Management of Financial Institutions - Assignment Example

Management of Financial s(see attached) The need for organisations to be aware of the influences of the external environment and the wayin which developments in these influences can have a substantial impact on organisational success. INTRODUCTION: Financial Institutions, whether private or public, collect money from the general public or other financial institutions and generate interest income from investing cash inflows in financial resources like stocks, bonds, derivatives and others. The British Financial institutions include banks, post office and loan institutions. Furthermore, financial institutions also include the national clearing house. This the centralized collection place where a bank or post office where checks and drafts change hands. Surely, the central bank is part of the financial institution. It is the British government's financial authority for it hands out periodic currency resources and also controls the supply of credit and holds the reserves of other banks while it sells new securities in behalf of the British government. The other financial institutions include, foundations, non-depository financial institutions, trust companies and others. Many companies use the financial institutions in their daily business transactions. Therefore, the companies being serviced by the financial institutions above can choose which financial institution to use. One of the criteria for choosing is the services that they offer. The following paragraphs discusses the factors affecting financial institution. BODY Describe the wider, contextual environment of financial institutions. The contextual environment is often approached covers many areas of business. These areas include technology, the economy, the nature of government, social attitudes and, of course, competitive forces all affect the climate in which business operates. For, the contextual environment sets the context for business to exist and it creates a climate of change with the five areas mentioned here. Technology. New technological developments in the financial institutions result in advanced production processes. Harvey Jones(2006) wrote that online banking had definitely changed from a minority sport into a mainstream race at astonishing speed. Almost every financial institution, from the biggest in terms of assets in the banking sector to the smallest local building society has brought business transactions between the purchasers and the sellers at split second speed. With the advent of the automatic teller machines, the time needed to transfer funds has been decreased. People will just carry the ATM plastic to withdraw money at midnight or during holidays Moreover, one out of every five British citizen have their banking transactions online through the internet starting in the year 2005. This was the finding of Lloyds TSB. The number of online bankers have dramatically increased until our current time period 2007. Present studies show that young customers between the ages of 45 to 54 years of age to do their jobs through the internet comfortably and safely. are increasingly comfortable managing their finances over the web. Forgotten, depositors and person withdrawing money from the banks would have get a number from bank personnel and wait until their number had been called before depositing or withdrawing their money. The advent of the automatic teller machines has allowed bank withdrawals even at midnight or the wee hours of the morning and on Sundays and holidays. On line banking services include payment of statement of accounts and other bills, getting the bank statement printout, money transfer to another person very far away and management of bank debits. Economy. general economic conditions and trends(Mcrae, 2007) must be taken into account when considering an organisation's activities. Mathew Scott(2003) stated Kevin Cohee, chairman and CEO of OneUnited Bank, looks at One Lincoln Street in Boston's financial district, he sees his vision for the future of black-owned banks slowly coming into focus. The $370 million, 36-story, 1 million square foot office tower, which officially opens for business in July, was built in a big part because of his bank's leadership in financing the purchase of the development rights to the construction site in 1997.The move had made the bank the largest minority ownership of the project. Consequently, they can now influence the development of the site. The project will entail hiring 4,000 permanent employment in the community. In turn, the bank and the other shareholders will economically benefit from this transaction. Furthermore, the Lincon Street project is one the tip of the iceberg of Cohee's business plans. Cohee has now renovated the former Boston Bank of Commerce as it metamorphosed into the largest, more progressive black owned bank of the United States. Economically, Cohee had combined black owned banks in the Boston, Los Angeles and Miami parts into the first black owned bank in the United States. But financing deals like the Lincoln Street project are only part of Cohee's vision. In fact, the Harvard Law School alumnus spent the last six years transforming the former Boston Bank of Commerce into the largest, and arguably most progressive, black-owned bank in the country. Implementing an acquisition strategy mirroring those used by mainstream banks during the 1990s, Cohee has linked black-owned banks in Boston, Miami, and Los Angeles to create the first black-owned interstate bank in the United States. Government. The political climate, through legislation and general policies, has a significant influence on the financial institution's business. The government makes laws in order to protect all concerned parties, specifically the clients of the financial institutions, from the fraudulent activities and ensure that the environment is conducive in order that business will grow. The news UK government Urges Work Bank Towards Renewable Energy(No author, 2004) showed that the UK government sent a letter to the world bank showing informing the bank that it had not exerted the extra effort to implement the recommendations of the Extractive Industries Review. The bank did not give out the much needed loans to the oil, mining and gas projects. This was sparked by the group Friends of the Earth that had been lobbying for the World Bank's full cooperation on this matter. The Extractive Industries Review report was endorsed over a hundred indigenous groups, European parliamentarians and religious leaders in all countries on earth. The Friends of the Earth complained that the World Bank was lacking in its drive to save the environment. Social Values. The United kingdom social values have changed in the current time period as compared to sixty years ago. In terms of education, there are more college graduates today as compared to fifty years ago. In terms of lifestyle, the life span of a person has increase by as much as fifteen years today as compared to fifty years ago because of the discovery of more effective medicines. Normally medical explanations are made for premature mortality, but this chapter focuses solely on social and behavioural factors as explanations for mortality rates for particular groups of people in Britain. The geography of society influences the behaviour and opportunities of its members which, in turn, alters the geography of the outcomes of their actions-in this case, death(Matthews, 2000). Social values have become more complicated. In response, the fIancial institutions have based their marketing and services strategy to include social values as one of the inputs. With this in mind, more banks will increase their customer database. Concentrate, in particular, on the influence of the social environment on customer attitudes and expectations. Social Values. The United kingdom social values have changed in the current time period as compared to sixty years ago. In terms of education, there are more college graduates today as compared to fifty years ago. In terms of lifestyle, the life span of a person has increase by as much as fifteen years today as compared to fifty years ago because of the discovery of more effective medicines. Normally medical explanations are made for premature mortality, but this chapter focuses solely on social and behavioural factors as explanations for mortality rates for particular groups of people in Britain. The geography of society influences the behaviour and opportunities of its members which, in turn, alters the geography of the outcomes of their actions-in this case, death(Matthews, 2000). Social values have become more complicated. In response, the Financial institutions have based their marketing and services strategy to include social values as one of the inputs. With this in mind, more banks will increase their customer database. Many banks have been trying to help the community, the environment, the marketplace and the workplace. The article The Co-operative Bank ( most socially responsible businesses), declared that the Co-operative Bank, BAA and Barclays have won the top three places as the United kingdom's most socially responsible bank. Based on the newest corporate responsibility in terms of their commitment to local communities, the marketplace and the workplace. They had bested the remaining one hundred twenty eight firms in the same market segment. Discuss the ways in which customers have changed in recent years Customers have now the discriminating taste of choosing the best bank based their services offered. This new customer change has been brought about by the proliferation of competitor banks in the United Kingdom. Customers now prefer to use the Automatic Teller Machines to withdraw and even deposit their money when compared to personally falling in a long line at the bank to withdrew from the bank female cashier the amount intended. Customers now prefer to use the internet to pay the bills and transfer funds because they no longer have the time to personally walk to the bank to get a number and wait for his or her number to be called. How this has impacted on their interaction with the financial services sector. The customers can now demand that the banks give them better services. If the approached bank refuses to grant the customers' needs, whims and caprices, then the customer can just pefer to withdraw all his or her money and transfer to another banking institution. Provide examples of the ways in which organisations within the sector have recognised these changes. In response, many of the banks have pampered their current and prospective financial institution clients with so many extra services. The banks have set up many automatic teller machines in strategic places such as groceries, public places and the like. Also they have included the use of cell phones and the internet online banking for many bank related transactions. Banks have also doubled the number of tellers in the banks to serve the physically present bank clients. Banks have also allowed their bank depositors to deposit their money through the automatic teller machines. To improve further the services it gives to its current customers there is a continuing increase in the number of banks that have merged with other banks and as well as bank acquisitions. The manner in which they have responded in terms of products and services In addition to the above services offered to their current clients and prospective depositors and bank loan applicants, the financial institutions have made major renovations inside the bank premises. The new bank set up have been re-engineered to maximize all company resources, especially the human employees of the financial institutions. First, the banks have empowered the employees to have greater creativity have become more interesting. Interestingly, the employees are offered rewards, commissions, salary increases and promotion for jobs well done. The employees are given responsibility and the complementing authority to do their part so that the company will overshoot the company benchmarks in terms of production, service and sales. The employees have been trained to increase their customer focus for it is ultimately the customers that pay the employees' salaries and not the managers of the financial institutions. Furthermore, some employees have been invited to be stockholders of the company for a job well done. This will surely increase their pride and dedication to the company goals. The ways in which these are delivered in order to achieve customer satisfaction and maintain their competitive position. The services have been delivered as soon as possible with the utmost care and quality. The customers have been pampered with quality services and other perks. Internally, the labor force have been trained that they are an important part of the company. If one employee fails to meet the expectation of the customers, the entire bank will suffer because the customer will transfer to other banks or financial institutions. CONCLUSION: Financial institutions such as banks, loan companies and others have been trying to outdo each other to get the money of the depositors and loan applicants. In order for the company to win the customers, they must give the customers all the possible quality services that they could think of. In this regard, mergers and acquisitions have increased in intensity until the year 2007. For, it is true that a big giant bank will win over a small bank. REFERENCES: Jones, H., Online banking: online banking has changed from a minority sport into a mainstream pursuit with astonishing speed. Almost every institution, from the mightiest banking monolith to the smallest local building society, now feels duty-bound to deliver its own online offering. Harvey Jones searches the web, What Investment, April, 2006 Scott, M., Stand and deliver: Kevin Cohee turned OneUnited into the nation's largest black banking institution one acquisition at a time. And he's not finished yet - B.E. Financial Company Of The Year, Black Enterprise, June, 2003 Matthews, H., Gardiner, V., The Changing Geography of the UK, Routledge, London, 2000. No author, UK Government Urges World Bank Towards Renewable Energy, Environment News Service, August, 2004 Gordon, P., Merger Boom Likely to Continue in 2007 Despite Increased Scrutiny of Cross-Border Deals, Global Finance, February 2007 Chartered Institute of Management Accountants, The Co-operative Bank.(most socially responsible businesses), Financial Management, June, 2006 Mcrae, H., At 2.8 per cent, UK growth is still robust. So how come living, Independent, The (London), Apr 26, 2007 Read More