Communication in Banking Sector

Developing a proper communication strategy in a banking sector must be built in the context of the customers expectations. In the current time, banking organizations are no longer interested in developing better communication strategies that will serve their clients. This is because they obsessed with making money, and maximizing on their profitability.
In view of this, most of this cooperation do not obtain their objectives because they are unable to attract new customers, and their normal customers run away from them, because of poor communication strategies.
During the current times, big organizations have a variety of employees who perform various jobs. The organizations employ marketing staffs, to market their services, and seek for clients. To increase their efficiency in communication, banking institutions employ company spokesmen to communicate their strategies and achievements to the stakeholders, to the government and to their shareholders (Bell and John, 23).
Communication is an important element that determines the profitability and efficiency of a banking organization. A banking organization cannot attract and retain a wide customer base without initiating better and effective communication strategies. Despite these realities, banking organizations maintain poor communication strategies. One of the main reasons is their desire to maximize profits, at the expense of customer satisfaction.
Trends in Communication Strategies:
In 1998, Citi Group merged with Travelers, and this made them as one of the largest banking organizations in the world. The company formed CEEMEA, its subsidiary which was in charge of looking for market in Europe, Africa and Asia. The organization realized the importance of communication in a business set up. To improve their communication capabilities, the company made a series of reforms, and introduced high end communication strategies such as the integration of information technology in their business set up.

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The results were immediate; the profitability of the company increased by more than 100%, and the company won numerous enterprise awards, for their introduction of information technology in the banking industry. The company managed to outperform established multinational business organization such as Barclays Bank, and Standard Chartered Bank. Other banking organizations followed the example of CEEMEA, and introduced information technology in their banking system. In the case of CEEMEA, customers could access their financial details, through the internet. An individual had the capability of opening a new account with the banking organization (Mohan, 20).
This made the organization to record an approximate number of two million banking accounts. This is the power of enacting proper communication channels in the banking industry. This is report outlining the effects of poor communication strategies in the banking sector. This report identifies the various needs of customers, and how the banking institution can satisfy these needs. This report identifies the strategies of competing banking organizations in relation to establishing proper communication channels, and thus creating customer satisfaction. It offers recommendations on better strategies, the business organization ought to implement.
Effects of poor communication strategies and customers’ expectations:
Banking cooperation’s will lose customers and fail to retain their existing ones if there communication strategies in inefficient and poor. This will most likely lead to reduced profitability, emanating from the reduction of their sales revenue. This will affect the objectivity of the banking corporation, and therefore give an edge to its competitors in the banking sector. Poor communication strategies will also affect the employees of the organization. For instance, withdrawing important information to the employees in regard to the objectives of the company, will make them loose focus, and concentrate on their desires at the expense of serving the customers. This will lead to poor and inefficient service, leading to loss of customers, and again reducing the profitability of the business organization.
Poor communication with a corporation will result to a culture of rigidity, and therefore limit the innovative capacity of its employees (Bell and John, 33). The competition in the banking organization is fierce, and to survive in the market, it is important for the bank to encourage innovation. Lack of it, is recipe for poor performance, therefore giving an edge to its competitors. To encourage innovation, the banking organization must initiate proper channels of communication, and increase incentives to anybody who comes up with better business ideas.
Customers expect so much from the banking corporation. One expectation of customers is honesty from the customer care staff, while giving information on certain services of the organization. For instance a customer might approach the customer care staff on the requirements of taking a loan, and how to repay the loan. It is essential for the customer care staff to act in a professional manner, and give out all the details concerning the issue at hand, and the expectations of the customer.
By doing so, the customer care staff will help the banking organization to create a brand name, that depicts honesty and reliability. This is an essential element in attracting and retaining customers. Another expectation of a customer is a speedy flow of information. Customers might require certain information from the banking corporation, and to get the information, they need to contact the customer care staff. The employee might need to consult, and gather the information. This process should not take long. This is because it will create anxiety on the employee, depending on the issue at hand.
There is also an issue of accessing their bank accounts. Customers require mobility in accessing their bank accounts. Their presence at the banking premises must not be essential, for them to access their banking account. They may need details of their transaction, or to check the balance in their accounts. The cooperation can device measures of ensuring that their customers can access their accounts through the internet or even their mobile phones. This will require a high degree of innovation.
Solution to the Problem:
One of the most effective methods of solving the communication problem within the organization is to adopt the concepts of open innovation. The cooperation needs to conduct a case study, and observe how successful banking cooperation such as Barclays Bank, Citi Group developed their communication strategies. The organization will thereafter adapt the strategies that are beneficial to them. For example integrating Information Technology in the organization is essential. This is a strategy that CEEMEA, a branch of Citi Group Cooperation enacted as part of its communication strategies (Mohan, 27).
Another solution is to train its customer care staff on the better communication strategies. This is to impart on them the necessary skills required to interact with customers, and the various stake holders of the company. Customer care staffs have a responsibility to act as the public relations personnel of the banking cooperation. It is important to equip them with necessary skills of how to handle the various stake holders of the business organization, including the customers of the business (Bell and John, 31).
The cooperation should create a proper communication channel, between the top management, and the junior staff. Managers of the organization should act as coaches and not administrator. This will enable them effectively communicate the objectives of the company, and will motivate the employees to work hard, so that they may help the organization to achieve its objectives.
The Case of Barclays Bank:
Barclays bank cooperation realizes the importance of effective communication in a banking industry. To disassociate itself from poor communication strategies, the organization has merged the marketing department with the communication department. This is because proper communication influences the degree in which a banking cooperation will achieve success in attracting and retaining customers.
There is the department of internal and external communication. Internal communication has the responsibility of liaising with the marketing department to ensure the company says the right words concerning their achievements to the internal stakeholders of the company. This includes investors and various high skilled employees (Mohan, 49).
The company has integrated Information Technology in its operations. Through information technology, the company is able to develop digital images of its services, therefore attracting new customers, and retaining the existent ones. The cooperation uses websites, and search engine optimizations, to make its presence felt. As a result of these measures, the organization has managed to retain its customer base, and attract new customers.
In conclusion, the success of a banking cooperation depends on the superiority of its communication and marketing strategy. Without proper communication channels, the organization will struggle to market its services. In relation to this, it is essential for a banking organization to invest heavily in building proper communication infrastructure within its set up.
The organization must re-design its goals, create a channel where junior employees will access their senior partners, and chat on the best ways of creating customer satisfaction. To create an effective communication infrastructure, the cooperation must move from its notion of profit maximization, to customer satisfaction. This will ensure that the staffs are innovative enough to come up with better ideas on how to further advance the objectives of the company. On this note, a company without better communication strategy is a company designed to fail in business.

HDFC Bank: Securing Online Banking

Managing Information Security in Information Systems
The importance of banking online has grown enormously in the past decade. Making for more profit and better convenience it is not likely to fade away anytime soon. This also presents some new hurdles for the online banking community. As the number of banking online customers increases the amount of criminal attacker will also increase. The bank recognizes this trend and therefore to maintain and even grow customer confidence and trust they develop ways to keep the customer data and money safe. The bank has to take on an enormous feet which is to protect customers and staff from the attacker and themselves. The banking security is only as strong as the end user of the terminal machine or the end user/customer using a credit/debit card. Throughout this paper I will present key facts and issues of this case then I will go through these issues giving alternative solutions and engaging in the pros and cons of those solutions.
Key Facts

Operations for HDFC bank had first got up and running during the year 1995 of the month of January
HDFC bank was one of the first banks to set up online banking.
HDFC is a trusted name in banking, 2,544 branches, 9,333 ATMs, 1,399 towns & cities.
HDFC Bank is one of the leading private banks in India
HDFC identifies public key infrastructure, during PKI’s infancy, as a suitable technology to address security.
In the Indian sector of banking there are basically 5 types of banks: private sector banks, regional rural banks, foreign banks, Co-operative banks, and public sector banks.
Once RBI had published the guidelines on internet banking HDFC started its online services.
For internal risk management HDFC bank used technology-intensive models.
The data center and backup systems where held at two different geographical locations in Mumbai.
RBI guidelines report banks should utilize the outside experts known as ethical hackers to penetrate systems, inspect infrastructure, and test physical access controls
HDFC has made the commitment to bring new products and attract new customers while signing with RSA security, the US based provider of IS solutions.

Key Issues
1) Improving banks services to attract and keep new customers.
2) Throughout the banking authority maintain information security.
3) Continuity in business is essential, how to maintain it?
4) What are the security challenges in online banking?
5) What are the challenges faced by Salvi?
6) Compulsions at HDFC Bank.
7) Roadmap the chief information officer (CIO) can implement.
Key Issue 1: Improving banks services to attract and keep new customers.
Alternative Course Solution:
a) Making the banking experience as fast and efficient as possible. Bringing up-to-date technologies to the front doors of the customer. State of the art website, phone applications and ATM’s will bring the banking experience to new levels.

By utilizing these channels of communication between the bank and the customer a very nice freeway of information exchange begins to take shape.
This is a very effective way to monitor customer transactions and to weed out the unauthorized user.


At the same time tracking customers can be an issue. Unless an efficient, effective protocol is established to track customers through these various channels it could become a headache and very difficult to manage.
To achieve a protocol that makes exchanging data over numerous channels work will endure cost. The adding of such protocol’s and policies will likely put the price tag higher.

b) Taking an effective promotional stand will attract new customer and help boost the banks reputation helping to keep those customers.

Setting the stage with an effective promotional scheme will certainly attract and secure new customers
When the customer numbers increase so shall the banks revenue stream. Bringing a happy bank and happy employees.


To develop and implement such a promotional scheme the bank will have to put out the money. Cost is always an issue when trying to improve you business.
Reaching out to people and trying to attract new customers can back fire. If the promotion offends people, annoys people or if it is just done poorly then it could actually have the opposite effect and could eventually hurt the bank.

c) By making use of website, phone app’s, ATM etc. . . . the bank can connect with the customer in a personal, effective way.

Pulling off this venture will build the relationship between bank and customer. The banks rep will grow and that is a very positive thing.
Having all of these channels through which the bank customer can use will provide a sense of anytime banking. Online, no problem, on the phone, no problem, on the road, no problem.


If everything is not perfectly setup than the customer satisfaction rate will definitely suffer in which the bank will suffer.
Ultimately by receiving a bad banking experience the bank could lose customers.

Key Issue 2: Through the banking authority how to maintain information security?
Alternative Course Solution:
a) Keeping the personal data, confidential data out of the hands of non-authorized personal.

Keeping sensitive information such as home addresses, telephone numbers, social-security numbers out of unauthorized hands will prevent fraud in credit, debit and account information.
By maintaining the personal data in-house it will also make for a more informed staff making for a better service and more complete work force.


This security measure could hurt relationships. The sharing of information if done correctly could actually build a relationship and by taking this out of the equation it could actually prevent a great binding.
The fact that an employee may use the information for a sinister purpose will always be a concern. The bank has to do the best they can with this type of in-house problem.

b) Using a strategy that employ’s ethical hackers to attempt penetration on systems and network infrastructure.

Will give the bank an awareness on which system programs are vulnerable to attack.
Maintaining all personal info: home addresses, social security numbers and credit card numbers.


By using ethical hackers the bank put its sensitive information out there. It gives up very sensitive information, its secrets so to speak.
When bringing in outside help the bank also brings in additional expenses. To hire an ethical hacker the price tag could be very large. A salary for an ethical hacker shows the story.

c) Maintaining software by way of updating and personal training.

By testing and keeping watch of your systems the bank will achieve the ultimate efficiency.
System programs, web applications, data servers etc. . . . all will be extremely enhanced.


As we found with employing ethical hackers the price tag will no doubt go up.
It is also possible that by taking this route the deliberate modification of some admin tools could take place.

Key Issue 3: Continuity in business is essential, how to maintain it?
Alternative Course Solutions:
a) Backing up data, being able to recover if the need should ever arise.

By backing up data the bank ensures itself in times of natural disaster, robbery, and any other type of event that could otherwise cause the bank to lose precious personal data.
The fact the banking organizations have such a spread of devices and applications, channels of communication between the public having data backed up can make for a well programmed system in which real time information is received in a more-timely manner.


Having information especially sensitive information always bring the possibility of the misuse of such data.
The data will be stored on databases and SQL injections and other database driven attacks will be a real threat.
The cost to ensure the correct safety measures and data systems will go up.

b) Making use of geographically locations, having more than one location.

Like other pro’s the bank can attract more and a new variety of customers by utilizing numerous bank locations.
The range of people the bank will reach will increase thus bringing in new customers.
By having more locations than the banking organization can spread. In doing this the bank will bring in better network connections and new and long lasting customers.


If the bank does decide to invest in new locations that is exactly what they will have to do, invest. Putting out more money to open new locations, staff, devices, new protocols all add up.
Deciding where to put these new branches could also be time consuming and costly. If a bank location go through and does not work out it would be like a money pit for the bank.

Key Issues 4: What are the security challenges in online banking?
Alternative Course Solutions:
a) Making sure the customers data is stored safe and soundly.

If this is done correctly the bank will gain a respectable reputation and with this will develop more customers.
Having this much data and the type of data that it is can make for some pretty exciting and state-of-the-art systems.


This is a task that is a lot easier said than done. If the security systems that are put into place to hold this data is not completely secure data theft could be a real possibility.
Holding this much data will bring with it the cost factor. The more data and the more complex the system gets the more money will be needed to develop and implement a secure database system.

b) Keeping a close relationship with the customer, not relying too much on automated systems.

Making the effort to still provide a personal experience for the customer brings a sense that the bank cares and that they understand in a personal way.
By keeping the personal connection with the banking customer the bank itself can tell what the vibe is on the back, hear what is trending, and basically have a view that is from the other side, the customer side.


It is possible that by building such close bonds between bank staff and open public banking customer the bank opens up the door to insider attack.
Employees that might have a negative view on the bank could reveal trade secrets, banking data, or sabotage.

Key Issues 5: What are the challenges faced by Salvi?
Alternative Solution Course:
a) Making HDFC a “World class Indian bank”.

This is a respectable ambition and it definitely sets the bar.
Under the watch of Salvi the customer should know that customer care and satisfaction will be at the highest priority.


Putting this type of standard in the mix could affect decisions, in turn the customer could suffer.
To become a World class bank HDFC must transform the offline user to the online user. This is obvious but it is also a costly and very cumbersome project.

b) Securing Online Banking.

Without question making the hard transition from offline banking to online banking will create a more efficient better class of bank.
If Salvi can make online banking secure than growing into the world class bank should follow.


Online banking brings new security risks: authentication, authorization, privacy, integrity, and non-repudiation.
The higher the banks reputation might actually make it a target for criminal trying to make a name for themselves.

c) Reducing false positives

This would help to not bother the law abiding, everyday banker.
Over time the false positives should work themselves out and the banking system will be greater for it.

Key Issues 6: Compulsions at HDFC Bank.
Alternative Solution Course:
a) Keeping customers in the automated channel. ATMS, online banking, mobile devices etc. . .

This will provide customers with better services. By keeping up-to-date with the state-of-the-art technologies the bank keeps efficiency at an all-time high.
This can attract new customers they like the fact that they can do banking business from the safety of their homes.


The one-to-one bank teller to customer relationship gets forgotten about.
Most Indian Bankers are familiar with the one-to-one banking, they like the personal service.

b) Increasing customers

The more customers the more money/revenue the bank will receive.
Growth, gain, and prosperity are some key virtues of a bank and with this in mind HDFC should always be on top of their game.


Always promoting, reaching out to increase the customer rate the bank could lose focus on what their really there for.
The more customers the more problems.

Key Issues 7: Roadmap the chief information officer (CIO) can implement.
Alternative Solution Course:
a) Secure the customer transition from offline to online banker.

This will grow the banks revenue, increase customers, making for a very efficient banking system.
This has to be accomplish if Salvi will reach the ultimate goal of World Class Bank.


As is apparent phishing scams will come to light.
With the online banking operation comes more security issues.
Lose the personal relationship between customer and staff.

b) Secure online banking.

The online banker will feel more comfortable when doing business online.
This is a step in the direction to become a world class bank.
Will bring more with it a better reputation and more customers.


The cost will always be a negative aspect of any progress.
With the online banking even if it is considered secure the criminal element will be more of an issue.

c) Evolve into the world class bank

This is the goal that Salvi wishes to reach and it is a prestige’s accomplishment.
With this comes the attention to detail, finer service a World Class elegance.


With this with also bring the increasing of hardware and software maintenance, upkeep of websites, management of data centers.

Bose, Indranil. The University Of Honk Kong. “HDFC Bank: Securing Online Banking” Retrieved From: April 4, 2015
PayScale, Inc. 2015. “Average Salary for Certification: Certified Ethical Hacker (CEH)” Retrieved From:
Rajpreet, Jassel. Ravinder, Sehgal. International Journal of Advanced Research in Computer Science and Software Engineering. “Online Banking Security Flaws: A study” Retrieved From:
Odyssey Technologies. “Implementing Transaction Security For HDFC Bank” Retrieved From:

Study On The Importance Of Green Banking Finance Essay

In our life money has always play an important and crucial role in almost in every aspect. And in this, bank is an institution which mainly deals with money. According to Freixas and Rocher bank is an institution whose current operations consists in granting loans and receiving deposits from the publics (1999, p1). Till date, the banking industry has improvised his products and facilities to provide it to their customer. No one has imagined that 100 yrs ago, that bank will play a crucial role in 21th century. Now banks are influencing the development and the growth of the economy in the way of both quality and quantity. The major source of financing investment of banking sector is from commercial projects which are important for economic growth. Hence, for promoting socially responsible investment and environmentally sustainability banks play a vital role in it. As we know banks themselves is not a polluters but it’s having relationships with some companies and institution which are polluter or could be in future.

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Banks are environmental friendly as in term of pollution and emission in its sector. In banking sector the internal environment impact is very low and clean as in the usage of water, energy and paper. The impact is not related with banks activities but with it customers activities. Therefore, the impact of external activity is enormous which is difficult to estimate. And environmental management is like a risk management it increases the value of an institution and lowers down the loss ratio. Thus banks should encourage prudent lending and environmentally responsible investment to the institution. Further those industries which are become green and those which are on its way to get green they have to fulfil the priority to lending by the banks. This process of finance can be called as “Green Banking” to restore the natural environment banks makes the industries to grow green. The concept of green banking will be equally beneficial to the industries institution banks and economy.
Internationally, banks and institutional investor for environmentally responsible/ socially responsible investment projects having their growing concern about it rate (Earth submit, 1992). Financial institution and bank can effectively achieve this goal because they have played an intermediary role in an economy and to the number of investors. Now-a-day environmental issue is not only a concern of the government and direct polluters, it also a concern of those institutions which are stake holders and partners of their business. So the bank and other financial institution can provide a vital support in maintain the environmental protection and sustaining the economic development.
The bank operate on long term return on their investment and credit, due to the environmental liability there is risk of non -payment and in the reduction of value in credit extension and investment. So it will get more important for the banking sector to follow certain safe procedure for the environment evaluation of the projects before providing them funds. There are some studies has been shown in the positive correlation between financial performance and environmental performance (Hamilton, 1995; Hart, 1995). Thus it will get more important for the banks and other financial institution in the context of environment performance whether to invest in companies or advise client to do so. The environmental management has to follow different rule formation for conservation of the resources like clean water act, toxic substance control act, clean air act. All these are environmental liability for banking institution in a recent (Bindhu.N.Nayak, 2008). Adopting all these principle will be beneficial for the banking sector and to the financial institution as to consumers and also their stake holder.
On international scale various strategies has been adopt to sustain development. The multilateral financial and development institution and international consortium has been building up the standard of environment and strategies to estimate the investment projects. The main aim of this paper is to discuss the issue of the banking sustainability and how it can play a role for the sustainable development and growth for the economy, particularly in the India aspect.
The most important and difficult part of the project is methodology. As in this project the research method which is been use to examine the importance of the green banking in economy to sustain the environment with the help of it. There are certain sources to collect a data for the project such as working papers, academic journals, and relevant books. The research has been done by getting secondary data from genuine source such as articles, journals which are issued by genuine newspaper agencies of a specific country. The project is based on the secondary data analysis as getting primary data is difficult because whatever the policies is taking consideration in bank is taken by the top management authorities and it is hard to have interaction with them in personally.
Research Methodology
Research is to be done to figure out the proper knowledge of the subject in a systematic way. It is analytical and hard working process to figure out the about the fact and theory. The term methodology refers “the theory of how research should be done” (Saunders, 2009). According to Welman and Kruger (2001) there are various techniques and methods in order to get effectively and scientifically correct information of the subject by applying objective method.
Systematically Review
The research of this subject is done on the basis of systematic way. And there is already material has been published by a genuine source on this particular subject. As it is said by Gronhaugh and Ghauri (2005) that “the word systematic suggest research is based on logical relationship and not just belief”. As method of research is consist of explanation of the data collection and the outcome of the facts from the study and finding the limitation of the subject. As Tranfield (2003) stated that traditional reviews are generally lack of information and some time the source of information was not authentic. Therefore, traditional review should be done very carefully and selective which include the evidence which is supported by the genuine author’s summaries (Critical Appraisal Skill Programme, 2005).
Quantitative and Qualitative Investigation of Methods: It is necessary, first to understand the difference between qualitative and quantitative investigation methods.
Generating or using numerical data is called Quantitative data technique and generating of non numerical data is called qualitative technique. If both techniques are using to approach the data then it’s called mixed method (Saunders, 2009). According to Smith (1981) every method has its own weakness and strength. And as result may be differ as the use if the different technique and approaches by the researcher. Usually researcher goes for the qualitative approaches which consist of analysation of words through illustration and non- standardised frame work and comparison.
As the project is an illustrative research and the objective is to understand the importance of the Green Banking in the India. Corbun and Strass (1990) has explained that the use of qualitative method is to understand the aspect of the subject. And it can be useful in understanding more about the subject which is already known. Quantitative methods can be use to gain insights approach to the issue which is sometime not possible to get the results from the quantitative method. Therefore, to describe key issues researcher prefer to use the quantitative methods especially in the case of transfusion service management which is not possible to get through from the quantitative method.
The classical structure of literature reviewing according to the researcher is like;
Study of basic level of banks and its importance in the economy.
And research has been done on the Green Banking at international level.
Then at what level Green banks are taking initiative in the Indian economy.
Accumulation of the Green banking policy and more narrows down to the work to get the objective of research.
“To get the transparent literature review, researcher have to describe all the approaches which make to search the selected literature, key words, outline of the choice and data base” (Tranfield, 2003). To analysis the literature several journals, books, articles and electronic base data were use.
Source of Tool:
To get the relevant material Ministry of Commerce and Industry, India site have been re-examine which is an official website of India. There are other search engine has been used such as Google scholar and University Library site has been used to gather the resources but university Library site is come to notice that there are very less journal are available regarding Green Banking.
Analysis of Secondary Data:
According to Haakim (2000) “secondary data from different sources can also be combined if they have the same geographical basis, to form area based data sets” to get the answer of the research question secondary data can be use as in getting the objectives which is aimed for the ample assembly.
Genuineness of the facts is tested by the reputed database which is publicised by the authentic resource. The aim of this study is to analysis the secondary data methods while investigating the facts and do the international comparisons and to understand the potential outcome that why Green Banking is very important in the developing countries and how they are playing a crucial role in sustaining the development of the economy like India.
Aim and objectives of research:
The purpose is to learn what strategies leaders in emerging market growth have adopted to attract FDI and how financial services play major role. The purpose is to develop a model for both categories and test the model empirically to substantiate the hypotheses. What are the lessons that laggards can learn from these leaders? The study intends to show a path to the PIN countries and other markets that will emerge in next two decades.
Therefore the objectives of this research are as follows:
To illustrate the benefits and shortcomings of Foreign Direct Investments in developing countries like India and China.
To understand the impact of FDI on gross domestic product of these emerging countries.
To examine current situation these economies and analyse the future possibilities of growth.
Limitations of the study:
This is systematic review based study of the available literature in the area of ‘Green Banking’. ‘Genuiness’ is the touchstone of Analysising the literature. Whereas, there are general and accurately presented material is available about ‘Green Banking in European countries but very few literature was found related to the ‘Green Banking in India’. And even thought their not much significant data or literature has been get from the Google scholar and University Library or any other search engine regarding Green Banking in India. Whereas, sincere efforts has been done by the researchers to get the authentic data from the genuine source and the judgement has been done on the secondary the data.
Research of the Credibility:
There is certain research tool to examine the credibility like Generalisability, Reliability, and validity. Dochartaigh (2002) described it as,”assessing the authority or reputation of the source”.
In the case of qualitative research the degree of validity is to be tested. To get the correct result, test of validity is important. “Validity is concerned with whether the findings are really about what they appear to be about, is the relationship between two variables a causal relationship”.(Saunders, 2009). This is a valid research because it is based on systematic data analysis from the genuine resource and on the basis of this research the question has been answered.
Reliability define by Joppe (2000) it is a consistent of a result which represent the accurate number of data is presented over the time and the study of result reproduced the same methodology then it can be said that research is reliable. If the research contains the systematic review of the available secondary data of same objective with a same topic and same results then the research of study is reliable (Golafshani, 2003).
The term triangulation means that “the collection of different data technique, which ensure about what you are thinking that they are telling you” (Saunders, 2009). According to Mathison (1998) it is crucial for the methodological issue in quantitative and naturalistic approaches to establish valid proposition and get control on bias because alternative epistemology is incompatible with the scientific traditional techniques. But this research is based on the secondary data analysis not from the primary sources. So, this method is not applicable for this research.
Consideration of Ethical:
This research is completely based on the secondary data review and not on the primary collection method like interviewing or questionnaires etc. So, the approval of ethical and confidentiality is no use in the research. The collection of data is based on books, articles, journals and reports. The research material which has been used is properly referenced and checking the authenticity of the resource to avoid the plagiarism.
Importance of green banking
Until now, the business operation of financial and banking institution were not acknowledged towards the environmental concern. Generally, the environmentally degrading activities of banking sector’s is like obstructing or getting in the way of business affair of their client. Nevertheless, it will be risk to their business if they were dealing with the environment. Although, there are indirect cost to the banks as they are not directly affected the by the environmental degradation. It is due to the firm environmental regulation which is enforced by the other countries authorities. In the case of failure, the industries have to face the consequence which leads banks to its closure. For example, in 1980 comprehensive environmental Response, Compensation and Liability Act (CERCLA). There was a huge loss for the bank in 1980’s in U.S. The bank was directly responsible for the environmental pollution of their client’s activities and made them to pay the remediation cost. That’s why banks in U.S are more concern about the environment while lending the fund to their clients. In European countries banks held directly responsible for any misdeed has been done by their clients. Therefore banks and other financial institution have to engage with their stakeholder on social and environmental policy. So that their client’s investment can be evaluate. This would make clients to build up a proper management for social and environmental policy issue regarding investment. The green banking is important for both economy and the bank, by escaping from the risk which is involved in the financial sector.
Legal Risk: – there is a relevant environmental legislation risk for banks if they do not comply with it. More particularly, there is more lender liability risk for paying up the claims and the cost of damages for pollution causing to the asset or depraved. Banks can be helped by the environmental management by enhancing it image and reduce the cost and risk and taking advantage of revenue opportunity.
Reputation Risk: As now there is more awareness about the safety of environment and banks may loosen up their reputation if they involve with the big project, which are indulging in the environmental destruction. Environmental management system have a few cases as in good result in cost saving and increase in the value of the bond (Heim, G et al, 2005). Sometimes it has lower risk, great environmental stewardship and increase in profit. Reputation risk is involved in both ethically and economically.
By adopting the green banking strategies bank can deal with these risks. There are two components are involved in green banking strategies (1) innovative environmentally oriented financial products (2) managing risk environment (IFC, 2007). Banks have to make a proper arrangement for environmental management system. So that risk can be evaluate which involved in the investment project. The risk can be adopted by recommending the distinctive techniques and rates of interest. From high risk project banks can withdraw fund from it. Creating services and financial products is a second component of green bank which support the environmental benefit with commercial benefit. All these comes in bio-diversity conservation, investment in renewable projects energy, investment in technologies, energy efficiency, environmental investments in mutual funds and bonds (WBCSD, 1997).
There should be protective polices for the liability guideline on development and environmental risk. The financial and banking institution should prepare a report of every project they invest and finance (Jeucken, 2001). For projects seeking finance they can have an environmental assessment. For each project bank can outcome with an environmental hazard management procedure and follow it. The big financial institution like Japan bank for international cooperation (JBIC) and International financial corporation (IFC) have consolidated with environmental management in their business strategies. All projects are taking consideration into terms of environmental impact in an account factors like, the substance scale and sector of the project, uncertainty and the degree of environmental impact proposed project site. Even World Banks are lending loan to the beneficiary country on the certain level of commitment that they adopt the environmental protection measures.
Over time there is a change in the environmental norms to follow the agreement. And it is considerably bit costly to follow up the standard and environmental norms. If the economic benefits can be consider in the terms of productivity health care and insurance then the cost is not much higher than the benefit. In the study its confirms that 14 billion pound had been caused in the medical expenses and 200 million working days had been loss due to air pollution which resulting in losses in productivity to the European union (Stavros Dimas, 2005).
Technologies which are environmental friendly practically decrease the financial burden and also building up the economic sense for the industries. Due to the more environmental awareness among the consumer in all over the world the pollutant industries were facing resistance by the consumer which often cause them massive boycott and close down of the industries and the cost is adding enormously.
The concerns about environment are articulated into the international policy trade and act as a blockade for ESGs (Environmentally Sensitive Goods). So affirming modes of production and sustainable technologies are now not taking as a financial burden. Although, it providing high profits and new opportunities for the business. Green banking has neutralized the risk, save the cost and up brings the reputation of banks. So it serves both the commercial objective of the bank as well as its social responsibility. Green banking solves the problem faced by the environmental regulation and enforcements authorities related to size and location of the polluting unit. The authorities have practical limitations on enforcing environment standard on small-scale industries and also industries located in far off places.
International initiative of green banking
At international level there are many banks who have taken initiative to get their branch green. There is one bank name PNC Financial Group Inc which is based in Pittsburgh has certified as a green bank. PNC green bank does not stop with getting eco-friendly construction. They include there parent company business model in developing their products, marketing and giving training to their employee.
PNC is one of the banks who have taken the green concept so seriously that it evolved the idea into the brand of the company. PNC has started its construction of getting green bank in 1998. They had selected 17 different sites for their location and make sure that it is easily accessible through transportation. Then they had planned to build their building accordingly to U.S Green Building Council (USGBC) and Leader in Energy and Environmental Design certification process. In 2000 the building was completed and it was the largest LEED green certified building in the world. Some of the new features have been included into the building structure like the lobby of the building is “eco” with a green roof. It was stated by Gary Saulson the director of the corporate real estate “that you can walk into the building lobby on 90-degree humid day without any problem because there is a three- story water wall in the space which work as coolant radiant which maintain the inner temperature of the building. Because of this innovative method PNC has set a new standard of development. And it has been appreciated by the mayor of the city for setting up the standard of eco-friendly responsibility and quality development in the city. And in 2007 PNC Bank has secure 20th rank among the Best Green Company for America Award (Deb Stewart, 2008).
Now PNC has more than 58 eco-friendly branches all across the state. And 41 branches has also obtained the Benchmark of ‘Green Bank’ most of the branches has granted the LEED certification. As all of these branches has follow the eco-friendly process such as;
Recycling: Near about 15 percent of furniture fabric and carpet is made of green material or recycle material for example Door and cabinetry are made of wheat board which process by the wheat product.
Water and Energy Efficiency :- the usage of energy has been reduce by 50 percent because of the high-tech system installation in the building and maximum usage of the natural light and water usage was also reduce by 6200 gallon in year.
Reduction in land waste: – Wastage of construction material like steel, wood and cardboard is to be recycled. By doing this 150 ton per branch wastage has been reduce. Using of the pre-made panel for exterior has reduced the waste, while constructing the panels. To protect the ozone layer non- chlorofluorocarbon refrigerant are use for cooling the system (Deb Stewart, 2008).
In 90’s the United Nations environment programme has launched a program which is known as UNEP finance initiative (UNEPFI). Under this, near about 200 financial institutions of all around the world has taken the participation and signed the initiative statement to promote the environmental development (Jeucken, 2001). The main purpose is to merge the social and environmental dimension to the financial performance. According to the UNEPFI, the sustainable development is a basic thing for the business management. It supports for the elementary advance to the environmental management and offers reconciling environmental discussion into the asset management business operations and other decision of the banks (Earth Submit, 2002). In 1991 the IFCs environmental panel was established for receiving the environmental assessment project. ABN-Amro banks which is Netherlands based banks who has developed certain polices like reputation risk management (RRM) to recognise, manage the non- financial and asses within their business strategies. Likely, the big international banks like Deutsche, HSBC, Standard Chartered and ABN-Amro banks has look and discuss at environmental problem under Kyoto protocol. Moreover, the government of Dutch has requested formally from the banks to achieve sustainable development. This agreement has been establish between banks and government in 1999. This environmental policy will improve the development of services and new financial products.
The Rain Forest Action Network (RAN) and Earth (FOE) had challenged the industry with their campaign which highlighted the case in which commercial banks were “bankrolling Disaster” in 2000 in U.S. ‘Bank Tract’ is a network which formed by the NGO’s to promote the sustainable finance in the commercial sector in 2002. This coalition up comes with 6 principles which assisting in the protection of environment and justice by the bank. This is known as Collevecchio Declaration (Bibhu Prasad Nayak, 2008). These 6 principles are no- harm, commitments to sustainability, responsible sustainable market and transparency, accountability and governance. There are more than 200 institutions that signed up the declaration and asked the banks to integrate with these commitments into their business operation. The declaration states that “Finance and Commerce has been at the centre of a historic detachment between the world’s natural resource base, production and consumption. As we reach the boundaries of ecological boundaries of the ecological limit upon which all commerce relies, the financial sector should take its share of responsibility for reversing the effects this detachment has produced”. To guideline the project banking institution have been constraint into common set of social and environmental policy for sustain the green finance. In Oct 2002 the group of small banks along with IFC had come with the proper general guideline and later in July 2003 they came up with a policy is known as Equator Principle. And other big commercial were also adopting this set of principles in their structure. And in July 2006 equator principle has been revised and updated. The used of the revised set of principle, the project coverage has been lowered by 10 million from 50 million dollar. Now 16 countries with 46 financial institutions were managing their business in more than 100 countries and they all have adopted the equator principle. The adoption of this principle in the business operation has become common standard for the project which integrated with social and environmental issue in business. (Bibhu Nayak, 2008; p10)
The NGO’s has received the activities of equator bank in a worldwide and it being proclaimed, when they came to know that it not commit to the equator principle. “Sustainable Banking Award” has been initiated by the Financial Times along with IFC in 2006. There are 151 financial institutions in which 104 institutions has made through to the final list of award in 2007. The ratio of bank apply was more than the previous year, it was about 100 percent more.
The international initiative of banks operations are voluntary in nature and the basic thing is to up come of the common good for the enhancement of the ecosystem. In competitive market there is a short coming of a voluntary commitment. As an increase of the green money in the market, lender will stimulant to delay the social commitment and the commercial interest which will programme in the short run. If the green money is voluntary than it will be precondition demand for the green bank. According to the government policy the bank which is responsible for the breach of law of their clients will have to help in promoting green banking.
Green Banking In India
From last two decade, the growth rate of Indian development is very high. And this is because of the industrial sector that plays a curial role in the development of the India. However, controlling the environmental challenge has been occurred in the way of Indian industry which makes impact in their business i.e. emission of pollution by their clients. Although government of India is trying to solve this problem by adopting the environmental policies and comforting the industries to adopt this environmental technology.
Fortuitously, India is a second fastest growing nation in the world in producing green house gases. India’s three main metropolitan cities like Chennai, Delhi and Mumbai are the world’s most busy and polluted cities. In India major polluted industries are paper and pulp, zinc steel and copper metallurgical industries, refine, tanneries, sugar, pesticides and insecticides, textile, fertilizers etc. The environmental management have to be taken care by the financial institution and banks, who are investing in the industries project. This can be done by improving the level of efficiency, quality of products and services. In this case banks and financial institution play an important role because these institutions are major source of finance to the industries.
In India there are broadly two main categories for the environmental policies and regulation which is liability, law control and command regulation. The control and command regulation are ex an-te regulation which are assigned to prevent from the environmental polluting businesses. With the help of this policy lending institution will set up a specific standard for the industries, so that they have to follow the regulation and project will examine closely by the ministry of environment and forest authority and it’s up to these authority whether they give the permission or not. The liability law is like based on the analysis of past performance (ex post). In this impose will be made by the authorities on the industries by closing down or imposing fine on them etc. Although there is no such law in India which impose any fine on the bank; which are providing financial help to those client whose are responsible for creating damages to the environment. Once the legal regulation comes in the frame work then the environmental standard will raise in India. And the industries which are responsible for polluting the environment will either have to shut down or have to invest money in the development equipment to meet the standards. And at international market industries will lose their competitiveness, which will directly affect the bank sector and economy of India.
Thus it is crucial for the bank to protect them from getting into non- performing assets in coming days. Analysisation of these facts make banks to accept the concept of Green Banking. The institutions which are not capable to control the pollution now may be future polluters. And one day, the legislation will taken a strict decision against the polluter’s who are responsible for damaging the environment and may have to shut down their units. For e.g. in Delhi and Agra, almost 150 SSI units had to be shut down because of not following the standard. Now banks and financial institutions are taking consideration about these perspectives, if the industries were not performing the environmental standard. According to the pollution control status there are 17 different categories of institution where they are equal number of institution which are shut down or defaulted. When there is a shut down or a default of a project, bank has to face financial losses it is because of increase of the liability and bad asset.
Shut down
Note: ^Competent to agree with the Standards, ^^ Not able to agree Standards. Source: * Annual Report 2005-2006 LOk Sabha ; Govt. Of India, Ministry of Forest and Environment; (sourced from
Now-a-days, awareness is spreading among the public regarding environmental pollution. And people are taking strict action against those industri

Mauritian Banking Sector History And Evolution Finance Essay

The Mauritian economy has transformed itself from a poor sugar economy in 1970’s to export-led growth strategy. After some time the Export Processing Zone sector was introduced to help to decrease unemployment level and foreign direct investment from Hong-Kong, France and UK increased which led to a better Mauritian economy. The growth of the country was examined by Arbache and Page (2008) from 1975 – 2005 and it was found that the island “was one of the best performers” compared to Namibia, Seychelled and south Africa for example, in terms per capita growth and low growth volatility.
Along the development of the manufacturing sector, the tourism sector surfaced as an important pillar contributing to the economy by increasing foreign earnings. Though these 2 sectors were doing well, diversification in services sector took place in the 1990’s.
Orientation was made to the financial services sector where the main focus was on the banking and insurance. Laws were enacted powering the development of this sector. In 1988, the Banking Act was amended to introduce offshore banking in Mauritius. Then, the Stock exchange of Mauritius Act 1988 established the Stock Exchange of Mauritius.
3.1 The Mauritian Banking Sector History and Evolution
The first bank being established is the “Bank of Mauritius” in 1813 failed in 1825. Then, along with the start off of a second Bank of Mauritius in 1832, the Mauritius Commercial Bank (MCB) was established in 1838. Both banks were severely affected by the financial crisis in London in 1847, though the MCB being the only one which survived to present. The MCB is now the largest bank with market share of more than 40%.
In addition to the above, a third Bank of Mauritius was establishes in 1894 opening a branch in Seychelles which was then acquired by HSBC in 1916. HSBC is, therefore, referred to as the oldest foreign bank being followed by Barclays Bank Mauritius ( a descendent of National Bank of South Africa).
A new Bank of Mauritius (BoM) was set up which earmarked the monetary history of the Island. Being established in 1967 as central bank, it has the sole power to issue notes.
Some functions of the central bank are:
Formulation and implementation of monetary policy
Government’s bank
Managing of the public debt and foreign exchange reserves
Regulating and supervising of banks
Today, Mauritius possesses a sophisticated banking sector with 20 banks. Banks form the base of the financial system as 70% of Total Financial Sector Assets are from the banking sector [Mohamudally-Boolaky and Ramlall (2009)] – supporting the fact the banking sector contributed more than 6% of GDP for the past year [Board of Investment Report 2011]. Besides traditional banking facilities, banks provide the following facilities: Point of Sales, ATM, Card, Internet banking, Mobile Banking, E-commerce facilities and so on.

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3.1.1 Major Developments in the Mauritian Banking Sector Segmental Reporting under a Single Banking License Regime
As from 2004, banks were no more segregated into onshore and offshore as the Banking Act 2004 was amended to govern all banks with a single banking license. Operations are now classified into Segment A (other banking activities than Segment B) and Segment B (Provision of financial services to non-residents that creates “foreign source income”) [Guideline on Segmental Reporting under a Single Banking Licence Regime – BoM (2005)]. CAMEL Rating
The BoM uses the CAMEL rating, which is an International bank-rating system, to rate individual banks according to factors that envelop financial, operational and managerial performance. CAMEL stands for:
C – Capital adequacy
A – Asset quality
M – Management
E – Earnings
L – Liquidity
Table: CAMEL Ratings for the Quarter ended 30 June 2012
Overall Rating *
ABC Banking Corporation Ltd
AfrAsia Bank Limited
Bank of Baroda
Bank One Limited
Banque des Mascareignes Ltée
Barclays Bank PLC
Bramer Banking Corporation Ltd
Century Banking Corporation Ltd
Deutsche Bank (Mauritius) Limited
Habib Bank Limited
HSBC Bank (Mauritius) Limited
Investec Bank (Mauritius) Limited
Mauritius Post and Cooperative Bank Ltd
P.T Bank Internasional Indonesia
SBI (Mauritius) Ltd
Standard Bank (Mauritius) Limited
Standard Chartered Bank (Mauritius) Limited
State Bank of Mauritius Ltd
The Mauritius Commercial Bank Limited
The Hongkong and Shanghai Banking Corporation Limited
* 1: Strong 2+ and 2- : Satisfactory 3+ and 3- : Fair 4: Marginal 5: Unsatisfactory
Source: Bank of Mauritius Communiqué for CAMEL rating for banks 28 December 2012 Mauritius Credit Information Bureau (MCIB)
According to BoM MCIB update (2005), the MCIB “collects, stores and provides credit information to lending institutions about customers’ credit exposures”. As from December 2005, banks need to inquire about credit exposure of their borrowers from the MCIB before giving any credit facility to their customers. BASEL I & II Framework
Basel I and II has been implemented in Mauritius in 1993 and 2008 respectively by the central bank and Basel III is under negotiations.
Under Basel II, for capital adequacy principles, banks are required to use the Standardised Approach to Credit Risk unless approval for Internal Ratings-Based Approach granted from the BoM [BoM (2008)]. Technological Development
Technological advances have contributed massively to the banking sector. New facilities have been developed such as:
Point of Sales;
Cards services;
Internet and Mobile banking;
E-commerce facilities and
Banks are connected via the SWIFT network;
Cheque Truncation System and so on Diversification
Banks are seeking regional diversification, for example SBM has branches in Madagascar and India [FSSA (2003)]. Also commercial banks such as SBM are becoming universal banks by diversifying into the following products: Wealth Management & Private Banking, Global Business, Fiduciary services, Asset Financing, and Stock brokering, amongst others.
Another major diversification of the financial sector is towards Islamic Banking under the Shari’ah principles. The first bank to offer this service is the HSBC through the HSBC Amana Branch. Then, in 2011 Century Banking Corporation started to operate as a wholly Islamic bank.
3.1.2 Benefits of the above major developments
The following are some of the benefits:
There has been an improvement in risk management;
Banks are becoming more competitive due to technological advances and they are having increasing technical efficiency;
Services offered are being designed to adapt to customers’ demand – les time consuming, availability on a 24/7 basis
Overall, banks are being more and more efficient. A proof of that is their survival during the Global Financial Crisis 2008. Though many banks closed down in the US due to the financial crisis, the Mauritian banking sector remained resilient, safe, lucrative and highly capitalised. As per the FSR 2011, this was possible due to high capital adequacy requirement, carefully designed regulations and better risk management.
3.1.3 Challenges and Future of the Mauritian banking system
The future of the banking sector is predominant as it drives the financial sector, which is a main pillar, to outstanding performance.
The future of banks that Mauritian authorities are still discussing about is the capital requirements of Basel III. This is because banks have a strong capital position and they are not exposed too much in the developments of external financial markets [FSSA (2008)]. However, it will have to be amended to suit the local context says J.Benoit (July 2012).
According to Khadaroo (2008), the participation of the BoM in the COMESA Regional Payment and Settlement System will allow extraterritorial payments among COMESA countries. This will reduce costs and time taken for the transaction to take place and enhance security.
Moreover, the island’s traditional European markets are in difficulty; therefore, authorities are planning to position Mauritius as an investment platform to link Africa and Asia [Zafar (2011)]. However, the problems that businesses will encounter are: lack of access to finance and infrastructure, corruption and political instability [Business mega (2013)].
Furthermore, the CEO of AfrAsia bank, J.Benoit (September 2012), said that new regulations and governance needs to be out since this will encourage banks to innovate. According to him, banks need to be encouraged to go for niche markets and large banks to do new things.
In addition, the Mauritian banking system lacks professionals to assist the financial sector development. Therefore, the island has been opened up to foreign talent to enable this development. Also, tertiary institutions have designed new courses – for example the University of Mauritius introduced Banking & Finance and International Business Finance courses to sustain the financial growth; and there are many new courses to come. Besides, from the Budget 2013, banks will offer a maximum of Rs 100,000 per year to students for their university fees.
Last but not least, the Mauritian financial sector will be more resilient to shocks in the future since this sector is becoming more open, exposures will continue to be managed prudently and there will be continuous enhancement in transparency

The History of Nigerian Banking System

The existence of banks in Nigeria dates back as far as 1862 when the first Nigerian bank
came into being. There was no banking legislation until 1952; at that time, Nigeria had
three foreign banks and two indigenous banks with a collective total of forty branches.
Despite the set standards by the 1952 ordinance, the growth of demand deposits was slowed
down by the Nigerian propensity to prefer cash and distrust checks for debt settlements.
1912 experienced the establishment of the West African currency board which was to help
in financing the export trade of foreign firms in West Africa and to issue a West African
currency which could be converted to British pound sterling. The colonial policies barred
the local investment of reserves, discouraged deposit expansion, precluded discretion for
monetary management and did nothing to educate Africans in developing indigenous
financial institutions. This led to a motion by several Nigerian members of the house to
establish a central bank to facilitate economic development. Though the motion was
defeated, the colonial administration appointed a bank of England to study the issue and he
advised against a central bank with emphasis on their effectiveness in an undeveloped
capital market. Another study was conducted in 1957 and this resulted in the creation of a
Nigerian central bank and the introduction of the Nigerian currency. The role of the central
bank was to establish the Nigerian currency, control and regulate the banking system, serve
as bankers to other banks in Nigeria and carry out the government’s economic policy in the
monetary field.
This policy included control of bank credit growth, credit distribution by sector, cash
reserve requirements for commercial banks, discount rates–interest rates the Central Bank
charged commercial and merchant banks–and the ratio of banks’ long-term assets to
deposits. Changes in Central Bank restrictions on credit and monetary expansion affected
total demand and income. For example, in 1988, as inflation accelerated, the Central Bank
tried to restrain monetary growth.
During the civil war, the government limited and later suspended repatriation of dividends
and profits, reduced foreign travel allowances for Nigerian citizens, limited the size of
allowances to overseas public offices, required official permission for all foreign payments,
and, in January 1968, issued new currency notes to replace those in circulation. Although in
1970 the Central Bank advised against dismantling of import and financial constraints too
soon after the war, the oil boom soon permitted Nigeria to relax restrictions.
The three largest commercial banks held about one-third of total bank deposits. In 1973 the
federal government undertook to acquire a 40-percent equity ownership of the three largest
foreign banks. In 1976, under the second Nigerian Enterprises Promotion Decree requiring
60-percent indigenous holdings, the federal government acquired an additional 20-percent
holding in the three largest foreign banks and 60-percent ownership in the other foreign
banks. Yet indigenization did not change the management, control, and lending orientation
toward international trade, particularly of foreign companies and their Nigerian subsidiaries
of foreign banks.
At the end of 1988, the banking system consisted of the Central Bank of Nigeria, forty-two
commercial banks, and twenty four merchant banks, a substantial increase since 1986.
Merchant banks were allowed to open checking accounts for corporations only and could
not accept deposits below N50, 000. Commercial and merchant banks together had 1,500
branches in 1988, up from 1,000 in 1984. In 1988 commercial banks had assets of N52.2
billion compared to N12.6 billion for merchant banks in early 1988. In FY 1990 the
government put N503 million into establishing community banks to encourage community
development associations, cooperative societies, farmers’ groups, patriotic unions, trade
groups, and other local organizations, especially in rural areas.
Other financial institutions included government-owned specialized development banks:
the Nigerian Industrial Development Bank, the Nigerian Bank for Commerce and Industry,
and the Nigerian Agricultural Bank, as well as the Federal Savings Banks and the Federal
Mortgage Bank. Also active in Nigeria were numerous insurance companies, pension
funds, and finance and leasing companies. Nigeria also had a stock exchange (established
in Lagos in 1961) and a number of stockbrokerage firms. The Securities and Exchange
Commission (SEC) Decree of 1988 gave the Nigerian SEC powers to regulate and
supervise the capital market. These powers included the right to revoke stockbroker
registrations and approve or disapprove any new stock exchange. Established in 1988, the
Nigerian Deposit Insurance Corporation increased confidence in the banks by protecting
depositors against bank failures in licensed banks up to N50, 000 in return for an annual
bank premium of nearly 1 percent of total deposit liabilities.
1.5.3 Types of Banks
A bank is a profit making business providing financial services which includes receiving
deposits of money, lending money and processing transactions. There are different types of
banks and so do their functions differ.
8 Commercial Banks
Commercial banks are authorized institutions providing retail banking services to the
public. They accept deposits from customers and in turn make loans based on those
deposits. They are noted for providing services which includes savings, current and
term/fixed deposit accounts, lending, payment and transfer of money which is now
facilitated by the recently introduced online banking. They also facilitate the transformation
of rural areas by extending banking services. They offer professional advice to their clients
on viable businesses and international trade. They are the channel for the implementation of
the monetary policies from the central bank and act as authorized foreign exchange dealers
in providing such facilities. They are collectors on behalf of other government and non
government agencies. They buy and sell securities on behalf of their customers and boost
the securities in the capital market and also sponsor companies seeking quotation on the
Nigerian Stock Exchange. Merchant Banks
They started operations in 1961 with the establishment of Philip Hill (Nigeria) Limited
which later merged with Nigerian Acceptances Limited in 1969. Other merchant banks
later came along. As a result of the non recognition of universal banking then, merchant
banks in Nigeria operate wholesale banking, which involves loan syndication, equity and
debt issues, ventures capital and equipment leasing. They play important roles in pooling a
consortium of banks, where the borrowing required exceeds availability of funds from
commercial or any other bank. They also introduce their big clients to the Nigerian Stock
Exchange and handle international transactions through a global network of affiliated
banks. The banks are usually sited at urban areas and provide services to large
organisations and extremely wealthy individuals. Universal Banks
Before the introduction of the universal banking concept by the federal government,
operators of merchant banks had complained that their poor performances over the years
were due to a banking system that they claimed favoured commercial banks. The clamour
for one-stop-supermarket bank became noticed in the mid 1990’s when the financial system
was swept by the distress in the banking sector. This virtually wrecked havoc on the
economy. Many people have observed that the distinction between commercial and
merchant banking is out-dated and no longer fashionable in other developed countries.
The harmonised banking service is seen as cost-effective for providing a level playing field,
where a customer can open an account and engage in all banking and insurance transactions
from one bank to the other. The new banking concept offers a wider range of banking
services, which include retailed banking, capital market activities and insurance business.
The banking environment will no longer be restricted to certain functions. The new banking
services commenced in January 2001. Development Banks
Development banks were established by the government, to promote national economic
development. They tend to address issues of low income, insufficient savings and
inadequate investment. The government and multilateral agencies sponsor the banks. The
first development finance institution is the Nigerian Local Development Board, which was
established in 1946 and charged with the responsibility of giving loans and grants to native
authorities, cooperative societies and other public bodies for prescribed development
projects (Agene 1990). Notable development banks include, Nigerian Industrial
Development Bank, Federal Mortgage Bank of Nigeria, Nigerian Bank for Commerce and
Industry, Nigerian Agricultural and Cooperative Bank, Peoples Bank of Nigeria and
Nigerian Educational Bank. Others include, National Economic Recovery Fund
(NERFUND), Community Banks, etc.
In a nutshell, for the long term survival of a bank, they would have to make money in their
operation so as to be able to meet up with their expenses. They accept deposits from
customers and pay interest which can only be realized from the exchange of money
between two parties. One of the ways in which they make money is by charging interest on
loans. The money deposited by customers is lent out to creditors. They charge higher
interest on money they lend out and pay lower on the deposits. The difference then serves
as own realization from the transaction.
Also, they operate on fractionalized deposit. They use depositors’ money to make money
by giving loans and earning interest. These loans are usually real estate loans and
sometimes car loans. Prior to the depression, banks were allowed to invest in the stock
market. As a result of the bank crash, a law was passed to end the practice and force banks
and investment institutions to be different entities.
1.5.4 Impact of the Central Bank on the activities of a Bank
The Central Bank of Nigeria governs the activities of banks in Nigeria and provides rules
and guidelines for the execution of activities in the banking industry. The central bank is
charged with the general control and administration of the monetary and financial sector
policies of the federal government. Its statutory mandate includes the issuance of the legal
tender currency, maintaining of the external reserves, safeguarding the international value
of the legal tender currency, and acting as bankers and financial adviser to the federal
government; promote monetary stability and a sound financial system in Nigeria. In
understanding the monetary policy, it is important to look at it from the perspective of the
mandate set for the bank. This includes maintenance of Nigeria’s external reserves to
safeguard the international value of the legal currency, promotion and maintenance of
monetary stability and a sound and efficient financial system in Nigeria, acting as banker
and financial adviser to the Federal Government; and acting as lender of last resort to
Consequently, the Bank is charged with the responsibility of administering the Banks and
Other Financial Institutions (BOFI) Act (1991) as amended, with the sole aim of ensuring
high standards of banking practice and financial stability through its surveillance activities,
as well as the promotion of an efficient payment system. In addition to its core functions,
CBN has over the years performed some major developmental functions, focused on all the
key sectors of the Nigerian economy (financial, agricultural and industrial sectors). Overall,
these mandates are carried out by the Bank through its various departments.The roles of the
central bank of Nigeria also include the establishment of a national microfinance
consultative committee, evolvement of a clear micro finance policy that spells out the
eligibility and licensing criteria, provides operational standards and guidelines to
stakeholders, adopting an appropriate regulatory and supervisory framework, minimizing
regulatory arbitrage through periodic reviews of the policy and guidelines, continuously
advocating market determined interest rates for government owned institutions and
promote microfinance funds through MFBS, promoting linkage programmes between
universal banks, specialized finance institutions and the micro finance banks. Departments of central bank and their activities
There a basically three departments in the central bank of Nigeria and they are the banking
supervision department, development finance department and other financial institutions
department. Banking Supervision Department
The banking supervision department of the central bank of Nigeria carries out on-site as
well as off site supervision of deposit money and discount houses. Its basic functions
include reviews and analyses of the financial conditions of banks based on CAMEL
parameters using prudential reports, reviews and analyses of statutory returns and other
relevant information, monitor trends and development for the banking sector, generate
industry reports on a monthly and quarterly basis. It also monitors compliance with the law,
guidelines and circulars (BOFIA (banks and other financial institutions act), CAMA, and
CBN (Central Bank of Nigeria) Act etc) Development Finance Department
The development finance department was established to manage the agricultural credit
guarantee scheme fund and finance the marketing operations of the defunct commodity
marketing boards. In view of the expected role of the bank in the Nigerian economy, the
department was restructured and renamed as the development finance department. They are
concerned with identifying development finance market failures, designing strategies and
policies for addressing them, formulating policies, regulatory and supervisory
framework for micro/rural finance, identifying development priorities, designing and
implementing alternative funding sources, monitoring and evaluating the impact of
development finance initiatives, advising government and the CBN Management on
commodities, SME, and micro/rural finance issues. The Other Financial Institution Department (OFI)
The other financial institutions department is saddled with the responsibility of supervising
and regulating the other financial institution sub-sector which include the community
banks, finance companies, bureau de change, primary mortgage institution, the
development finance institutions and the recently launched micro finance banks.
The department carries out both on-site and off-site supervision of the other financial
institutions. The off-site supervision involves the appraisal and approval of the application
for licenses, nominees intothe boards and top management positions, transfer of shares and
increase in hare capital, statutory returns from other financial institutions, appointment or
exchange of the external auditors. The on-site aspect of the department’s function includes
pre commencement examination before the grant of a final license to an OFI (Other
financial institutions), routine examination which is the regular examination, target
examination addresses specific supervisory concerns arising from unprofessional conduct
of the operations of an OFI and is carried out as the need arises while spot-checks for quick
confirmation/ verification through independent on-site assessment. This includes corporate
governance, accounting systems and records, quality of assets, reliability of information
provided, internal control system/anti-money laundering controls and procedures, earnings,
liquidity, financial condition and capital adequacy.
1.5.5 Effects of the Monetary and Economic policies on the activities of Nigerian
Monetary policies refers to the specific actions taken by the central bank to regulate the
value, supply and cost of money in the economy with a view t achieving governments
macroeconomic objectives. For many countries, the objectives of the monetary policy are
explicitly stated in the laws establishing the central bank, while for others they are not. The
objectives of the monetary policy may vary from country to country but there are two main
The first view calls for the monetary policy to achieve price stability, while the second view
seeks to achieve price stability and other macroeconomic objectives. The central bank of
Nigeria like other central banks in developing countries, achieve the monetary policy goal
through the amount of money supplied.
In Nigeria, the Central Bank defines money supply as comprising narrow and broad money.
The definition of narrow money (M1) includes currency in circulation with non-bank public
and demand deposits or current accounts in the banks. The broad money (M2) includes
narrow money plus savings and time deposits, as well as foreign denominated deposits. The
broad money measures the total volume of money supply in the economy. Thus, excess
money supply (or liquidity) may arise in the economy when the amount of broad money is
over and above the level of total output in the economy.
The need to regulate money supply is based on the knowledge that there is a stable
relationship between the quantity of money supply and economic activity and that if its
supply is not limited to what is required to support productive activities; it will result in
undesirable effects such as high prices or inflation.
In summary, monetary policy in the Nigerian context refers to the actions of the Central
Bank of Nigeria to regulate the money supply, so as to achieve the ultimate macroeconomic
objectives of government. Several factors influence the money supply, some of which are
within the control of the central bank, while others are outside its control. The specific
objective and the focus of monetary policy may change from time to time, depending on the
level of economic development and economic fortunes of the country. The choice of
instrument to use to achieve what objective would depend on these and other
1.6. History of the banks surveyed
1.6.1 Zenith International Bank Plc.
Zenith Bank Plc was incorporated on May 30, 1990 as a private company limited by shares.
In July 2004, the Bank became a public company limited by shares and subsequently
launched what still remains the most successful Initial Public Offering (IPO) in the history
of the Nigerian Capital Market. Its 6,000,000,000 (six billion) ordinary shares of 50 kobo
each were later listed on the Nigerian Stock Exchange on October 21, 2004. Zenith Bank
Plc achieved yet another milestone when it raised N53.63bn in February 2006 by a Public
Offer of 3,000,000,000 (three billion shares), one of the largest amount in the history of the
Nigerian Capital Market.
Zenith Bank Plc is one of the largest and most profitable banks in Nigeria with total assets
plus contingents of over N714.5 billion after consolidation.
The Bank has continued to record remarkable performance on several parameters.
Zenith Bank’s growth and performance has earned excellent ratings from both local and
international rating agencies. Agusto & co. ltd has consistently rates the bank Aaa for six
consecutive years. Also of repute is the fact that the bank has the lowest non performing
loans to total loans ratio of 1.7% against the industry average of 18% and has grown its
asset base at an average of over 50% per annum in the last five years.
Its service offering covers but are not limited to corporate and commercial banking
services, funds and asset management, investment banking and financial advisory services ,
private bank, treasury and cash management services.
In delivering their vision, they put strategies in place which has being their guide in their
operation. It sets out to differentiate itself in the banking industry through the quality of
service it render, the caliber of their clients and the drive for a unique customer experience.
The bank is easily associated with attributes such as innovation, best risk asset portfolio,
high quality personnel, consistent superior financial performance and leadership in the use
of information and communication technology.
The bank’s overall vision is to make the brand a reputable international financial services
network recognized for innovation, superior customer service and performance while
creating premium value for all stakeholders.
1.6.2 Guaranty Trust Bank Plc
Guaranty Trust Bank plc was incorporated in July 1990, as a private limited liability
company wholly owned by Nigerian individuals and institutions. The bank was licensed as
a Commercial Bank in August 1990 and commenced operation in February 1991.
In September 1996, Guaranty Trust Bank plc became a publicly quoted company and won
the Nigerian Stock Exchange President’s Merit award that same year and again in the years
2000, 2003,2005 and 2006. The Bank was also runner-up for the quoted company of the
year award in 2005. In February 2002, it obtained a Universal Banking license and was
appointed a settlement bank by the Central Bank of Nigeria (CBN) in 2003.
Its quest to continue adding value to the businesses of its stakeholders has seen it emerge as
a pacesetter and industry leader over the years. This is evident in its introduction of real
time online banking in 1990, mobile, telephone and internet banking in 2002, Slip free
banking in 2006 and the first fully interactive self service call centre; GT Connect in 2006.
The bank was able to meet their financial obligations as they fell due and this got them the
recognition of three rating agencies. Agusto& Co reaffirmed its triple a risk rating every
year fro the last four years, Fitch also assigned the bank a double A minus risk rating in
recognition of its strong domestic franchise, good quality assets and sound earnings record
and finally, Standard & Poor’s, assigned the Bank a double B minus (BB-) risk rating. The
Bank is the only Nigerian financial institution with such a rating, which is the same as the
Agencies Sovereign rating for Nigeria.
The bank has over the years been a recipient of several awards for superior financial
performance, customer service delivery, excellent share performance, management
efficiency some of which are the most respected financial institution in Nigeria (2006), the
highly commended bank of the year award in Africa (2005), Most Customer friendly Bank
(2007), Best Bank for Brand Development 2007.
Despite the challenges which characterized the year under review(2006-2007 Financial
year), the bank was able to grow its gross earnings by 46% from N34 billion to N49 billion
while its profit before tax rose by 50% from N10.5 billion in the previous year to N15.7
billion. In the same period, total asset and contingents increased by 54% from N391billion
a year earlier to N603 billion.

The Banking Sector Reforms In India Finance Essay

The banking sector reforms in India are aimed at introduction of best international practices and technological changes for making the Indian banking sector competitive globally. The Indian banking system is more efficient and stable today. Consequently there has been a rapid increase in the number of banks in this country. The banking horizon is changing because of the increasing number of private banks and the foreign banks. Apparently there is a cut throat competition between the banks. New and variety of services are offered by banks which are non-conventional and customized as per the customer requirements. Banks began to diversify their services as part of their corporate strategy to cater to various customer segments.
Structure of banking in India
The Indian banking system is classified into scheduled and non-scheduled banks. The scheduled banks are then classified as state cooperatives banks and commercial banks. The non-scheduled banks are classified as central cooperative banks and primary credit societies and the commercial banks.
Commercial banks are classified in both the scheduled banks as well as the non-scheduled banks. Schedule banks are those which are included in the SECOND SCHEDULE of BANKING REGULATION ACT 1956.
To be included in the second schedule a bank
Must have paid up capital and reserves of not less than Rs 5 lakhs.
It must also satisfy the RBI that its affairs are not conducted in a manner detrimental to the interest of its depositors.
File:Scheduled banking structure in India.png
RBI(Reserve Bank of India) is the central bank of the country. As the central bank of the country RBI has the power to supervise and control all the banks with the intensions of developing a sound and efficient banking system. It also performs many different developmental and promotional functions.
The functions of RBI are as followed:
Note issue
Bankers bank
The central bank
Banker to the government
Custodian to Foreign Exchange Reserves
Management regulation of exchange
Credit control
Other functions.
The Indian banking system has witnessed a substantial improvement in both stability and efficiency parameters such as capital position, asset quality, and overall profitability. There has been a remarkable improvement in the financial health of commercial banking sector. The banking sector reforms have improved the stability of the Indian financial system.
The performance and the efficiency is analysed in terms of profitability, productivity, financial stability, and quality of assets. The following indicators are used:
Profitability indicators: It is measured in terms of net profit of the bank. The interest, non-interest income, and the expenses influence the net profit.
Some of the important indicators of profitability are as follows:
Interest income as percentage of total assets: Interest income
Total assets
Higher ratio indicates higher profitability.
Interest expended ratio: Interest expenses
Total assets
Fall in ratio improves the profitability
Net Interest Margin(NIM): interest income — interest expenses
Total assets
A fall in NIM indicates the need to reorient the banks policies.
Intermediation Cost of Assets Ratio (ICAR): Non-interest expenses
Total assets
Lower the ratio higher the efficiency.
Overhead Efficiency(Burden)Ratio: Non-interest income
Non-interest expenses
Higher ratio indicates lower profitability.
Returns on Assets(RoA): Net profit
Total Assets
High RoA indicates better deployment of funds.
Return on Equity(RoE): Net profit
Total Equity
RoE will help the banks to access new capital.
Capital markets indicators: The capital market indicator is based on the EPS and P/E ratio.
Productivity Indicators: productivity indicators are generally analysed in terms of:
Profits per employee
Business per employee
Financial Soundness: Financial soundness is reflected by the Capital Adequacy Ratio.
CAR: Total capital
RWAs: Risk Weighted Assets
Higher the ratio better is the sustenance of the banks.
Asset Quality: The quality of assets in the bank is shown by the level of non-performing assets (NPAs). Lower the ratio better is the asset quality. The 2 ratios used are:
Ratio of gross NPAs to gross advances.
Ratio of net NPAs to net advances.
The above graph has the data of the gross NPAs of the banks. The X axis depicts the years and the Y axis depicts the percentage. The red dotted line is for the Gross NPAs and the blue dotted line is for the Gross advances. Looking at the graph we can confidently state that the Gross NPAs are increasing whereas the Gross advances are decreasing since 2010-11.
The comparative performance of public sector banks, new private sector banks, and foreign banks is explained below for the recent years
Productivity and profitability of banks: Productivity is directly related to profitability. It is analysed in terms of business per employee and business per branch.
Business per employee: The business per employee in the public sector banks has increased from Rs 471.18 lakhs in 2006-07 to Rs1013.63 lakhs in 2011-12. But is still low as compared to foreign banks. The business per employee for foreign banks has showed a tremendous increase from Rs974.77 lakhs in 2006-07 to Rs1559.74 lakhs in 2011-12. The business per employee for the private banks has also increased from Rs695.23 lakhs in 2006-07 to Rs823.26 lakhs in 2011-12.
Profit per employee: The profits per employee are the highest in foreign banks followed by new private sector banks in 2011-12. Per employee profit was Rs 16.3 lakhs in foreign bank, Rs 8.1 lakhs in new private sector banks and Rs 5.93 lakhs in public sector banks in 2011-12.
Interest income: The interest income of public sector banks, new private sector banks and foreign banks showed an increase to Rs366318, Rs 96827 and Rs 28520 respectively in 2011-12.
Interest expended ratio: The interest expended ratio same as interest income has showed an increase for all the banks in 2011-12. The figures are Rs231153 lakhs, Rs57115 lakhs, Rs10622 lakhs.
Financial Soundness: The CAR(Capital Adequacy Ratio) is the most important indicator of financial soundness of banks. The capital to risk weighted assets ratio is shown is the figure below. The CRAR of public sector banks has been between 12 and 15 percent. The old private sector had CRAR lying between 12 and 15 percent. The new private sector had CRAR of more 15 percent. It goes the same with the foreign banks for the year ending in March 2012.
Asset Quality: the asset quality of a bank is shown by level of non-performing assets (NPAs). Better quality of assets is the indicator of efficiency. There is a vast improvement in the efficiency of Indian banks.
The NPAs as percentage of Average Total Assets are increasing marginally in 2011-12. The NPA of foreign banks rose from 0.8 in 2009-10 to 1.4 in 2010-11 to 1.6 in 2011-12. The new private sector banks showed an increase from 1.1 in 2009-10 to 1.2 in 2010-11 to 1.3 in 2011-12 approximately. The old private sector banks has shown an increase but less as compared to the other banks. The national banks have shown a gradual decrease in the NPAs since 2009-10 to 2011-12.

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Customer services: In order to ease customer access to banking facilities, Indian banks have begun offering bouquet of financial services to their clients. The number of branches proving CORE BANKING SOLUTION (CBS) is increasing tremendously. Under CBS a number of services are provided such as ANYWHERE BANKING. The number branches of PSBs that have implemented CBS increase from 35464 in March 31, 2008 to 46304 in March 31, 2011.
The banks are providing more and more ATM facilities to the customers. The foreign banks and new private sector banks are the larger contributors in this.
The above graph is for the year 2008-09. The highest number of ATMs is provided by the state banks but on-site. The highest number of ATMs provided off-site is by the foreign banks.
The banks in India are using Information Technology (IT) not only to improve their own internal process but also to increase the facilities and services to their customers. Computerization has taken place all over India. The only motive is to bring banking at the fingertips of the customers and employees.
Virtual banking
Debit Cards
Credit cards
Point of Sales(PoS)
Door step banking
Internet banking
Mobile banking
Phone banking
Electronic Funds Transfer (EFT)
Electronic Clearing Services (ECS)
Real Time Gross Settlement (RTGS)
Business Economics 3 by Johnson, Mascarenhas, and Chatterjee.
The institute of chartered accountancy (India),r:76,s:0,i:316

Comparison of Marketing Strategies in Banking Industry

1. Introduction
There has been progress and advancement in the field of finance and business due to the widespread use of information technology. Banking Industry has proved that it is far ahead due to the implementation of several technologies and most of its industries and businesses are doing exceedingly well because of this. In today’s times, when one is interacting with banks and other financial institutions there is a gap in services which is felt by the demanding and upmarket consumer. Due to this banks have had to pull up their socks and turn around their operations by introducing sophisticated means of conducting business. They have hence provided ATMs (automatic teller machines), computer and internet banking, phone banking and banking kiosks are proving to be alternative means to benefit from the banking services in a comfortable and convenient manner.

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According to scholars Wong (1998) and Kimball & Frisch (1997), e-channel, also known as innovative distribution channel or online banking, as per Daniel (1999) or technology-intensive delivery system, says Filotto et al. (1997), is interpreted as the approaches used to deliver financial products using electronic media such as personal computer, the telephone and the Internet, say Dannenberg & Kellner (1998). The ATM as a matter of fact is the most commonly used electronic distribution channel that aids the customers of a bank to conduct their banking transactions, which could be deposits, withdrawal or balance enquiry 24-hours a day. All banks in Malaysia provide ATM services coupled with the phone banking option. As the customer service department has been centralized services such as phone banking, account balance enquiry, instruction to issue bankers cheques and giving standing instructions are services which can be executed for all. Though a call will first reach an automated response system, a customer may want to talk directly with a service representative. The phone banking facility is available 24 hours a day. Some examples are Direct Access of Southern Bank, Tele-banking of RHB Bank and Maybank. Phone banking, or also known as remote e-banking, self-service banking, home banking and office banking, is the third type of e-banking. There is internet banking as well which makes use of the Web. This is a comfortable way of finding out the balance in your account, if you need to transfer funds or request for a cheque book, and make the payment of bill, and can be done at home or while you are in office.
Within three years, marketing companies believe that the financial services business over half of the customers will use the Internet to make themselves knowledgeable about the new financial services, products and search for more information, if they do need it. This number can even go higher in a short period of time. LIMRA’s optimizing Opportunities with Online Consumers (2007) came to the conclusion that around out of 10 online customers, 7 say that they expect to check products, prices, grading and details of the company on the internet. These findings show that there is plenty of opportunity for people to make use of the internet to introduce opportunity within a large number of prospective customers.
As the World Wide Web continues to grow, the expectation of the user and his behaviour are also changing. Potential customers now have the skill to develop content online and play a proactive part in creating and sustaining relationships with companies they are able to find online.
This dissertation aims at exploring the effectiveness of e-marketing in banking industry and its impact on the industry.
2. Problem Statement
In order to increase the customer base, the marketing team of a bank uses content and illustrations in direct mail or ad campaigns to attract and draw customers towards it schemes and products. Of late there has been an increase in tele-callers as well who persistently call and promote the various products available. On the Internet, which is fast-paced in form and function, banner ads and smartly written click-to-pay has become a trap to captivate customers. The other level is keyword buying from Google and other search engine providers, and especially the buying of regional keywords. This one is a fresh technique used to bring the surfer to a website, where he or she will find ways to do business with your bank. The use of technology in the marketing of service industry especially banking industry is not such a new concept. Its been used and have been in use for various countries but it should have a key focus which will be discussed in this research.
3. Research Question
“What is the effective e-marketing tool(s) used in bank industry marketing? Evaluate the comparison between UK and Indian Banks?”
4. Research Objectives
The key objectives of the research are:

To evaluate the various marketing strategies used by the banking industry.
To study the effectiveness of different marketing strategies used.
To examine the various e-marketing methods used by the service industry.
To study the effective e-marketing tools used by UK Banks.
To study the effective e-marketing tools used by Indian Banks.
To evaluate the comparative analysis between e-marketing tools used in UK Bank and Indian Banks.

5. Literature Review
The Meaning of Marketing
Marketing has a two-way definition when it talks comes to discussing corporate activities. Firstly, it is used to adjust its resources on a constant scale so as to satisfy its chosen customers and in doing so to offer social and financial benefits. This is being tagged as marketing concept and stresses on the accountability of senior management to keep an eye on the situation and acclimatize oneself to changing situations. The scholar Levitt (1983), is a promoter of this concept. The other definition is to perceive marketing as a subject of demand management, primarily a technology to affect the behaviour of customer groups. This method is tagged as marketing management and it stresses the accountability of operational management to stage-manage demand in support of the business. It handles the selection of target markets, collection of appropriate offerings and stresses on advertising. According to Anderson (1983), it has many advocates as this been in the thoughts of most marketing theorists to date.
Marketing in Banking
The UK clearing banks have a branch network which is similar the field sales force of a production company. It is through these branches that customers are able to make use of the services of the bank. The branches work as outlets through which the bank’s policies are put forth, its relationships with its customers is tackled and the markets are surveyed and intelligence reports are gathered. Hence the branch and its management seem to be pivotal to any marketing exercise and their behaviour towards marketing an essential element in its acceptance.
It may be debated that technical transformations like cash dispensers, credit cards and other electronic modernization is taking the customer further and further from his branch and he is becoming a stranger with the staff of the bank. The branch of the bank is the main crossing point with the customer and these very alterations are likely to increase the value of the branch as a stage for business development and cut down on its role as a performer of money transactions.Whether marketing in the short term has improved the situation of a company by the results achieved in their branches, management is likely to introduce marketing. In the initial days when bank marketing was introduced in the UK, there were some doubts about the capability of a conventional line of work to acknowledge what appeared to be a different method to take up. The procedure and the concerns linked with the application of marketing to financial services is hence special interest to students of marketing and banking.
Indian Banking Scenario
In the 1960s marketing in banks began in its most conventional form of publicity and public relations. Even though they functioned within the stipulation that there can be only small changes among individual banks, the marketing environment of a bank has since then changed to a large extent. Today banks are facing strong opposition from the foreign, private and public sector banks, and there is a pressure from other financial institutions. Financial institutions are not only better placed statutorily, they provide higher returns and a handy product-mix which offer tax rebate benefits as well. A far as the supervision of their marketing function is there, these companies are better supervised and administered. While, it is discouraging to observe that the immense boost received by the banking sector thanks to nationalization has not been factored in in productivity and profitability, on the other hand, its cost of carrying business has gone up, its bottom line has dropped and the disparity between the anticipated and perceived quality of customer service has also become broader. As a result, the banking sector has been under strong criticism by the Government and the public alike.
In order to make their business environment more positive, in the last few years, banks have adopted various steps which are initiating creative schemes; organizing processes to reduce paper work and delays; introducing teller systems; competent enhancements in the look and feel of the bank’s branches; looking up the model, expert and service branches; offering extra boost to their publicity initiatives; creating customer service bodies at the banks’ offices; carrying out customer relations programmes; establishing customer service departments at the head office of banks; making courtesy weeks/fortnights, customer service campaigns and door-to-door surveys; setting up “May I help you?” counters and placing public relations officers in large branches. These reactions of the bank show that may be they have woken up to a logical way of marketing their financial services, and to think beyond the narrow course of marketing as “publicity and public relations” held so close by them.
UK Banking Scenario
In developed countries, though industrial and consumer goods industries have increased their marketing exercises, service companies and the banking businesses seem to be slow in taking up and enforcing the marketing concept, for case studies in various countries, say Watson (1982), Donnelly & Berry (1981), Lewis (1981), Cramer (1968). To the best of the present authors’ knowledge, there are no researches of bank marketing in developing countries, more so in Turkey. As Turkey becomes more liberalized and industrialized, marketing of bank services becomes crucial to its economic development. Also, data about bank marketing is important for foreign bankers, international monetary agencies, domestic policy makers and overseas businesses which deal with Turkish markets.
Technology Marketing in Banks
The banking industry would not have been so sophisticated and evolved had technology not been harnessed to its maximum. There have been a number of factors responsible for its progress and evolution. Broad economic trends and social forces, toned down by government policy and controls, become the environment within which progress occurs, and the level of oppositions largely decides the rapidity of amendments. Technology is a way to prevail over obstacle and expenses, but in recent years it has become all-embracing and advocated change. It has also been accountable for the rise in superiority of marketing in the supervision of banks.
There are two factors why only providing a gist of a single banking system at the present time would be insufficient to study the influence of technology. The first is that the application of technology is unequal among countries and period of time, and the other is that technology is growing very fast and will continue to do so. There is a time gap before technological developments are implemented and we need to know what decides this gap. The only way to move forward is by way of a historical study, sketching an outline of the parallel progress of technology and banking operations since the 1950s and perhaps into the future.
Technology and Marketing
It is a well-accepted fact that the value of marketing in dependent on the level of opposition in a certain market. Since 1950s, competition has shot up in all banking markets, and it continues to grow with the existing trend of de-control, which focuses on getting rid of structural barriers between types of institutions and market, while escalating the control for prudential objectives. In this environment and period, the growing worth of marketing departments is not alarming.
Even a perfunctory glance at marketing literature reflects that the contribution of bank marketing has undergone a change in this period. Some writers have typified three different stages through which it has progressed – the first stage was the one in which marketing was restricted to advertisements that reiterated the bank’s strong points; the second was one in which the bank was proactive in marketing its new products; and the last stage began when banks tried to find out and match the actual requirements of the customer. In the first stage there was not much that a marketing department could do, however, in the second and third stages marketing had a powerful role to enact in bank management.
In the second stage, technology took on an important role in bank marketing, with the design of new products. One mode that was adopted was to put up accounts for depositors, which often had a layering of interest rates as per the size of balance or a rate that altered daily and weekly with money market rates. Others offered some connection between two different accounts, perhaps a current account and an interest-bearing account; when the latter account was operated by a building society or savings bank that had little influence to offer current accounts, transfers between the accounts included two institutions. It was typical of banks in the second marketing stage to get lazy and so slow down the customers from making the most of the power to minimise their current balances day by day; in the third phase they are expected to meet the customers’ requirements, but it is surprising how few of them have yet to provide “sweep” accounts so that the current account balance is exactly zero by the end of the day. These features of the new accounts would have been impossible without support from the computer.
The third stage is the one in which marketing becomes the superior part in the strategy of the banks, when marketing departments lose their shine as the bank’s management, at the highest levels especially, must comprise of people who have experience of marketing. It is also a stage in which the method is to fractionalize the retail customer base. Banks which provide payment services can easily beat the rivals on the basis of their computer record of the traits and the financial behaviour of their customers. Technology is hence vital for this stage but it would be wise to remember that technological support for new products and segmentation has been in existence since 1980 in the form of mainframe computers; the only new thing is the addition of new software.
6. Research Methodology
Research approach
The researcher took on a case study method to get a detailed understanding of how e-marketing Industry. As per Denscombe (2000) when emphasizing on one or few research units with the objective of obtaining detailed information, the best method is to take up the case study approach. As per Yin, when the researcher has almost no control over happenings and when the stress in on a certain event in real life and to answer ‘how’ or ‘why’ questions, case study is the preferred method approach.
Case selection
By using random sampling techniques, the researcher found 4 banks which include 2 from each country i.e. UK and India. One public and one private sector bank was chosen for both the countries. As per scholars Hunt & Shelley (2004), a qualitative method makes the researcher grasp and construe the qualitative character of the information. The way forward keeping the qualitative aspect of the study in mind will include an in-depth study and assessment of the existing research and techniques applicable to the specific research problems, involving environmental issues within the marketing mix and policies created by the companies. The purpose is to fully grasp the way the companies create marketing strategies to remain in the competitive market.
Data collection
Primary data:
According to Denscombe (2000), for an in depth knowledge and understanding of the importance of e-marketing strategies in in Bank. The researcher used a face-to-face interview as the most apt method. This would not only enable him to seek information, but also give him an opportunity to seek detailed clarifications on the thoughts. Walshman (1995) had stressed on the advantages of personal interviews as one of the best ways to record the views and aspirations of the interviewee. The researcher faced problems such as limitations on the selective thoughts of one person, inconsistencies due to rigid beliefs of the interviewee, collation of voluminous data, transcription by using this methodology.
To gather information from the interviewee, the scholar has suggested to use the semi-structured interview guide as interview questions would differ as cases had very different strategies. According to Walshman (1995) interviews provide the best way to understand the views of the participants regarding the actions and events, which have or are taking place and the views and aspirations of themselves and other participants. In qualitative approach there is the extra benefit of permitting the researcher to go back to the drawing board and assess the understanding provided by the respondent in more detail as compared to other methods. The interviews will be carried among managers of the companies who are accountable for the creation of green marketing strategies. The researcher documented the responses and also simultaneously recorded them to transcribe later. The researcher will be going for 5-10 interviews from each bank.
Secondary data collection
Secondary data is gathered from different sources such as websites, annual reports, books, journals and articles and case studies. The objective this information gathering is to find out the related data regarding strategies adopted by the Trident Solutions.
Pilot study:
A pilot study was carried out among interviewees to ensure that the terms used are correct and suitable. As per Denscombe (2000, p 135), interview will be held using the face to face approach in order to aid the interviewer to ask questions which were not in the interview guide depending on the respondents answers.
Data analysis
The information was studied using content analysis. After the interview got over, information was cut down to recognize the patterns and themes and obtain a clear understanding. As per Ghauri and Gronhaug (2005) information was explored, studied and classified based on the questions in the research questions. If more information was needed or when new questions arose, then another round of data collection would be conducted.

Vietnam Banking Industry: Customer Satisfaction Analysis

It can be said that Vietnam is on the way of dramatic development and integration in global economic. Since Vietnam has officially become a member of the World Trade Organization (WTO), besides the advantages and opportunities, there have been still many challenges that Vietnam has to overcome. In recent years, Vietnamese’s banks have achieved many important achievements in innovation have grown larger and stronger than previous time. However, compared to the world, Vietnam banking industry is still small, modest, and inadequate.

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Undoubtedly, compared to 10 years ago, Vietnam banking industry has really been a remarkable growth. Firstly, banking system has mobilized and provided a large amount of capital to the economy, estimated about 16-18% of annual GDP (Vietnam Head Department Statistic 2008), nearly 50% of social capital. Credit growth has been increased during the year and in 2008 which was estimate to be approximate 24% that is 19% higher than in 2007. The banking system has also contributed to growth, the development, and economic stability in recent years. Secondly, Vietnam’s banking system had a comprehensive renovation. Many legal documents have been issued comprehensively, the policies about banking activities has been completed and consistent with international practice. Moreover, the discrimination between types of domestic credit institutions and the foreign ones has been gradually eliminated. Banks as well as credit institution have been autonomous and self-responsible. Competitiveness of credit institutions has been enhanced therefore banking market has been developing safely and effectively. Thirdly, monetary policies have been renovated and operating under market principles with international practice. The indirect operating tools that manage monetary policies have been formed and developed. Interest rate policy and exchange rate flexibility have been adopted by the market mechanism. Credit policies have been expanded and made innovation in the direction of fairness and equality for all economic sectors, business, and all residents.
1.2 Customer satisfaction management in Vietnam Banking Industry
Competitive trends in quality of banking product and services on financial and monetary markets increasingly urged Vietnamese’s banks to renew and continue to have effective customer policies and strategies in order to compete fairly with foreign banks. Thus, Vietnamese’s banks have ability to overcome the challenges that have been forecasted to be very fierce in coming time. Customer satisfaction management can be considered as an important point in cultural enterprise and cultural care, implementation of banks’ strategies towards customers in the context of globalization. Undoubtedly, currently when the difference in quality, design of banking services as well as the competitiveness of the products itself is no longer critical among banks, the determined factor is the quality of customer service. Aware of the important of increase customer satisfaction, Vietnamese’s banks have established customer satisfaction management in order to evaluate customer satisfaction on their products and services. Therefore, banks can improve their operations as well as consolidate their images in customers’ eyes, and banks can increase sales, market share, and position in the market.
2. Bank management studies on BIDV, Hochiminh City branch (HCMC)
2.1 Performance of BIDV, HCMC branch
Bank for Investment and Development of Vietnam has a short name is BIDV, was established under the Conference No.177/TTg dated on 26/04/1957 of Prime Minister of Socialist Republic of Vietnam. HCMC branch which is one of the largest scale branches in BIDV system, has estimated assets VND 10,000 billion (BIDV annual reports). HCMC branch has high business performance with ROA ratio always above 1%. There are 313 staffs classified into 4 blocks these are credit, customer services, block of units, and internal management. Founded in 1977, HCMC branch is always pioneer branch and dynamic in BIDV system in development new products and services based on applying modern technology and customer-oriented. Recently, BIDV – HCMC branch has been successful in the role of focal bank in arrangement of syndicated loans, co-financed investor in large scale projects. HCMC branch’s activities in recent years have been customer-oriented, creating the best conditions for customers to access and use banking services more effectively.
BIDV is one of four state-owned commercial banks so it is quite easy to understand why customers have high level of trust for bank. Based on the result of survey and research done recently to measure customer satisfaction, reveal that generally bank has been successful in bringing satisfaction to customers through the provision of products and services. The level of customer satisfaction varies from agree to fully agree. The measurement of customer satisfaction is based on the quality of services, number of products and services, and the continuity of using the services. The quality of services brings satisfaction to customers, they use the most services provide to them and they seem to be happier to use more BIDV’s services. This result confirms the criteria activities “cooperate and succeed” that BIDV has done for years. Thus, the bank has been successful in bringing satisfaction to customers through the provision of products and services. However, this is also pressure for the bank for better improvement what they have achieved. Therefore, the bank should promote further efforts to preserve and bring the highest satisfaction to customers.
2.2 Purpose of the study
Nowadays, in the competitive environment, customers are crucial survival of the bank. The banks which are paid attention, interest as well as loyalty of customers, will capture market shares and develop faster. Business strategic direction to customers is becoming the most important strategies of banks. How to give customers the best satisfaction is always the problem that banks try their best to fulfill. Therefore, research customer satisfaction in the bank is an important work that has to be done regularly and continuously in order to meet their needs. Since then, they can serve customers better and make customers always be satisfied when using bank’s products and services. This study is not out of this purpose which aims to enhance customer satisfactions for BIDV as well as increase the quality of products and services supplied by BIDV.
2.3 Significant of the study
The study presents the evaluation of customer satisfactions on products and services provided by BIDV – HCMC branch. Thus, bank has a comprehensive glance on the products and services they are supplying to customers. Bank should focuses on business development strategies as well as the quality of products and services. Obviously, if the service quality does not meet customer’s demand, the customers will no longer to use it. From the evaluation of customer satisfactions, bank can realize clearly their strengths and weaknesses. From there, they continue to promote strengths and overcome weaknesses in order to improve the quality of services, increase customer satisfaction.
2.4 Limitation of the study
The study has a positive contribution to the bank in understanding customers and identifying their position in the market, however the study still has some certain limitations as follows:
The study focuses on group business customers therefore it cannot be the overview of the entire customers’ transactions in BIDV – HCMC branch.
The study only considers about the time used and the number of bank’s transactions, it does not find out all customer satisfaction in the connection with trading enterprises, financial potential and cultural factors.
The study only focuses on evaluation of customer satisfaction of HCMC branch’s services so it cannot assess on customers in the city and other locations as well as potential customers who are not using banking services.
Based on these findings, this study can be improved with variety customer group, larger number of samples, wider research scale.
3. Model relevant to study
3.1 Introduction of Servqual model
Managers in banking industry are under increasing pressure to demonstrate that their services are customer – focused and that continuous performance improvement is being delivered. Given the financial and resources constrains under which banks must manage it is essential that customer satisfaction are properly met and measured and that from the customer satisfactions, any gaps in services quality are indentified. This information the assists a manager in identified cost – effective ways of closing services quality gaps and of prioritizing which gaps to focus on – a critical decision given scare resources.
This study involves the use of Servqual model (Parasuraman, 1988) which is a popular model of quality research of services and the most common application in the marketing research. According to Parasuraman, the quality of services cannot be determined vaguely but it depends on sense of belonging to customers for such services and this perception is considered by many factors. Servqual model is built based on the evaluation of quality of services, which is the comparison between the expected value, expectation, and the value customers perceived. Servqual model considers two main aspects of services quality as a result services and the process of services which are studied through 5 criteria – reliability, responsiveness, tangibles, assurance, and the empathy.
Customer satisfaction
Services quality
Sources: International Journal of Business and Management
3.2 Elements of Servqual Model
3.2.1 Reliability
Reliability shows the ability to provide services accurately, on time, and credibly. This requires consistency in the implementation of services and respects commitments as well as keeps promises to customers. In the banking sector, this criterion is measured by customers through the following elements.

The bank performs the services right from the first time.
Banking services are implemented at the time they promise.
Banking transactions are done correctly.
Bank’s staffs are always ready to serve customers.
There are always bank’s counselors at the table to help the customers.
Bank’s statements are submitted regularly and promptly.

3.2.2 Responsiveness
This criterion measures the ability to solve the problem fast, deal with customers’ complaint effectively and the willing to help customers as well as meet the customers’ requirements. In other words, responsiveness is the feedback from banks to what customers want.

Bank’s staffs are available to assist customers.
Bank provides services rapid, on time.
Bank responses positively to customers’ requirements.
Bank’s hotline for customer services is 24/24.
Bank tries to solve problems for customers.

3.2.3 Tangibles
Tangibles are the images of the facilities, equipment, machines, attitude of staffs, materials, manuals, and information systems of the bank. General speaking, anything that customers can see by eyes and feel by senses can impact on tangible.
The bank has adequate facilities.
Bank has modern equipment and machinery.
Bank’s staffs look professional and dressed.
Bank arranges the transaction counters, tables, and shelves scientifically and conveniently for customers.
3.2.4 Assurance
This element creates credibility and trust for customers, which is considered through professional services, excellent technical knowledge, attitude courtesy, and good communication skills, so that customers can believe in the quality of bank’s services.
Bank’s staffs serve customers politely, and courteously.
Transaction documents are clear and understandable.
Bank’s staffs always provide necessary services information for customers.
Bank’s staffs answer customers’ questions clearly and accurately.
3.2.5. Sympathy
Sympathy is the caring, consideration, and the best preparation for customers, so that they can feel as “guests” of the bank and are always welcome at any times, anywhere. Human factors are the core of this success and the more caring the bank gives to customers, the more customer understanding increases. The sympathy of bank’s staffs for their customers are expressed as follows:
Bank’s staffs notices the needs of each customer.
Customers do not have to queue for a long time to be served.
The bank has convenience location for customers to have transactions.
Bank’s ATM systems are modern and ease to use.
Bank’s staffs treat customers kindly.
3.3 Summary and limitation of previous research and findings
Through journals I have examined, research issues about customer satisfaction can be classified into 3 main categories including factors influence on customer satisfaction, the measurement of customer satisfaction, and the impact of customer satisfaction on business
3.3.1 Research about factors influence on customer satisfaction
The research investigates the relationship between services quality, overall customer satisfaction, and behavioral intention across public and banks. The findings indicate that services quality is significant determinant of customer satisfaction in banking industry (Monica Bedi, 2010; M.Jun and S.Cai, 2010). However, different dimensions of services quality were found to be statistical significant across public and banks. The study helps banks to redefine their corporate image to one that is customer-oriented and driven by service quality.
Research limitation concern the potential for the data inaccuracies due to item misinterpretation or predisposition to certain responses on the part of the participant does exist (Bedi, 2010). Similarly, the sampled data is one limitation which was collected from one organization (M.Jun and S.Cai 2010). Although, the purchasing department serves a wide range of internal customers and is involved in various purchasing activities, the dataset is limited by the potential lack of generalisability.
3.3.2 Research about the measurement of customer satisfaction
The research provides method to measure customer satisfaction based on assessing customer perception of services quality in services and retailing organization. One of the most popular model is Servqual (Parasuraman, 1988) is based on the perception gap between the received quality and the expected services quality, and has been adopted for explaining consumer perception of services quality. In addition, the availability of customer satisfaction data from national indices has also facilitated the examination of the factors associated with aggregate level customer satisfaction (M.Ogikubo et al, 2009).
Besides, the research points out the limitation of the Servqual is that the evaluation of services quality evaluated based on the expectation performance gap derived from Parasuraman 1988 is insufficient because much of the empirical research supported performance based measures of services quality (K.Ravichandran, 2010).
3.3.3 Research about the impact of customer satisfaction on business
The research presents that customer satisfaction has an important impact on business which is determined factor in customer loyalty as well as customer retention (Harkiranpal S., 2006). Moreover, the research provides an examination of satisfaction-retention relationship, and the development of more comprehensive view of the customer’s quality perception (Hennig Thurau and Klee, 1997). Customer satisfaction positively affects an organization’s profitability. Satisfied customers form the foundation of any successful business as customer satisfaction leads to repeat purchase, brand loyalty as well as positive word of mouth (Hoyer and MacInnis, 2001).
4. Methodology for study
4.1 Research design
These terms quantitative and qualitative are used widely to differentiate both data collection techniques and data analysis procedures. Quantitative is predominantly used as a synonym for any data collection techniques or data analysis procedures that generates or uses numerical data. In contrast, qualitative is used predominantly as a synonym for any data collection techniques or data analysis procedures that generates or uses non numerical data.
Three types of quantitative studies these include experimental approach, cross-sectional designs, and survey method. Because of limited time to complete collecting primary data, survey is an optimal method to collect research information. When using survey will give more control over the research process and sampling is used it is possible to generate findings that are representative of the whole population at a lower cost than collecting the data for the whole population.
4.2 Data collection
Data can be obtained from primary or secondary sources. Data can be collected in a variety of ways, in different settings and from different sources. Data collection methods include interviews, questionnaires, observation, and variety of other motivational techniques. Questionnaire is the best way to collect the data about customer satisfaction because making an appointment for personal interviews or telephone interviews is difficult, even though impossible. Beside the personal information and customer characteristic (open questions), questionnaire is designed including 33 properties (closed questions) that build up the characteristic of banking services. It is presented on scale from 1 to 7 points (from lowest satisfaction to highest satisfaction about the components of banking service). It will help quantify the opinion of customers who were invested and use the questionnaire to verify and analyze the multivariable date in the valuable the satisfaction of customers later. The customers are also suggested to evaluate their own overall satisfaction in last question by giving the scores.
4.3 Data analysis
After collecting all the data, the process of analysis begins. To summarize and rearrange the data, several interrelated procedure are performed during the data analysis stage. For quantitative data analysis, statistical tools of Microsoft excel and analytical software SPSS are used for data input and analysis. The statistic results were presented by graphical form with detail description.
5. Conclusion
Customer satisfaction is not only vital factor but also the target that all banks want to achieve. Along with the increasingly strong competitiveness in banking industry, learning about customer needs as well as the factors affecting customer satisfaction has become essential. Therefore, this study is useful in proposed policies, development strategies of banks.
In the service sector in general and banking sector in particular, the role of the meeting customer needs has an important implication that derives from the interaction between banks and customers as well as the positive impact that banks have. More specifically, if banks bring their customers the high customer satisfaction, customers will continue to use their services, support new bank’s products or services, introduce the bank to other partners, and become loyal customers. From there, they are contributing to increase sales, market share, and position in the market that are the targets any bank wants to achieve.
This study researches customer satisfaction with the products and services that banks provide to customers. This thesis is presented through the survey of customer satisfaction. Survey results are reliable input source to marketing strategies and opportunities to help banks better understand customer needs, customer’s evaluation of quality of bank’s services. Therefore, banks can improve their operations and enhance customer satisfaction more effectively.

Corporate Social Responsibility in Banking

Abstract: In today’s global economy, corporate social responsibility (CSR) is a core component of corporate strategy. As a result CSR emerge as a safeguard to protect financial scandals and diminish reputation of the banks. It also advocates and works to minimize the conflicts with stakeholders. Corporate Social Responsibility (CSR) designed to respond to huge unmet needs of the society in the achievement of long term and persistent business value. Especially commercial banks play an important role in implementing various social and philanthropic programs to help disadvantaged people of the country. To reinforce, CSR activities, banks have focused the area of market place, work place, community and environmental policy. The analysis in the study was targeted to understand the overall corporate responsibility status in the banking sector of Bangladesh.
Keywords: Corporate Social Responsibility, Commercial Banks, Bangladesh.
Now-a-days corporate strategy planner focuses their concentration on wealth maximization rather than profit maximization. The main cause is the intense market competition. So, they divert mentality from conventional business to social business. In addition, recent financial scandals eg, Enron, Parmalat, Worldcom etc have forced corporate executives, globally, to contemplate a broader strategy beyond the focused view of stockholders wealth maximization.

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The impact of business on the society has become a crucial issue. As a result, banks are emphasized on social, ethical and environmentally responsible approaches to business activity. Bank examine the environmental effect of projects in loan approval process and no projects are approved which are detrimental to the environment. Commercial banks are well aligned with Bangladesh Banks guidance on this aspect. They believe in the need to focus on poverty alleviation through education and health care, for long run benefit of the nation.
Recent theories of CSR (Baron (2001), McWilliams and Siegel (2001), Bagnoli and Watts (2003)) assert that firms engage in “profit-maximizing” CSR. That is, companies are assumed to be socially responsible because they anticipate a benefit from these actions. The World Business Council for Sustainable Development (WBCSD) has given the following definition of CSR:

“CSR is the task of a business to contribute to sustainable economic development, working together with workers, their families, the local community and society in general to improve quality of life.”

Barnea and Rubin (2005) demonstrate that the decision to invest in CSR is negatively related to insider ownership, and interpret this finding in the light of an overinvestment hypothesis. CSR is good for shareholder value, up to a given level, but insiders may have an interest to overinvest in it to improve their reputation, and they are more likely to do so when their ownership share is lower.
Literature Review:
There is a growing trend for investors to direct their money towards explicitly socially responsible organizations. According to Peter A. Heslin and Jenna D. Ochoa (2008) “The amount invested in ”green” mutual funds in the U.S. rose 695% in the last six years. During the last three years, the amount of money invested in clean energy has reached U.S. $70.9 billion globally.” The primary goal of any economy is to maximize the material wealth of nations (Adam Smith), production and distribution of wealth (John Stuart Mill), to maximize material wealth and material welfare (Alfred Marshall), satisfaction of the human needs with the scarce means (Lionel Robbins). But now a day, the objective of a firm is not only consistent with those scholars but also incorporates social, ethical and environmental concerns. Therefore the primary objective, the purpose or use for which, firms exist is to ensure the subsistence of mankind and sustenance of the Earth containing the mankind.
Some authors have argued that the stakeholder perspective of CSR ought to extend to the concept of accountability. Drawing from the works of other academics (e.g. Gray et al. 1987; Williams 1987; Roberts and Scapens, 1985), Swift (2001:17) broadly describes accountability as ‘… the requirement or duty to provide an account or justification for oneʹs actions to whomever one is answerable’ and narrowly as ‘… being pertinent to contractual arrangements only,… where accountability is not contractually bound there can be no act of accountability’.
According to Lantos (2001), ethical CSR is a firm’s mandatory fulfillment of economic, legal and ethical responsibilities. It is akin to the first three components of Carroll’s typology. Altruistic CSR is the same as philanthropic responsibility of Carroll’s typology but differed from it in the sense that Lantos argued that it would only be possible for private firms to be philanthropic and irresponsibility on the part of public corporations since they do not have the rights to use the funds of shareholders (who might also be involved in private philanthropy) for public philanthropy.
As argued by Konz and Ryan (1999: 200): “People are searching for meaning in work that transcends mere economic exchanges between isolated, autonomous individuals. ‘(and)’ a way to connect their work lives with their spiritual lives, to work together in community, to be unified in a vision and purpose that goes far beyond making money”.
In modern era, business activities moving around the society visualizing sustainable development. It is not only a promotional activity but also an ethical dilemma. Some of the authors’ findings are given below:
Sethi (1975)
– corporate activities should be stable over time
– definitions of various categories should be applicable across firms, industries, or even social systems, making comparative analysis possible.
Carroll (1991, 2004)
CSR is made up of the following components in a bottom-up order:
(1) economic responsibility – ‘be profitable’
(2) legal responsibility – ‘obey the law’
(3) ethical responsibility – ‘be ethical’
(4) philanthropic responsibility -‘be a good global corporate citizen
Lantos (2001)
Identified the following strands of CSR:
(a) ethical CSR,
(b) altruistic CSR and
(c) strategic CSR
CPD (December, 2002)
Following issues have been identified under corporate responsibility framework:-

Sustainable Development
Business Ethics
Human Rights
Legal Compliance
Corporate Governance
Fair Employment
Health & Safety
Labor Standards
Community Relations
Environmental Responsibilities

Objectives of the Study:
The objective of the study is to investigate a definite structure and concept of Corporate Social Responsibility (CSR) in the area of banking sector. It deals with early history of corporate social responsibility, banking mission, and the area of social welfare. Besides these, it has some special objectives. These are:

To get an idea of banking role in sustainable development.
Evaluate transparency and accountability of corporate as well as public entities.
To learn business ethics, safety and ergonomic issues.
To learn banks responsibility to community.
To know standard conduct that includes employment fair policy and all core labor standards.

Methodology of the study:
The paper is constructed to synchronize theoretical and practical exposure of CSR in Banking perspective. As a result, the paper is descriptive in nature. Most of the information are generated by evaluating “Secondary Sources” like:

Annual report of different commercial Banks
Study related books and journals
Web sites

Collected data have then processed & compiled with the aid of MS Word, Excel & other related computer software. Necessary tables have been prepared on the basis of collected data and various statistical techniques have been applied to analyses on the basis of classified information.
Evaluation and Findings:
In Bangladesh, there are forty eight scheduled banks and out of them forty six had engagement in CSR practices in some form or other in 2009 (Review of CSR Initiative-2008-09). Due to intense competition in the banking sector, it is essential for a bank to behave in a responsible manner towards the society. This sense stimulates business activities in a long term and persistent social value. To attain this intrinsic quality banks should:
Focus on vision based strategy (wealth maximization rather than profit maximization).
Draw their attention to internal and external components of the CSR activities like; fair salary structure, employee benefit, corporate governance, labor standards etc. They need to trust their shareholder-customers, shareholders, employees and society. Behaving responsibility towards society and the environment strengthens this trust.
Their commitment has always been to behave ethically and to contribute towards changing the quality of life of their people, the local community and generally the society. Corporate social responsibility focuses on:
Figure 3.2: Area of Social Responsibility
Work Place
Market Place
Area of CSR
Source: Annual Report of National Bank Ltd (2009)
In 2004 and 2005, several banks adopted meticulous CSR policies to limit lending related to destructive projects. The intense pressure from environmental activists and shareholders, different banks agreed to not finance projects in endangered or high conservation value forests or where illegal logging is occurring. Environmental concerns have grown steady during the past several decades. Goldman Sachs was the first global investment bank to adopt a comprehensive environmental policy. The natural environment is the major worldwide issue facing the business and the public. World concern continues to mount about the depletion of the Earth’s ozone layer and the resulting “green house effect”, a dangerous warning of the Earth.
In the year 2007, There is a greater concentration in the field of disaster relief, both in participation and expenditure wise, was observed mainly because of the cyclone ‘Sidr’. Whereas, in the year 2009, the ‘Education’ and ‘Health’ sectors were getting more attention and appeared to be the most popular area for CSR activities as huge investments are being made by several banks in these segments. These shifts point to the responsiveness of the banking community to the changing need of the society.
Despite progress made by many companies, adoption of CSR policies and reporting are still in its early stages at most corporations. Our Corporate Social Responsibility Program engages companies to adopt strong social and environmental policies, and follows us to ensure that commitments are kept.
Corporate social responsibilities may provide added advantages to the business like as Balanced Score Card. Because pushing incentives in the base level (Work Place, Market Place, Community and Environment) will increase bottom line figure (Profit) of the statement. The positive attitude towards the focused element (Table-03) is the way of getting added advantages from the society.
Major Areas
Focused Element
Added Advantages
Work Place
Working Environment
Enhance employee satisfaction, confidence, productivity and loyalty
Employee Benefit
Job Security
Gender Discrimination
Staff welfare
Day-care Center for children of bank employee
Market Place
Customer Service
Attain customer fidelity, and retention
New Product
Introduce new technology
Secure public confidence, interaction, positive attitude and devotion
Sports & Cultural Activities
Health Care
Disaster Relief
Allure public attention through ethical behavior
Financing on eco-friendly firm
(Financial Inclusion)
Fig: Added Advantages received by practicing CSR
The Financial sector in turn can contribute hugely by catalyzing CSR practices in their real sector corporate clients, promoting inclusive economic and social development. In terms of direct monetary expenditure, engagements of banks in CSR initiatives are increasing, particularly following issuance of BB guidance (DOS Circular No 01 Dated 1st June 2008):
CSR expenditures of banks have thus far largely been in the form of passive grants and donations. Apart from one-off grants and giveaways, some banks have engagements in longer term continuing support commitments, in areas of education and healthcare. Besides the passive engagements by way of grants/donations (Table 1, Section B, page 2), banks are now getting actively engaged in socially responsible business operations, by way of increased lending to under-served economic sectors like agriculture and SMEs, towards fuller financial inclusion and faster poverty eradication.
The June 2008 BB Guidance circular suggested that banks could begin reporting their CSR initiatives in a modest way as supplements to usual annual financial reports, eventually to develop into full blown comprehensive reports in GRI format. Banks are yet to adopt separate reporting of their CSR activities in comprehensive formats such as the GRI format.
The ultimate conclusion is that corporate responsibility is a changing philosophy of business. The demands for “social responsibility” have provoked enthusiastic discussion and debate on what new roles, if any, business firms should play in the social system. Banks should not attempt to minimize the expectations of the society; rather they need to respond to them more efficiently. The corporate responsibility practices can play positive role in improving competitiveness in the corporate entities in Bangladesh as well as improve working and living environment for the workforce. Whether is for the government, the community, shareholders, directs, top management, employees or the general public, a corporate organization that intends to effect changes in the environment must always perform a number of socially responsible actions.
Formulate uniform rules and regulations: Government or regulatory bodies should formulate uniform rules and regulation regarding CSR practices in banking sector.
Tax Shield: All social contribution by the banks should be tax exempted. As a result, social contribution will increase gradually.
Change corporate values: In most of the cases, social contribution treated as enhance reputation only. But, they have to change their values and try to think it’s their responsibility too.
Improving Business and Social Productivity: A society’s productivity depends on how efficiently it uses resources. If the naturally human and financial resources are combined and managed effectively by business forms then the productivity of both business and society can be high.
Balancing Ethics and Economics:A serious social challenge to business is to integrate ethics and economics. How much more profit is desirable and what cost to the customers? What about product quality? Is the customer being cheated through poor measurement or abrasive advertisement? Ethical behavior and economics are the opposite sides of a bad coin. There should be a balance.
Carroll, A. B. (1991). The pyramid of corporate social responsibility: Toward the moral management of organizational stakeholders. Business Horizons, 34(4):39-48
Carroll, A. B. (1999). Corporate Social Responsibility: Evolution of a Definitional Construct. Business & Society, 38(3):268-295
Carroll, A. B. (2004). Managing ethically with global stakeholders: A present and future challenge. Academy of Management Executive, 18(2):114-119
Lantos, G. P. (2001). The boundaries of strategic corporate social responsibility. Journal of Consumer Marketing 18(7): 595-630
Konz, G. N. P & Ryan, F. X. (1999). Maintaining an organizational spirituality: no easy task. Journal of Organizational Change Management, 12(3):200-210.
Peter A. Heslin and Jenna D. Ochoa , Understanding and developing strategic corporate social responsibility, Vol. 37, No. 2, pp. 125-144, 2008

The Difference Between International Banking And Global Banking Finance Essay

To define a banking system as International or Global is quite difficult because there is no clear-defined Bank system model. We can make a certain classification by looking at the way in which foreign assets are funded and liabilities are managed. The international model of banking system relies more in Centralised funding which means that assets funds and liabilities (gathered mostly by bank domestic market) are shared among the main Bank units and then allocated to other member of the banking group. While Multinational or Global Banking has a more decentralised tendency which means that funds and liabilities are local claims. To diminish our uncertainties regarding the banking classification we can see the currency in which rely the bank assets and liabilities. In this way we can see the dependency on foreign exchange of the cross-border funding. International Banking is very dependent on foreign exchange rather than Global Banking which use local currencies and consequently eliminates transfer and exchange rate risks.

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Identify five ways in which a bank headquartered in the USA can fund loans to a borrower in Japan, and classify them as examples of international or global banking
Real life examples can give us a better understanding of Banking System models. We can take into account a Bank which its main offices are situated in USA. We can distinguish five ways where this bank can fund loans to a borrower located in Japan. Looking carefully the way this funding is done, we can make a certain classification as International or Global Banking.
USA customers deposit their money to Bank Head Office which follows these funds to Japan gives them as loans to Japan borrowers. Since this process involves cross-boundary it is considered as International Banking.
USA customers deposit their savings to Head Office which in turn deposits these funds at its Bank Unit in Japan. The Bank unit can give these funds as loans to Japan borrowers. This is also an International banking system.
Another way to move funds is that Head Office gets Japan deposits and in turn gives loans to Japan borrowers who need financing. So the whole process is done by the head office in USA without involvement of any bank unit or USA saver. This is International Banking classification again for the same reason.
If a Bank unit in Japan takes deposits from Japan savers and gives these funds as loans to Japan Borrowers then we are in the same country, so it called Global Banking system.
Still we have the same system as the last one when the USA saver deposit their saving to Bank units in Japan and the funds goes for Japan borrowers.
The ratio of locally funded foreign assets to total foreign assets is referred to in the reading. What value will this take for a pure global bank? What will be the value for a pure international bank?
Use the data provided in you case study to illustrate this.
The foreign assets, especially the ratio of cross-border assets to locally funded ones, is the best measurer to classify a banking system as International or Global. Since it is difficult to have a banking system totally Global, this measurer ratio would be, (total local assets)/(total foreign assets)=1. For banking system totally International this ratio would be 0. If we have another measurer ratio such as, (total cross-border assets)/(total foreign assets)=0 for Global Banking and 1 for International banking. These are the sides of the segment and the most of the banks relies between these sides.
Identify five reasons for the move away from international and towards global banking since 1980s.
According to BIS reporting data at the reference Global Banking System, we can see the movement that banking system had during certain different periods. If we choose a starting point such as year 1980 till now, we can see that Global banks has been expanded more than International ones. Especially US Banks local claims has been increased by 400% instead of the foreign claims which were increased by 55% (Bis Reporting Data table).
We can identify some reasons to explain how this shifting is done:
Most of Bank strategies tended to increase their assets and liabilities in foreign markets. This goal is achieved by trying to make the saving customers into more credit card holders or mortgage customers.
Another reason for the shift was by increasing the market of Bonds and Securities. So, the aim was to increase borrowers of local obligations or local government bonds.
The period of 80′ is known as Debt Crisis, where most of the banks couldn’t pay back their debts (region as Latin America was most hit by this crisis and also other well-developed countries). In such Market Risk, moving toward global banking was a good solution to reduce risk. Also, having different currencies in different countries makes the exchange of currencies very risky for bank transaction and funding. So, having the funds in a country and investing those funds there eliminates this kind of risk.
Acquisitions of cross border banks and by expanding existing operations was one of bank strategies that makes banks more and more global. If we look back at 90s the data show an increase of inflows in some developed countries by 21 % (UNCTAD (2001)) and this came by merging and acquisitions.
Another reason for expansion of Global Banking are the countries restriction which are becoming more and more easy in the meaning that they are becoming more opening to new financial institutions. Having lots of country boundaries like financial laws or any other restrictions makes the global system quite difficult to enlarge.
Why is Europe an exception?
use data from you case study
Reading through the article Global International Banking, we can see that the regions involved are mostly of USA or Asia. So, Europe it’s not so much involved in this kind of Globalisation. Even from the data in table 1 ( BIS Report 2001) we can see that Europe countries has a high number on international claims (Europe area shares almost 38.6 %of international claims vs all countries and Western Europe shares 62.2%)
This is possibly due to the main head offices which are located in Europe, in countries like London, Amsterdam, Zurich and Luxemburg and thus they tend to have more cross-border activities. These activities are also strongly related to Europe money market. The goal is to have cross-border funds in order to strength the position of Euro currency and also to increase local claims in Europe. Also many large business companies tend to have securities and obligations in other countries outside Europe using the funds raised up in Europe in euro currency. Such activity increases the competition between these large companies and tends to avoid main retail transactions in Europe countries. Also there are other factors that exclude Europe from this shifting towards global systems such as, Institutional ones. The existence of Cartel groups makes difficult the shift because of the fear of losing the group value. Also most of the Europe banks are affected by different regulatory systems, different tax and labour laws, accounting and reporting systems, and also having different country restrictions in Europe, impede the shifting to global systems.
Distinguish between Transfer Risk and Country Risk. How does global banking diminish Transfer Risk?
Every banking system, International or Global involves certain kinds of risk such as Country Risk, Transfer Risk and other risks hanged on by the institution itself. Since these systems lay down in different countries, they face the countries restrictions e.g country economic, political, social. From this tendency comes factor such as interest rates, currency evaluation or other issues (not dependant on country economy, such as natural disasters) which may affect a lot the foreign investor. The risk that arises from the country, in which it is being invested, is called country risk. Part of such risk can be considered Transfer Risk. This is due to preclusion of exchanging the foreign currency to the country one to make transactions. The transfer risk is limited to country in the terms of the country’s demand for foreign currency and also to the foreign exchange which could fluctuate in different periods. Investing in one country and using those funds for loans or other possible investments, like global banking does, diminish the transfer risk in terms of currency devaluation. International banking involves funds transfer through the countries and in this way the transfer risk is at high levels.
During the Argentine crisis, USD deposits and USD loans were treated differently by the Argentine authorities. Deposits remained in USD, while loans could be repaid in pesos at a devaluated exchange rate. What are the implications of this for global banking strategies?
Include some data from the case study
When a country is in financial crisis, happens that lots of foreign investors move away, inflation goes up, unemployment arises and other effects take presence in that country like Argentina in our case. The Argentine government took a decision to treat bank deposit in USD and loan instalments to be paid in pesos. Having peso currency depreciated, makes that the exchange rate between Dollar and Peso to be high (more peso for one dollar). When the exchange rate is high, the effect it has on interest rate is that it goes down. by keeping at low level the interest rate of the country, more money will be in circulation, and more cash flows for any investment. In this kind of situation, Argentina can be attractive to new investors, especially global banks which operate locally. The government decision has an effect on local claims in local currency. In this way the peso currency gains strength foreign reserve in USD can be kept at the same level as the cash circulation. Since the ratio local claims versus international claims was 34% (table 1, BIS reporting (2001)) the government tented to increase such ratio. Argentina is a good example of shifting from international to global system because such a decision helps global strategies to be developed in this country and to diminish transfer risk.
Part Two: “Capital Flows in East Asia since the 1997 crisis”
In what sense can the net capital outflows from East Asia since the 1997 crisis be said to have supported the global economic and financial system in recent years? Explain your answer fully.
The 1997 was a year to be remembered for countries like Thailand, Malaysia, Indonesia and other countries that form the East Asia region. Due to lack of financial system and poor governance, those countries were affected by stock market devaluation, asset prices going down and also currency devaluation. Having such financial problems, lots of investors move away causing capital withdraws. But since then, gradually improvements have been made by passing from account deficit to account surplus valued at $88 billion. Current account balance surplus or deficit shows how well the net foreign assets of that region are and in the calculation are included government or private payments of the certain period.
The net capital flows from East Asia to other part of the world involved the creation of foreign exchange reserves. Viewing the data (BIS Quarterly Review (2003)) between two references of times 1998 and 2003, we can see that the region reserves has been growing time after time, increasing in this way the global reserve by almost 50%. But the usage of this reserve didn’t focus on region domestic investment but to other part of the world. The country, which played a great role in region recovery, was United States.
Having current account deficit in the same period, at about $240 billion (BIS Quarterly Review (2003)) United States imported for East Asia region a net value of $116 billion. In other word we can say that United States invested in Asian assets with high risk and the region gradually transferred the risk to global markets which want to diversify their investment portfolios.
Despite this growing there are some criticisms regarding how well can this reserve be used on the region itself and not to the rest of the world. But what are the benefits from the yield of the foreign exchange reserve comparing to the investment inside the region. What can be the profits in each case? The region main profits on the first case are by balance payments in order to have assets in financial markets at the rest of the world, and this is called risk free global market. The other case is to invest in the region, and in this way to improve the region’s financial market. Some critics believe that in the last case there will be much more profits than the first one and makes the reserve less rational.
Another critic is done to the net Capital outflows in the sense of externalities involved in the process. As we all now, Externalities are behaviours or any financial decision which don’t takes into account the country or region interest. In our discussion we can say that the resources of the region are putting into work for the other part of the world rather then for the private companies or corporate.
In what sense have the gross flows of capital into and out of East Asia involved “an international exchange of risk that is restoring and strengthening national and corporate balance sheets in the region and rendering the region’s economies more resilient”? Explain your answer fully.
Capital flows have two point of view in which has to be seen, capital inflows or capital entering in the region and capital outflows or capital going out of the region. Both ways of flows involves risk in the process, but this risk involves different counterparties. What is in common, is that Capital flows in East Asia has been influenced by so called, Foreign Direct Investments (FDI) which was the main source of capital inflows in the region and data shows that before the 1997 crisis the region was receiving almost 20% of global FDI. Even after the crisis, the region had some difficulties to attract new investments but still the FDI were at high level, especially in China. The main FDI for the region are USA, Japan and investments between the region’s countries. In 2002 East Asia was having 16% of net USA FDIs and 15% of Japan net FDIs. Also, having trade arrangement between region’s countries is one of the possible investments flows. Being in an international exchange of capital flows, it involves risk for sure and it comes in different forms such as, portfolio investments and bank channels.
Equities of portfolio in the region went down after the crisis, especially in Thailand (80% between 1996 and 1998 (Graph 5, BIS Quarterly Review (2003)). Gradually region equity market got some strength and local equities versus international equity began to be more correlated. This was due to exports, industrial production and the region economy as a whole.
Even, foreign bank lending to the region fell dramatically after the crisis. If we look at graph 6 (BIS Quarterly Review (2003)) we can see that Japanese banks reduce their claims on East Asia. Some of East Asia banks sold their debts to USA investor and other corporate bonds were sold in international market.
In contrast to counterparties involved in the inflow of capital process, the outflow process is through bank channels. After the crisis East Asia began to buy securities of US Treasuries, US Agencies and some European and Japanese government debts which we know that they are low risk. Also banks began to have deposits outside the region, in international banks.
Paying back low-risk debts and selling its own equities, East Asia was giving to the outside world secure capital and in turn its financial structures, such as corporate balance sheets were getting stronger. But if we compare the yield from capital inflows and the yield from capital outflows, data shows that East Asia during 1997-2002 is getting less than its giving. But, from this exchange of capital the region is getting liquidity.
But, how much could East Asia earn if the capital on gross basis have been invested in the region and not to flow outside it. Till now, only USA had more benefit by East Asia, and local market bond of the region has been left behind.