Universal Banking Essay

1505 words - 7 pages

Universal Banking is a multi-purpose and multi-functional financial supermarket (a company offering a wide range of financial services e.g. stock, insurance and real-estate brokerage) providing both banking and financial services through a single window.
Definition of Universal Banking: As per the World Bank, "In Universal Banking, large banks operate extensive network of branches, provide many different services, hold several claims on firms(including equity and debt) and participate directly in the Corporate Governance of firms that rely on the banks for funding or as insurance underwriters".
In a nutshell, a Universal Banking is a superstore for ...view middle of the document...

Thus, emerged new financial conglomerates that could maximize economies of scale and scope by building the production of financial services organization called Universal Banking.
By the mid-1990s, all the restrictions on project financing were removed and banks were allowed to undertake several in-house activities. Reforms in the insurance sector in the late 1990s, and opening up of this field to private and foreign players also resulted in permitting banks to undertake the sale of insurance products.
The phenomenon of Universal Banking as a distinct concept, as different from Narrow Banking came to the forefront in the Indian context with the Narsimham Committee (1998) and later the Khan Committee (1998) reports recommending consolidation of the banking industry through mergers and integration of financial activities.
Universal banking is a combination of commercial banking, investment banking and various other activities, including insurance. It seeks to provide the entire gamut of financial products under one roof and reflects the global convergence between commercial banks, investment banking and insurance companies. The convergence is an attempt by banks to fulfill the lifelong needs of the customer by following the cradle-to-grave concept. Commercial banks have a long-term relationship with their customers when compared to other financial intermediaries.
Universal banking has its own merits and demerits. The main advantage is that it results in economy efficiency, lower cost and higher output. But there is a fear that because of their sheer size they might gain a monopoly, which is undesirable for the economy. Also there can be conflict of interest because of the combination of all types of financial activities. The solution of Universal Banking was having many factors to deal with, which can be further analyzed by the pros and cons.
Advantages of Universal Banking
• Economies of Scale. The main advantage of Universal Banking is that it results in greater economic efficiency in the form of lower cost, higher output and better products. Many Committees and reports by Reserve Bank of India are in favour of Universal banking as it enables banks to explit economies of scale and scope.
• Profitable Diversions. By diversifying the activities, the bank can use its existing expertise in one type of financial service in providing other types. So, it entails less cost in performing all the functions by one entity instead of separate bodies.
• Resource Utilization. A bank possesses the information on the risk characteristics of the clients, which can be used to pursue other activities with the same clients. A data collection about the market trends, risk and returns associated with portfolios of Mutual Funds, diversifiable and non diversifiable risk analysis, etc, is useful for other clients and information seekers. Automatically, a bank will get the benefit of being involved in the researching.

Other Papers Like Universal Banking

英国Marketing Thesis: Situation Analysis and Market Plan for a Uk Bank

2072 words - 9 pages more regulatory policies for banking industry so it is better to launch bank now because the conditions and circumstances are good for launching a bank in UK now a days.#p#分页标题#e# 社会,人口和文化因素—Social, Demographic & Cultural Social and Culture of the UK is mix people belong to different demographic sectors so there cannot be a universal rule or policies for the customer. We should be aware of the fact and formulate those policies which are

Islamic Banking Essay

1832 words - 8 pages Islamic Banking Malek Alraddadi 02-24-2014 FIN-610 Introduction This study debates upon the history of Islamic banking. What are the ethical issues involved in the implementation of Islamic banking. Since the birth of Islam what type of steps are taken and by whom these measurements were taken. Besides this this paper also declares the response and customers point of view regarding Islamic banking with the help of different studies

Technical Analysis Of Banks

3127 words - 13 pages universal banking: | |In India, the penetration of banking services is very low. Less than 59 % of adult population has access to a bank account and less than 14 % of adult population has a | |loan account with a with a bank. Under such circumstances, it would be incorrect to create a regime where banks are allowed to choose a path away from carrying banking to | |masses

Sustainable Banking -an Indian Perspective

3068 words - 13 pages highest sustainable rate of return, while being profitable in the long run. Such banks require that their shareholders have the same vision and ambition. Unfortunately, the current status and demand for sustainability in society is not sufficiently developed to make the goal of sustainable banking possible for large banks. 6. International Practices - Universal banks usually cover all activities like Equator Principles, Green Banking, etc. a

Investment Banking Industry In The United States And JP Morgan Chase

3534 words - 15 pages as financial intermediaries. The use of financial markets is at the heart of investment banking.There is an important distinction between investment banking activity and the institutions that perform it. Investment banking activity can be, and is, also undertaken by banks (who are financial intermediaries), provided the respective regulatory framework allows it and an individual bank (ie, a universal bank) wishes to engage in it. Generally

Global Banking

2083 words - 9 pages banks. - In 1979, a joint WB-IMF mission in the Philippines introduced monetary reforms that took effect in 1980. These reforms include the formation of Universal Banking or expanded commercial banking which requires a minimum capital of P500 million. - This new concept of banking aims to increase the mobilization of saving, and channel the financial resources into long-term lending which the economy urgently needs. Participation of TNBs

Cashless Nigeria

1531 words - 7 pages complained that the policy has limited their cash transactions, no matter the type of electronic transaction they use. But competition in Nigerian banking sector has become intense, partly due to regulatory imperatives of universal banking and also due to customers’ awareness of their rights. Bank customers have become increasingly demanding; they require high quality, low priced, immediate service delivery and improved value from their chosen banks


3175 words - 13 pages Companies (1992), the Law" On Securities "(1996), the Law" On the Bank of Albania "(1997), the Law" On banks in the Republic of Albania "(1998), as well as the normative acts issued by the Bank of Albania. Republic of Albania has organized the banking system based on the universal model and not that on the specialized one. Based on Law 8365, dt.02.07.1998 "On Banks in the Republic of Albania", the banking system is divided into two levels. Structure

It Usage In Banking Industry

1577 words - 7 pages transistors, real time genome sequencing, and universal networks. In such environment the network of powerful hand held devices will mean that there may not be any need of carrying debit cards or credit cards and money may change ownership on the networks without any ATMs. 2. The change of The Nature of Competition By IT Usage Over the last many years information technology has turned banking industry on its head. Changes in the internal

Effectiveness of Credit Risk Management on the Financial Performance of Philippine Universal Banks

1604 words - 7 pages Performance of Philippine Universal Banks. More specifically, it will present profile of the various Philippine universal banks, number of years of operation, capital adequacy, asset quality, management soundness, bank’s earning, liquidity, bank size, and different risk management in banking. It will also identify the benefits of credit risk management strategy and characteristics of credit risk management of Philippine universal banks

Banking Features of Australia and Canada

3312 words - 14 pages with the big five. Also, the business of the big five is quite diverse, comprising of ordinary private banking and investment banking and other financial activities, so that they are like large-scaled universal banks. Apart from the common feature of high concentration in banks, effective and sound regulation is another primary reason making Australia and Canada copied with GFC. As is universally accepted, both of the banking regulators in

Related Essays

Universal Banking Essay

1344 words - 6 pages Universal banking is the norm in lower- and middle-income countries. Ever- expanding safety nets also seem to be the norm in the 20th century in these same countries. Is there a connection between the two? Should the structure of the financial system influence the depth or breadth of the financial safety net adopted by governments? Why or why not? The role and the future of safety nets as an inherent feature of the majority of financial

Ssssss Essay

443 words - 2 pages Is It Necessary To Separate Retail Banking From Investment Banking? Discuss Possible Advantages And Disadvantages... increase in the efficiency. Benston G.J. (1994) also believes that universal banks may end up with too much power over specialized banks and smaller companies... Save Paper Is It Necessary To Separate Retail Banking From Investment Banking? Discuss Possible Advantages And Disadvantages... conventional analysis, was

Investment Banking Essay

1557 words - 7 pages Difference Between Investment Banking and Merchant Banking Investment vs. Merchant Banking Bank is an organization that provides a range of financial and some non financial services to its customers. The main source of income, that makes the bank survive is the interest charged from those to whom the bank has given loan. A bank accepts deposits from its customers and pay interest to that deposited money, while it lends money to those who

Russian Commercial Banks Essay

1622 words - 7 pages at not such high pace as in 2012. In our opinion, the exceeding pace of growth of retail lending over corporate lending will continue. Barclaysis a British multinational banking and financial servicescompanyheadquartered in London. It is a universal bank with operations in retail, wholesale and investment banking, as well as wealth management, mortgage lending and credit cards. It has operations in over 50 countries and territories and has