in that, if it is a restriction by the company, then Mr. Green did not act in good faith to inform the insurance of his past criminal activities. Though he was asked in the application form, he claims to have stated it orally to the broker, a fact the broker denies.