Discuss the benefits and challenges of bank competition, banking risk, financial innovation (both securitization and M & A) on international banking considering the COVID-19 crisis?
The COVID-19 crisis has brought out various benefits and also multiple challenges in the international banking sector where numerous factors have come out through this factor which is bank competition, banking risk, and even the financial growth. The COVID-19 crisis is a major epidemic that has agonized international banking in such that there have been various challenges such as the banking risks where the banks have, in some cases, been losing their daily targets. Apart from their goals, the international banking sector has also been facing a significant economic crisis where this has been brought about the economics which they depended on have been brought to a stop, and this is due to the COVID-19 crisis. Away from that, we also going the epidemic has also brought out various benefits those we never knew they could come out in a very first growing rate. The benefits which have been brought out by this COVID-19 crisis are such the bank competition, which is something that we were never expecting, and also still, we have various bank innovations. These benefits have come to showcase international banking that there are always multiple activities that the banks can carry out, even if there were no epidemics.
Firstly we are going, beginning with the benefits of international banking with the COVID-19 crisis on bank competition. The banks in the overall world have started competing due to the crisis, and this is whereby we are seeing the international banks giving out various services that never existed. The services that are being brought out by this COVID-19 crisis are whereby we are seeing the banks giving out their customers a relief on their tax. Through this relief on the charge, the customers have been competing to run on the banks, which have cheaper tax relief making the international banks gain more customers, which is a very reliable relief for the banks at the present moment and also in the future to come. Apart from the tax relief, the banks have also been working on investment parts where they are giving their customers high returns whenever they intend to invest with these banks (Mashenene, 2019). Through these investments, banks have been competing to give their customers the best investment services where most of them are offering their customers high returns if they invest with them. And through this, many of the customers have been flocking on those banks that have high returns on the investment parts, making them gain a very apprenticing reputation in the current state and the future to come. Apart from the investments, international banking has also been offering apprenticing secure bank transfer, which has caused competition between the banks. And through the secure transmissions, this has made the banks gain more customers than how it was expected.
Apart from the benefits being brought by the bank competition, we also have the challenges which are being carried by the bank completion through the first effect, which has been bringing the bank competition, which is tax relief. The banks have been facing challenges since, as they give favorable bank transfers to their customers, they are not gathering profit. Instead, what they are gaining in their end is losses. This means that even if there is bank competition, we also have the challenges being brought out by this. Even if they are gaining a good reputation in another end, they are also recording losses (Hidayat, 2016). Apart from the injuries, we have also talked about the investments where we have banks offering investments to their customers. But as for these investments, they are offering huge returns to their customers, which means in their end, they are recording losses, which Is not the daily goal for the international banking sector. And lastly, we have talked about secure bank transfers, which means that the bank with the cheaper bank transfers will have a large number of customers, which will be very apprenticing for their future. This means at the current situation; they will be recording losses (Khan, 2016). All these banking competition factors that the banks are undertaking they are all banking risk which the bank is taking to gain more customers that is only at the current moment. But if the customers will still be asking for the services from the same bank, that means the international banking will have taken a risk that will benefit it in the future. But this risk may still not work as expected if they had not planned well for them.
Apart from the bank competition and also the different banking risks, we also have various banking innovations that are being brought about as a result of the COVID-19 crisis. The changes that we are talking about here are mobile banking, which mainly did not exist in banks. We all know that banks that they usually use to pass their transactions; it is either through the checks or the ATMs, which at the current moment cannot be used a die to the COVID-19 crisis. Through avoiding tests and the use of the different ATMs, the banks have been coming up with various innovations such as the mobile apps where their customers can access to gain their services (Radhika, 2020). Apart from the mobile applications, the banks have come with mobile banking innovations where their customers can use them to get their funds. Through this mobile banking, the customers will not be required to go the bank for any transactions to be carried out, preferably all that they need is only a mobile phone and access to the internet so that they can view their mobile apps. In contrast, in mobile banking, all they need is a bank.
Conclusively, it is well evident that the COVID-19 crisis has come in with various benefits and also challenges in the international banking sector. And through the help of factors such as bank competitions, banking risks, and even the innovations, we have been able to identify the international banking benefits and challenges.
Critically discuss the inherent difficulties in the measurement and management of the risk of banking?
Banking is a vast business industry that needs a lot of expertise when intending to start giving banking services. In this part of the text, we will look at the different difficulties involved in the measurement and management of the risk of banking. The banking sector is a business sector where there are various risks of starting banking services. One thing that the banker has to put in mind that there are also other banking services that he or she is going to meet up within this industry. Through this, there are various factors that we are going to look at that is going to help us in identifying the difficulties that are involved in the line of measurement and the management of the risk of banking. Some of the different challenges that the bankers have to put in mind that various competitors are waiting for them in the banking industry, apart from the competitors the bankers must identify their strategies that they must use in the line of offering the banking services. Besides that, we are also going to use different factors such as rising expectations, which are expected by the bankers to realize them before they hit their banking industries. Lastly, to mention a few, we are also going to look at the security breaches which face the banking industry and even the changing business models.
To begin with, any banker must keep in mind that whenever he or she intends to start a banking industry, there must be competitors. And this competitor will not be just a walk on the path of that one can come to overdo them. Instead, the banker must have different tactics and also strategies that he or he is willing to put into use to avoid falling on the jaws of competitors. The motive that any banker must be willing to undertake is to identify what is not in the banking sector that the competitors have not put into practice and use for the sake of management and measurement in their banking line. By identifying the different strategies that have not been used, it will be beneficial for the banker not to fall in the hand of the fellow competitors (Wardrop et al. 2017). Apart from that, the bankers must also be willing to go deep and understand what the consumers lack in the banking services area. Because looking at the mobile transactions and Sacco’s how they perform about the way banks play, the mobile sales and the Sacco’s in most cases always do well than banks. And this is one of the significant factors that the banker need to look on so that he or she can be able to win over what the customers need from the banking services. By identifying the different strategies and services required for the banking sector and also the level of competition, this will be very accessible for the banker to be a step ahead than the fellow competitors. And through this, it will help the bankers to be able to avoid the different difficulties in measurement and management in the banking sector.
Another critical factor that will be very helpful for bankers is the changing business models. The changing business models will be beneficial to the banker because as the world is also growing, the business sectors also have to build, meaning that the banking industry has even to thrive. The main reason this factor will be beneficial to the banker is that he or she will be able to get away from the management and measurements of the banking services. The changing business models that we are talking about here are such the shift of the checks and the ATMs to improved businesses. What these banking services need to shift to is to go to mobile applications and also mobile transactions. This is because these mobile transactions are very straightforward and even very first (Sayed, 2018). By introducing these mobile transactions, the banker will have a chance to stand out to be more different than the other competitors. This means that by the bankers going to this step, they will be different from the other bankers, and they will also be making work easier for their customers for what their customers will need to access these services. For the banking app, they will only be required to have a working smartphone and access to the internet, and in the case of the mobile transactions, what they will need is only working mobile phones. By ensuring this, they will not only be working away from the difficulties of managing the banking services, but they will also be working towards having favorable business models that will be very helpful for their customers and even for the growth of their business.
Lastly, we also have another major factor that bankers have to consider in their line of banking, which is raising expectations. The rising expectations are mainly the unknown information that the customers did not know. But in the current situation that we are talking about the increasing expectation is where the customers know more about the banking services and whenever any banker I intending to start a banking industry he or she must also be willing to look at the situations that we are talking about (Özataç, 2017). They must have the necessary knowledge and wisdom which they will be using to approach their customers so that they can avoid losing them since looking at many bankers. This is where most of them fail the exam and don’t have the skills and techniques to approach their customers.
Conclusively, it is well evident that various factors need to be looked at so that the bankers can be able to avoid the management of banking. Besides that, we have been able to identify the different factors, such as competition from other banking services, which bring banking management difficulties.
References
Mashenene, R. G., & Mkende, E. (2019). Benefits and Challenges of Mobile Banking usage in National Microfinance Bank Dodoma, Tanzania.
Khan, A. G. (2016). Electronic commerce: A study on benefits and challenges in an emerging economy. Global Journal of Management and Business Research.
Radhika, G. (2020). A STUDY ON E-COMMERCE BENEFITS AND CHALLENGES IN BANKING SECTOR. Studies in Indian Place Names, 40(40), 364-372.
Hidayat, S. E. (2016). The Application of International Financial Reporting Standards (IFRS) by Islamic Financial Institutions (IFIs): Benefits and Challenges. Journal of Islamic Economics, Banking, and Finance, 113(5741), 1-9.
Wardrop, A., Griffiths, S., Harris, J., D’Angelo, N., & Parsons, L. (2017). Contested Domains: Regulatory Challenges in Banking and Finance. U. Queensland LJ, 36, 39.
Sayed, A. (2018). Upcoming Challenges On Banking Sectors: Overall study based on United Commercial Bank (Macro Environment).
Özataç, N., & Gökmenoglu, K. K. (Eds.). (2017). New Challenges in Banking and Finance: 2nd International Conference on Banking and Finance Perspectives. Springer.