question archive Advanced Commercial Bank Management -BNF412- MIDTERM EXAM INTRODUCTION: International banking is that kind of banking that is done on an international scale and which is used by the companies to provide ease to their customers
International banking is that kind of banking that is done on an international scale and which is used by the companies to provide ease to their customers. International banking is working for the welfare of the people. Usually, these banks are profitable, but they are not good and effective from a cost point of view. Usually, the banks offer larger loans to their customers for their popularity and also for productivity, but the main advantage of this banking is that the customers can do international banking throughout the world the companies and the businessman can connect internationally to share their identification and also to exchange their assets with each other for the benefits that can be obtained as the result of the international banking. International banking is like the other banking systems, but it meets the needs of the people internationally. Many multinational companies would take the advantage of this thing and they would invest their money in such type of banking systems. The profit of international banking can be increased by increasing the capital income which is very fruitful for the national economy of the country. For the continuous growth if the economy is very essential to notice that the growth can be increased by enhancing the profits related to the companies and the other banking systems. For the effective growth of the economy ease can be provided to the customers so that the productive financial banking system can be formed which is working international and fruitful to the economy of the country in a productive manner.
Defined International Banking:
International banking is a procedure in which banks interact with money and credit between nations that are separated by political borders. Foreign/offshore banking is another name for it. To put it another way, international banking refers to banking activities that take place beyond national borders. It covers offshore branching, correspondent banking, representative offices, branches and agencies, limited branches, subsidiary banking, acquisitions and mergers with other foreign banks, as well as the international movement of money and provision of financial services.
Understanding International Banking:
An international bank is a financial organization that offers various sorts of financial accounts to customers who are not citizens of the country in which the accounts are held. Individual banking and investing services may be the primary emphasis of these firms, which are sometimes referred to as offshore banks. Other banks of this sort could specialize in providing commercial or business accounts to eligible businesses. An international bank's policies, processes, and general operations must abide by all applicable laws in the jurisdiction where the bank is established to operate. Individual institutions are permitted to adopt rules that are specific to their banks, in addition to complying with the law.
Features of International Banking:
Multinational enterprises benefit from the international banking facility since it allows them to transact in numerous currencies. The euro, dollar, pound, sterling, and rupee are the key currencies that global firms and people may deal with.
International banking can provide ease of accessibility means the person or the business can share their money intentionally without any effort. The individual can use his money throughout the whole world. This gives the freedom to the person and ease of accessibility to access their bank account or to withdraw the money from them.
3- Transactions Across Borders
Overseas banking enables the company to pay international bills. Companies can simply pay and receive money thanks to the currency conversion feature. Additionally, perks such as overdraft, loans, deposits, and other services are available at all times for international transactions.
4- Maintenance of Accounts
With the support of international banking, a multinational corporation can keep accurate records of worldwide accounting. All of the company's transactions are documented in the books of banks all across the world. The company's accounting may be kept up to date by accumulating data and numbers.
Growing customer use of securities markets to raise funds in a more volatile and riskier world:
The first factor is finding the growth:
The only their sources are mentioned which are related to the market growth and which can affect the market which is as under:
If the market share is growing, you should adopt such policies and the procedures through which you can capture others shares.
You can steal other shares to make up compatible with the other banks working in the same market.
The second step is to concentrate in the services and the requirements:
Firstly keeping in view the steps that the neighboring banks had been adopted to meet the needs and requirements and then try to focus on your wean areas that where the growth is less and where the growth factor is increasing the banks may provide the ease if the accessibility to their users like in the form of ATM and the other resources so you should also adopt such kind of the parameters to make yourself compatible with the other companies.
Implement the digital system:
The larger banks are succeeded, and they meet the requirements and the needs of their customers the reason behind this is that they adopted the digital system while providing the services to their users to meet their needs. The use, if the digital system is very common and familiar in the society, is the person who requires any kind of the necessary details, and the information can press a single button and the person can easily access all the details and the current and past transaction by suing the digital system.
Services are the main issue that can be tackled by adopting effective and interactive communication while delivering your services to the users. Mostly the customers cannot find the correct services because their helping line or the helping services are idle. So firstly, develop and organize such kid of the system which can easily provide a lot of the services to your users.
Types of International Banking Offices
· Correspondent Bank
· Representative Offices
· Foreign Branches
· Subsidiary and Affiliate Banks
· Edge Act Banks
· Offshore Banking Centers
· International Banking Facilities
1- Currency Risk:
Risks of Exchange Companies must get familiar with currency conversion rates while conducting business globally. When buying goods and recruiting staff at the local facility, companies that choose to operate commercial sites on foreign land often employ foreign currency. Prior to exchanging it for foreign currency, a company's start-up capital might originate from its local operations. Prior to exchanging it for foreign currency, start-up cash may originate from the company's local activities.
2- Political Risk:
Companies in the United States may be hesitant to do business worldwide because other countries may be less politically and economically stable. Political turmoil, military coups, dictatorships, and anti-business organizations can all contribute to tough banking conditions in other nations.
3- Risk Management
When documenting and reporting financial information from commercial activities outside the United States, U.S. corporations must adhere to Generally Accepted Accounting Principles (GAAP). Regulators are keeping a tight eye on publicly traded corporations because they may utilize overseas business activities to disguise earnings or losses.
Developing better methods for assessing risk in international lending:
The bank calculates credit allocations in the bank's financial records and lists in accordance with the accepted international financial standards for accounts likely to achieve losses from them and when there are indications that the work of such allocations should be carried out, which may affect the expected cash flows of these assets or investments.
· Check the lists of the sovereign ratings of the international banking systems:
Firstly, pick up the list of the sovereign ratings which are the reason for the increased risks then adopt suitable measures to reduce such kinds of risks to make international banking effective and fruitful.
· Read out the latest news about international banking:
Then I should select the appropriate newspapers or google sites to check out the risks in the international banking systems. Then analyze the given data after that check out the areas where the risk is increased and after that put the factors which are the chances to increase the risks in international banking systems.
· Check out the risks that are related to the assets:
Find out the beta coefficient higher risk beta coefficient and then find out the risk in the system and I use the resources to tackle with them.
Adjusting to new market opportunities which are created by deregulation and by using new international agreements:
As deregulation occurs in one country after another and international treaties offer up new financial service opportunities, international financial markets are undergoing tremendous upheaval. In the United States, the federal government moved in 1994 to enable holding corporations to buy American banks across the country, allowing them to expand their business.
Deregulation is such kind of a process that can be used to reduce the restrictions on the international banking system. The goal of deregulation is just to increase the accessibility to the customers and to improve the service to give to the customers. The customers can increase the deregulation because they did not affect their interest rate. In the process of deregulation, the barriers and obstacles coming in the way of international banking are reduced because the market is free to set their ideas and cists which is the way of increasing the growth rate.
The companies have the freedom to create their monopolies which is the chance of the increased growth and income. The deregulation costs 1.9 trillion dollars which is surely a very good amount to reduce the risks and increased the growth of the business. But the cons of deregulation are that it will decrease security and the people are subjected to fraud and many other issues.
The rural and the other population which is not familiar with such kind of banking deserves no profit because they are not familiar with such banking services.
The future of Banking:
The international banking system faces a lot of the challenges like the growth in the neighboring countries and the financial banking growth in the other countries. After a lot of years, the structure of international banking requires a lot of the challenges that are coming towards the national growth and the economy of the country.
Today the current financial system is allocated and designed for the internet age. A lot of the countries and the bank branches are interconnected through the internet to share their details like assets and costs. but the crisis which the international banking system faces is very challenging.
The results of the researchers that the companies and many other banking systems will do for the past years are very surprising and stunning. Rapid growth in international banking by providing countless services and ease of accessibility to the customer's many businessmen and the high profiled people enforces themselves to join the system of the international banking.
But the second issue is that some people are still using the internet services, but they cannot access the services through their phone the reason behind this is that the cost of the internet is too high to meet the challenges of the international banking system.
But when the cists approach zero so that they can easily afford the international services and can use the banking system.
The future of financial services:
1- Retail Banking's Future
Technology aimed at increasing the operational efficiency of retail banks is having a favorable influence on the industry. According to Insider Intelligence, 39 percent of retail banking executives believe technology has the largest influence on cost reduction, compared to only 24% who believe it has the largest influence on improving customer experience.
2- Trends in Banking Technology
Consumers, particularly Gen Zers, are driving the future of banking technology. They perceive technology as something that improves their lives. The use of an application programming interface (API) to make private data available to anybody with the consumer's consent is a frequent trend in banking technology. APIs might be used to pull customer account information into a bank's mobile app. Fintechs have also relied on API technology to run their operations, and their success has prompted competitors to create their own APIs.
3- Online Banking's Future
Mobile banking has eclipsed Internet banking in popularity, and the global number of internet consumers has decreased. Mobile banking is increasing at five times the rate of internet banking, according to Insider Intelligence, and half of all internet clients are also mobile banking users. Despite the rising popularity of mobile banking, several banks are still unable to meet demand for mobile chores such as bill payment and incentive redemption, forcing customers to switch to online banking. However, if millenials and Gen Zers continue to gravitate toward the mobile market, even this drive will not be enough to promote internet banking.
In the high and challenging era of the business environment, it is very difficult for international banks to meet the challenges and there is a great burden on the national economy of the country. Globalization is the economic trend that would affect adversely the working of international banking. When the number of the sponsored is decreased then the interest rate on the money would increases. The profit of international banking can be increased by increasing the capital income which is very fruitful for the national economy of the country. For the continuous growth if the economy is very essential to notice that the growth can be increased by enhancing the profits related to the companies and the other banking systems.