This Literature Review Mobile Banking Dissertation is in continuation with Mobile Banking Introduction and Analysis Dissertation. It discusses about banking industry, mobile banking and barriers to mobile banking.
2.1 Banking Industry
A bank can be defined as the financial intermediary who accepts the deposits with the condition of reimbursing on demand through the check drawn by the customers of the bank.
2.1.1 Types of banks
The Banking industry appears in three basic forms which are:
Central Banks: These are the banks which issues money on behalf of the government and these banks also plays an important role in stabilising the economy of the country by regulating the money supply (Chin, 1998a).
Commercial Banks: The Role of the commercial banks is to accept the deposits for the purpose of the channelling these deposit into the various activities such as lending which may be done either directly or through the capital markets.
Saving Banks: These banks are known as the building society and the main role of these banks are to borrow and save money which is taken from the members of the financial co-operatives formed.
2.1.2 Standard activities of banks
Banks were initially mean for the three standard activities which were carried out by the all banks. These three activities for which banks were developed are as follows:
Payment system constituents: Banks main activity includes the working as the payment system for the various activities between banks and the users of the modern banking system. The Payment services which are provided by the banks to its users can be divided into three main areas which are: payment and remittances, collection and Forex services (Tornatzky and Klein, 1982). Payment and remittances services includes services like various kinds of cheques such as bankers cheque, multicity cheque, DD, debit cards, travel cards etc. Collection includes services such as local clearing, national clearing, ECS and cheque collection etc. Forex service provided by banks includes collecting and distribution of the foreign currencies.
Intermediary: Banks also work as the intermediary between the money depositors and money lenders. Deposit services provided by banks are of different kinds such as current accounts, saving account, fixed deposits and recurring deposits. Loan services which are provided by the banks in form of retail loans and corporate loans are of business loans and trade finance types. Hence banks take money from the people at some interest rate and lend that money to some other users for making profits (Sulaiman et al, 2007).
Financial services: The Financial services offered by banks are in the form of distribution of various financial instruments such as mutual funds, Insurance, gold coins etc, collection of taxes, Demat accounts, safe keeping and advisory services provided by the banks.
2.1.3 Banking Channels
Banks provides various online banking channels to their service users in order to avail various banking services. These channel ranges from the latest technological services to the regular deposit or with drawl services (Scornavacca and Hoehle, 2007). Some of the major channels provided by banks are as follows:
- ATM: ATM is machines which dispense cash and sometimes takes deposits as well without any intervention of human and also provides various other services as well.
- Mobile Banking: Mobile banking is the Availing banking and financial services through any telecommunication devices which includes services such as bank and stock market transactions, accessing account detail and other information.
- Branch: Banking branch is any banking retail location which is used to provide the banking services to the customers.
- Call centre: Call centres are the customer help centres established by banks in order to solve customer complaint and provides solution to various problems of the customers. [Read about Banking Law]
- Online banking: Online banking services are the online services provided by bank for payment and fund transfer services etc.
- Video banking: It is the banking services provided by banks in order to carry out the banking transactions with the help of video or audio connections.
2.2 Mobile Banking
Mobile banking is providing banking services like account checking, fund transfer, payment, credit and other transaction through a device which is mobile such as a cell phone or personal digital assistant (PDA). Initially mobile banking was offered through the SMS but with the introduction of smart phones and WAP it has been extended to the real time services through WAP (Ajzen, 1985). So mobile banking services can be defined as follows:
“Availing banking and financial services through any telecommunication devices which includes services such as bank and stock market transactions, accessing account detail and other information”
You may like to read about Indian Banking System.
Mobile banking is also known as the M-Banking, m-banking or SMS Banking. Mobile banking services are the new trend in the banking domain after the internet banking era. Since pocket devices have enabled the services of WAP for the customers hence customers are able to access their banking services anytime and from anyplace (Ajzen, 1991). Mobile banking services have been proved as the boon for the customers since they can access their banking information from anyplace at any time and they do not need to access computers for accessing their bank accounts.
2.3.1 M-Banking research for consumer adoption
For mobile M-Banking services adoption in the world there have been researches conducted by the researchers. These researches have addressed various concerns related with the mobile banking services (Fishbein, 1969). The Major areas of the e-banking services accessed by the researchers so far are the service quality expectations in the mobile banking area for customers and application of the SERVQUAL model for the research, acceptance of the technical banking services and hurdles in mobile banking acceptance. Some of the major areas of research are as follows:
A customer perspective on the expected service quality and based on the SERVQUAL model, accessing the satisfaction and dissatisfaction index among the mobile banking customers (Lewis et al, 1991): The Research focused on the customers perspective of the mobile banking services and difference between the perceived and ideal services provided have been sought out based on the SERVQUAL model of service quality. Hence the difference between the perceived and ideal banking services has given the satisfaction or dissatisfaction level among the consumer’s mind for the mobile banking services (Fishbein, 1980).
The research has given a separate framework for accessing the service quality in case of the technological services. Hence there are some service elements in technical services which do not resembles with the general service quality assessment. Hence the service quality parameter framework has been developed for the technical services (Allport, 1935).
Motivation for the customers to accept and use the mobile banking services (Barczak et al, 1997): The Acceptance of the mobile banking services among the customers is not very high. Though banks have initiated many programmes to aware people about the mobile banking services (Stroebel, 2003).But since whenever financial matters are involved acceptance from customers in not much. Due to which there are lot of barriers faced by the banks in offering the mobile banking services.
Consumer behaviour towards the mobile and internet banking services based on the demographic factors for customers (Beckett et al, 2002): The Acceptance of mobile banking services in the customers varies from person to person and it depends upon the demographic factors of the customers. Various demographical factors decide acceptance level of mobile banking services among the customers (Chin, 1998a). Some of the demographical factors deciding the acceptance level for mobile banking services are: education level, geographical area, technology penetration in that place, income level and attitude of people for mobile banking services.
2.3.2 Technology adoption model
Technology acceptance model is popularly known as TAM (Ajzen and Fishbein, 1980), the TAM model talks about the behaviour of customers for the technology adoption. According to the technology adoption model the attitude of the people decides their intentions and the desired intention of the people tells the behaviour of the people for the technology adoption (Newsted, 1996). The Model for technology adoption takes into accounts various factors for technology such as usefulness of the service and eases of use for the service and based on these parameters attitude and behaviour of the people for the adoption of the technology services can be determined. The Following figure illustrates the technology adoption model for the customers:
Figure1: Technology adoption model (*Source: Davis et al, 1989)
According to the technology adoption model behaviour of the customers for the technology can be determined through the intention of the customer to use a particular system and intention to use a system comes from the attitude of the person towards the technology (Davis, 1989). The Attitude of the people for technology can be built with the help of the two major factors which are the usefulness of the technology for the user and secondly ease of use provided by service to customer. Hence the model establishes a link between the usefulness of the technology and the intentional behaviour of the technology.
According to the technology adoption model external variables also have some control and impact on the perceived ease of use by the customers (Bookstein, 1982). There are several factors which are external to system but impact the ease of use perceived by the customers. These external factors are training, system features, user technical support and documentation of the processes.
2.3.3 Attitude and Intention building elements for the mobile banking adoption services
The Technology adoption model establishes a relationship between the attitude of the customers to use the mobile banking services and their behaviour to use the mobile banking services. There are several factors in the mobile banking domains which are responsible for building the customer attitude towards the use of the mobile banking services for the customers (Will, 2008). A framework representing the elements of intention and behaviour for the mobile banking customers have been given as follows:
Figure2: Showing the framework for attitude and intention for use for customers
As shown in the figure above the attitude towards the use of the mobile banking services is attached with the intention to use the service from the customers. The Attitude of the customers gets affected by various factors which are as follows:
- Compatibility: Compatibility of the mobile banking service used by the customers can be defined as the degree to which a particular service co-relates with the past experiences of the customer (Rogers, 1962). Hence if a particular service is compatible with the past experience of the customer then it would be easy for the customers to connect him with the service. Hence it will build the positive attitude of the customer for the mobile banking services.
- Relative Advantage: Relative advantage implies the use of mobile banking service over the alternate use of the services (Rogers, 1962). If mobile banking offers the advantage in terms of the faster access in operations and safe transactions then definitely customers would be positively impacted and the higher positive attitude towards use of the service would be there.
- Visibility: Visibility for the mobile banking services can be defined as the as the extent to which mobile banking services can be observed prior to use (Rogers, 1962). If the mobile banking services are having such visibility in the market that customers are attracted towards the service for use then attitude towards use of mobile banking services would be positive from the potential customers.
- Result Demonstrability: Result demonstrability can be defined as the extent to which results of any services are clearly visible to the potential customers of that service (Rogers, 1962). If the benefits of using a particular service are well visible and clear to the potential users then definitely attitude to use the services will be higher for the customers. Hence the result demonstrability positively affects the attitude of the customer to use the product or service.
- Image: Image can be defined as the degree to which status of a person will increase by using a particular service (Benbasat, 1991). Hence image of the product positively impacts the attitude of the customers to use the mobile banking services.
- Trail ability: Trail ability of any innovation can be defined as the ability of the innovation for trial before full implementation of the innovation (Rogers and Shoemaker, 1971). Hence if a particular service can be tried by the potential users then that particular service will be accepted much widely and in faster time by the customers.
- Ease of use: It is the degree to which perceived image of the service in customers’ mind which is portrayed as the effortless use for the customer (Davis, 1989). If the particular service is perceived to be as the effortless use then that particular service would be much faster accepted by the customers.
As revealed from the figure 2 that there are some factors which are responsible for creating the intention to use a particular service. The Attitude build by the service attributes leads to the intention to use the service. And if the customers have the high intention to use the services then his behaviour for the use of service would also be there. Some of the factors impacting the use of mobile banking services can be shown as follows:
- Subjective norms: Subjective norms on any potential customer of the mobile banking services can be called as the pressure from the social peer groups. The Subjective norm forces the customer either to use or not use a particular service. Since in case of mobile banking services decision is taken by individual hence the social impact is only on the individual. There is big impact of the subjective norms on the person’s intention to use the mobile banking services. Hence greater the subjective norm on a person greater is the intention of the customer to use the mobile banking services.
- Perceived behaviour control: Perceived behaviour control of the potential customers is the analysis of the resources and opportunities from the customers so as to check whether the customer is enable to use the mobile banking services or not. Perceived behaviour of any person consist of three major factors which are: self efficacy, resource facilitation condition and technology. In the framework it depends upon the perceived behaviour of the customer about him that whether he would be able to use the mobile banking services or not. Hence greater the use of perceived behaviour of the customer greater would be the intention of the customer to use a particular product.
2.3.4 Barriers to mobile banking
Research have been conducted for finding out various categories of barriers to the mobile banking which make customers hesitate in using the mobile banking services. The Barriers to mobile banking services can be categorised among various sub category each representing the impact of various factors on the mobile banking adoption process for the customers (Tatham, 2005). Some of the factors related with the mobile banking constraints are as follows:
- Lack of information: Information: Information is always a major element in the adoption of any technological services among the customers. Information fosters the confidence in consumers for the use of the mobile banking services (Mazzon, 2007). Information is assumed to be as the key element for the innovation diffusion process. A proper communication process can help the innovators to diffuse the innovation process among the customers and the good or bad innovation process defines the technology adoption among the customers.
- Lack of information: Lack of information among the customers has the positive impact upon the behaviour and intention model of technology adoption model (Moore and Banbasat, 1991). Since due to the lack of information among the customers ease of use is not present and due to which customers do not intend to use the product and so the behaviour for using the product is not present in the customers.
- Lack of observability: Lack of observability is also positively related with the behaviour and intent model for the customers (Lee et al, 2003). Since due to lack of observability usefulness of the product is not there due to customers do not have intent to us the product so there is lack of customer behaviour in using the product.
- Complexity: The Complexity in the products involved is also positively correlated with the behaviour intent model given in the technology adoption model (Davis et al, 1989). Due to the complex nature of the product ease of use in not present in the attribute of the product due to which customer attitude towards the product is not good and so as the behaviour of the customer is not aligned for the product.
- Lack of relative advantage: lack of relative advantage refers to the advantage provided by the mobile banking services for the faster operations. If suitable advantage is provided by the service then the customer prefers to transact through the mobile banking over the other means of transactions. The Lack of relative advantage has a positive co-relation with the behaviour intention model (Davis, 1986).
- Cost: The Cost of using the mobile banking also affects the acceptability of the mobile banking services among the customers. Since if the cost for the customers for using the mobile services is higher than definitely customers are going to transact from other available means. The Cost of using the mobile banking services has the negative impact on the TAM model for technology adoption (Lauren and Lin, 2005).
- Perceived risk: Risk perceived by the customers also present the major hurdle for the customers in using the mobile banking services. If the risk perceived is higher than the normal transactions then definitely acceptability would be lower among the customers. The Risk perceived has negative relation with the TAM model of technology adoption (Wan et al, 2005).
- Unsuitable devices: Unsuitable devices refer to the mobile handset used by the customers for operating their bank account. If the cell phones are of not proper attributes then customers may face many difficulties in using the services. Hence the unsuitable devices have the negative impact upon the intent and behaviour relationship in the TAM model.
2.3.5 Framework for customer resistance
For realising the barriers faced by the customer for the adoption of the mobile banking service a framework has been given (Ram & Sheth, 1989) which investigates into the process and finds out the insight about the process. According to them there are basically two resistant construct which are: functional and psychological. These two constructs are further sub divided into the three sub construct and two sub constructs. Functional construct has been divided into three sub constructs which are: Usage barrier, value barrier and risk barrier. And the psychological barrier is further divided into two sub constructs which are: traditional barrier and image barrier.
Some of the studies concerned with the adoption of the internet banking among the customer group it has been revealed that the lack of information and proper training are among the major barriers in the technology adoption system (Herzberg, 2007). As the information flow starts in the system the technology adoption increase. Hence there is reverse relationship between the two phenomenons.
Figure2: Showing the framework for the customers for the mobile banking services
- Usage Barrier: The First kind of barrier to the mobile banking strategy based on the two constructs. Hence the usage barrier is the part of the functional construct. Usage barrier of the mobile banking is concerned with the usage of the mobile banking services (Li, 2005). If the ease of use of the services is present in the mobile banking services then definitely customers would be intended to avail the mobile banking services.
- Value Barrier: The Value barrier of the mobile banking services is related with assessing the value of the offerings given by the company. In the value barrier system, performance and monetary value are among the most important factors (Sinkkinen, 2008). As the perceived performance which is the expectation of the customers, which is about the impact which a customer would experience after using the services would provide value for the customers. Hence if the perceived value is higher then there are more chances of the use of the mobile banking services by the customers.
- Risk Barrier: The Risk barrier initially in the banking industry was related with the fraud and bad service quality of the banking services. But in the modern day the risk barrier of any service can be defined as the uncertainty attached with any online transactions. Since in case of the online transactions there are a lot of issues involved as the mobile banking is one the developing stage (Doherty, 2003). Hence in case of any new innovation which involves any financial matter customer are reluctant to accept that since it has lot of perceived risk involved in that. Hence risk attached with the mobile banking service can be assumed as the biggest barrier in the acceptance of the mobile banking service among the customers.
There are basically three major kinds of risk attached with the mobile banking services as perceived by the customer which are: privacy and security, reliability and self efficacy (Lin, 2005). Privacy and security of the mobile banking service refers to the theft of the PIN code etc. Since in the mobile banking services many cases have aroused which have involved the lost of PIN, username or password hence there is threat to their online information and threat to funds as well.
Risk of reliability can be defined as the risk to customer that whether bank will perform same kind of service over and again over a period of time. It is not possible in services to provide exactly same service every time hence there is always a perceived risk among the customers in mobile banking that the service provider would not provide the reliability in the services (Tuunainen, 2004). The Last kind of risk aroused is due to the self efficacy which is the risk related with the resistance to any kind of technological innovation. The mobile banking is one of the major innovations hence the risk comes from the reasons of self efficacy. Since consumers do not have full confidence in the new innovation.
- Traditional barriers: The Risk framework not only takes into account the functional and technological issues into account but also considers other barriers pertaining to the customers in mobile banking services. Traditional barriers are attached with the personality of the customer (Benbasat, 1991). The Barriers of tradition and image have been removed by creating good service which can contradict past experience of the customers. Since customers are not ready to accept new technology very fast so the tradition and image barriers arises due to that. Hence any new innovation which is not in accordance with the values and beliefs of the customers and do not relate to the past experiences can’t be adopted by the customers very soon (Pedersen, 2005). Hence any new innovation would be resisted if it contradicts the past experiences of the customers.
The Mobile banking have lots of traditional barriers involved in it since the past experience and tradition of the customers says differently when it comes to the use of banking service and going to banks and making transactions. But with the evolution of the mobile banking services, it has changed the way customers used to do their banking transactions (Schurig, 2004). Hence it is not in accordance with the traditions and past experience of the customers.
- Image Barrier: Image barriers refer to the perceived image of any product or service in consumer mind. This image can be made in consumer mind due to the relation of that particular product or service with its product class (Pu¨schel, 2008). Hence the new innovations are assumed to be attached with the technology which is risk and difficult to use sometimes. Hence the services like mobile banking are attached with the notion of complex to use computer and internet services. Hence the negative kind of image is attached with the mobile banking services due to its relation with the mobile and internet.
2.3.6 Mobile Banking adoption process
The Adoption of any new innovation have to be passed through a number of logical steps which includes the assessment of perceived risk in the new innovation, after assessment of the risk it comes to the risk dimension which are the effects of the risk on the user and finally the assessment of the benefits sought out from the particular innovation (Rivari, 2005). So in the case of mobile banking services the new innovation adoption framework is applicable since it also follows the all three steps mentioned above. The following figure explains the adoption process of the mobile banking services.
Figure3: Showing adoption process of mobile banking services
As shown in the figure 3 that there are three major steps to the mobile banking adoption processes which are as follows:
- Applied risk: The Applied risk of the adoption process of the mobile banking services includes three major risks which are: Exclusion, intrusion and seclusion. The Extrusion can be defined as the process of state of being excluded from something hence the customers always have a risk they would be excluded from their financial assets by the use of new technology (Will, 2005). The Risk of seclusion is also talks about the similar kind of risk for the customers. There is also risk involved for the customers in entering into a new service from which customer is not aware of hence such an entry into the new area also posses various risk for the customers.
The Various risks in the customers are attached with the different risk dimensions. The Risk of exclusion is attached with the psychological and social parameters (Rogers, 1962). Hence a person is having risk to be excluded from the social environment by the use of the new technological innovation. The Similar kind of risk posed due to the seclusion is also attached with the psychological and social. The Risk of intrusion is attached with the financial, performance and social as well. Since the customer is having the risk that his entry into a new technology may not yield the desired performance for the customer and might also results into the time wastage for the customers (Shoemaker, 1971).
- Risk Dimension: Internal risk dimensions involved in adoption of any new innovations are of various kinds. Some of the major risk dimensions involved in the process of mobile banking is: financial risk, performance risk, psychological, physical, time and social risk (Hoehle, 2007). Hence these various risk are attached with the applied risk dimension for the customers. Financial risk attached with the mobile banking service is the risk of losing the funds of customers during the financial transactions. It also contains the risk of the theft of any username, password or PIN number etc.
Performance risk attached with the mobile banking service is not yielding the desired performance which customers want from the mobile banking services. Hence the performance is not what is desired by the customers. Psychological risk involved with the mobile banking service is the non fulfilment of the perceived benefits as sought by the customers in mobile banking services (Saporta, 2005). The Physical risk attached is the risk which involves physical efforts and no output generated because of that. Time risk is the wastage of time incurred due to the use of the mobile banking services by the customers. Social risk attached with the customers is the status which customers going to lose in the society due to the use of the particular service.
- Adoption process: Adoption process for the mobile banking services is based on the analysis of risk and the benefits which are given by the mobile banking (Stone, 1974). Hence after the risk analysis by the customers which are attached with the mobile banking services customers try to gauge the benefits attached with the mobile banking. Hence after proper analysis of the risk and benefits customers came to decision of whether to accept the services or reject the services.
- Perceived innovation attributes: The External innovation attributes attached with the process of mobile banking service are relative advantage which is the advantage a customer get due to the use of the mobile banking service over the other methods of transactions (Mohezar et al, 2007). Compatibility refers to the co-ordination between the values and experience of the customers with the new services. If there is proper co-ordination among the two then customers are going to accept the new services. Trial ability refers to the extent to which customers can try the service before it comes into full installations. If customers are able to try the prototype of the services then they can adopt the services easily.
Observability is the visibility of the service before its use if the observability of the customers is high for the service then definitely the intention t use the service would be higher for the customers (Suoranta and Mattila, 2004). Complexity refers to the degree to which a particular service is not easy to operate. Hence the more complex a service would be to use less it would be used by the customers. Previous experience of the customers refers to the experience of the customers with the same kind of services or his experience with the different such services. Hence if the customers are able to attach current services with the previous experiences then only they will be ready to use the services.
2.3.7 Motivation for customers to use mobile banking services
Mobile banking services are used by the customers despite of its various risks and various barriers involved in it. The Use of mobile banking service is due to the various motivation customers are having in the use of mobile banking services. Some of the major motivations customers are having from the mobile banking services are as follows:
- Anytime services: With the increase in the complexity in the financial transactions and increase in the volume of financial transactions a swell customers are now a day making more number of transactions. Hence due to which they have to visit every time banks which are very time consuming for them (Taylor and Todd, 1995). Hence mobile banking provides service provides them benefits of using the service any point of time. Since sometimes customers needs to make the transactions for 24 hours a day.
- Any place services: With the mobile banking service the major benefit customers have gained is the anyplace service i.e. customers can make transactions from the place they want to (Klein, 1982). This facility is beneficial in terms of cost and time as well.
- Faster Transactions: The Mobile banking services provides access to faster transactions to customers as the mobile banking services are processed within minutes and the transactions are completed across the world in little time which was earlier not possible with the physical nature of the services (Morris et al, 2003).
- Easy online processing: With the help of mobile and internet banking services it has becomes beneficial for the various companies to develop their electronic sales platform (White, 1998). Hence their customers can buy the products with the help of mobile and internet banking services.
- No physical presence required: Initially when banking operations are done with the banks directly there was need of the physical presence of the customer or the signature of the customers. But in case of the mobile banking service there is no such requirement customers can login from any place and can access to their accounts.
- Development in technology: At the initial stages of the mobile banking services, customers were reluctant to use the services since at that time technology was not well developed and there was high possibility of the technical glitches in the mobile banking services (Saporta, 2005). Hence the customers were having the financial risk due to that but now with the development of the advanced and secured technology there are less chances of the technical glitches in the financial transactions. Hence the customers are having the high amount of confidence in the mobile banking services which encourage them to use the services.
- More Awareness: Initially customers were not much aware of the mobile banking services hence the fear was there in customers mind about the mobile banking services. But now banks have started spreading awareness about the mobile banking services among the customers with the help of various awareness programmes (Riivari, 2005). Due to which there is increase in the awareness level and customers are encouraged to use the mobile banking services.
- Compatibility of the mobile devices: Initially mobile devices were not so well developed and were not compatible to provide the apt services to the users. But in recent years mobile technology has been developed so fast that mobile devices are well connected with the internet and other technological platforms which help the customers to provide easy to use mobile banking services (Lin, 2005).
- Motivation from the banks: With the increasing penetration of the banking services across the world, bank branches are also increasing at a fast pace. Hence due to that operating cost of the banks are increasing multifold hence in order to curb the operating cost banks are encouraging their customers to have the minimum number of physical transactions. So customers are encouraged to have more online transactions (keeling, 2003).
- Low cost: The Cost of transactions from mobile banking and internet banking for the customers is less as compared to the cost of transaction for the customers from the physical access to banking services (Sinkkinen, 2008). Hence with the increasing volume of transaction if the cost per transaction will reduce for the customers then it would be preferable for them.
2.4 Financial Industry
Financial industry consists of various services provided by the financial intermediaries such as banks, credit card companies, investment funds, insurance companies and stock brokerage companies etc.
2.4.1 Types of financial services
The Services provided by the various finance program intermediaries are as follows:
- Banks: The Banking institutions are among the oldest forms of the financial services providers which are in the existence from the very old time even the time when money was not in use. Banks are very important financial institutions for any nation as a whole (Hwang et al, 2005). The Following services are provided by banks:
- Safekeeping of money: Banks now a day have started working as the safe keepers where the customers can store their valuables. Hence customers can be assured about their belongings and in the safekeeping services banks charge some money to their customers for the safe keeping services.
- Check book issue: Banks issues the cheque book for their customers at which customers can make payment to their respective creditors. Hence customers can pay through the cheques hence it become easy for the customer to transfer the money.
- Various loans instruments: There are various fund based and non based loans provided by the banks to their customers. The Various kinds of loans issued by the banks are home loan, auto loans and other business loans which comprises of working capital loans and others.
- Credit and debit card issuance: The Paper money is issued by the banks so as to make the shopping process easy for the customers.
- Fund transfer services: There are various services introduced by the banks in order to transfer the funds from one account of other in very less time. Some of the services for transferring the funds are RTGS and NEFT.
- Money deposit services: There is various money deposit accounts provided by the banks which provides customer facilities according to different plans. Some of the money deposit accounts are saving account and current account and fixed deposit account.
- Payment system: Banks also allowed its customer to have the multiple payment system in which customers can pay through online as well as through paper money.
- Intermediaries: Banks work as intermediaries for the many services, between customer and the service provider, such as for the stock trading, loans etc.
- Investment bankers: The Investment bankers provide the services which help the customers to invest their money in various instruments and help to get better returns on investments. Some of the services provided by the investment bankers are as follows:
- Asset management
- Hedge fund management
- Credit card companies: Credit card companies issues the credit card for the users with the help of the banks which acts as intermediaries. Credit card facilitates the purchases for the customers and provides short term loans to customers.
- Insurance companies: Insurance companies issue the insurance for the customers which is of various types such as life insurance, vehicle insurance etc. Hence insurance companies help the customers to safeguard their life and various other assets against risk.
2.4.2 Challenges to the financial industry
At present the financial industry is also having lot of challenges which have to be tackled by the financial industry in order to make the users risk free. Some of the major challenges to current financial sector are as follows:
- Challenges due to banking sector: There are various challenged which are posed to the banking sector worldwide. One of the major challenge faced by the banking industry is the non integration as the various banks worldwide has been divided into small size banks with small asset size which posses challenges on their capacity to tolerate any kind of big losses which may be due to various reasons.
- Developmental challenges: Looking at the current growth rate worldwide which demands a big requirement of the adequate fund availability all the time for development purposes (Chin et al, 1996). Hence the challenge posed by the development is due to the proper amount of fund availability all the time.
- Linkage between various financial markets: The Globalisation has huge impact on the various financial markets across the world. Due to the globalisation various financial markets are attached to each other and any turmoil in one market also affect the other markets across the world which posses challenge to financial market.
- Challenges posed by regulation and supervision: The Restructuring processes in the global financial sector have generated the need for the regulatory and monitoring framework. Hence the regulation and supervision posses challenge to the global financial sector.
- Payment and settlement system: There is a major risk posed by the financial sector in the settle of the various kinds of payments which are done many a times (Pedersen, 2005). Due to various technical and human errors there is a big risk of the loss of funds in the financial transactions which is now a day a major challenge posed by financial sector.
- Governance issues: The Governance issues have occupied the major stage in the today’s financial sector as there is more need of the governance with the increasing competition and diversification in ownership in the financial sector worldwide.
Assignment help Australia offers free sample assignments did by us in the past. Judge us by our work and get the best quality assignment help to score excellent marks in your academics. Get assignment writing tips, for online assignment help now.