Clients May Criticize Bank Administration Expenses

The banking industry has undergone major upheaval in recent years, largely due to the lingering recessionary environment and increased regulatory environment. Many banks have failed in the face of such tough environmental conditions. These conditions

The issues arising from such a system is the amount of data collected, the operational system in place gathering the data and the quality of that data. For example, in order to precisely identify costs related to a customer the bank should use the activity-based costing methodology, that will assign the costs of all activities of the customer towards the bank (products and services) and assign those costs to the actual consumption of each product and service. Such measurable data could be the income derived from interest paid on outstanding credit balances and loans, the fees paid by the customer, the risk score and the bank’s overhead towards the customer. In order to assess this data – usually they are suppressed in a computerized system that no one can use entirely – one should identify the specific measurable parameters. The bank will have to allocate resources for this task but it will pay off eventually. The data inputs will lead to product / service level metrics and will help the bank assess the profitability of each

Prior to the financial crisis, the overall responsibility for financial oversight was divided among several different agencies. These agencies and their “varying rules and standards led to certain entities not being regulated at all, with others subject to less oversight than their peer

There are various categories of banking; these include retail banking, directly dealing with small businesses and persons. Commercial and Corporate banking which offers services to medium and large businesses (Koch & MacDonald 2010). Private banking, deals with individuals, offering them one on one service. The last category is investment banking. These help clients to raise capital and often invest in financial markets. Most global banking institutions provide all these services combined. With all these institutions in existence within the same localities and offering similar services, there is a need to regulate the industry so as to protect the consumer and provide fair working environment for all banks (Du & Girma, 2011).

While banks engage in questionable practices such as approving larger checks while bouncing multiple smaller checks so that they can charge more fees from their customers, national consumer-interest and political groups seldom criticize these institutions for their financially motivated business practices.

One thing US banks have in common is that they are all financial institutions regulated by the government—at both the state and federal level.

One thing all US banks have in common is that they are all financial institutions regulated by the Federal Government.

The old saying the fox is going to watch the henhouse is some of it for same problems we run into with regulators regulating themselves. Part of the systemic problem that existed in the late part of the first decade of the 21st century were government entities known as Fannie Mae and Freddie Mac. Both of these government institutions would just as responsible as the banks themselves for the crisis that took place and sworn new regulation which may not be far-reaching enough.

The banking crisis of the late 2000s, often called the Great Recession, is labelled by many economists as the worst financial crisis since the Great Depression. Its effect on the markets around the world can still be felt. Many countries suffered a drop in GDP, small or even negative growth, bankrupting businesses and rise in unemployment. The welfare cost that society had to paid lead to an obvious question: ‘Who’s to blame?’ The fingers are pointed to the United States of America, as it is obvious that this is where the crisis began, but who exactly is responsible? Many people believe that the banks are the only ones that are guilty, but this is just not true. The crisis was really a systematic failure, in which many problems in the

** Wells Fargo’s decentralized corporate structure gave the Community Banks Leadership the freedom to manage as they pleased and created an environment that rejected any oversight from outside the community banks ranks. Lack of centralized reporting and oversight made it difficult for the corporate office to identify trends or warning signs that lead to issue. Most of the warning signs were occurring at the local level, but there were a few major signs of a problem that bubbled up to the corporate which they seemed to ignore or did not identify as a potential problem.

In the both traditional and nontraditional banking services create non-interest income. The Traditional fee-generating activities include transaction services. These services for both retail and business depositors Although in recent years a lion share of these charges has been introduced for nontraditional technologies like online bill-pay, online money transfer etc. The Nontraditional fee-generating activities are included investment banking, insurance, underwriting and venture capital etc. These activities helps banking firms to generate a substantial amount of non-interest earnings. For example, in the traditional banking system, loan servicing charges and securitization charges do not exist but now a days these are a part of income of a banking company.

Financial institutions work with a large amount of data, often sensitive information. The computer software banks use are quite complex, which makes them a target for fraud and

A branch is a legal and operational extension of its parent foreign bank. A branch may engage in a wide range of bank activities such as: trading and investment activities, accepting wholesale and foreign deposits, granting credit and acting as a fiduciary. A branch may not engage in retail deposit-taking activities. A branch is cheaper to establish than a separately chartered bank subsidiary because a separate capital investment is not required, and the legal and accounting costs of maintaining a separate corporation can be avoided. In addition, a branch may make larger loans

Private banking industry has changed in a very basic way, driven by many key factors such as: free competition systems, modern developments in information technology (in particular, developments of the internet), and changing demographics. Private banks now operate in an environment shaped by increasing and shifting regulations, and in markets influenced by the uncontrolled situations of the world economy and geopolitical issues.

At the same time, the regulators should be as transparent as possible and fully accountable. The accountability and transparency of the regulator will increase the credibility of the regulator and in-turn benefit the regulated entity. Types of Financial Regulation Financial regulation in a country can be done either by a single body called a single regulator or multiple bodies co-existing and working together or in a hierarchy of entities known as multiple regulators. A regulator whether single or multiple does not determine the economic standing of a country or its financial strength. Many developed countries of the world follow either the system of single regulation or multiple regulations. Often in times of economic crisis or financial boom in the country’s economy the government of the nation will review its regulatory system and choose to expand or close down some of its regulatory bodies.