The banking industry caters to a diverse clientele, which includes, individual customers, small businesses, farmers, corporates and corporations, banks, governments, institutional investors, non profit organizations and international clients. Learn about the banking products and services for these customers.
Let us try to understand what is the scale of banking in modern globalized world? Two major components of banking are “Deposits” and “Loans”. The banking industry caters to a diverse clientele, which includes:
- Individual Customers
- Small Businesses
- Corporates and Corporations
- Institutional Investors
- Non Profit Organizations
- International Clients
First are Individuals like you and me. We earn money and spend money. We keep our surplus with banks and take loans from banks when we need money. Bank provides various services and products for this sector including savings account, fixed and recurring deposits, car loans, home loans, personal loans, credit and debit cards and salary disbursement accounts.
Small business houses and traders need banking services to manage their day to day operations. Banking Industry offer various products tailored to the specific needs of small business men and traders. Some examples are cash credit accounts, current accounts, pay orders, demand draft, payable at cash cheque books, credit and debit card, loans for fixed assets and machinery etc.
Banking plays a very important role for farmers. Apart from offering products which are available to individual customers, it also offers many products and services specifically tailored for agriculturists and farmers. Banking sector plays an important role in agriculture based economies like India. They are one of the preferred mediums for governments to disburse various subsidies and concessional loans for farmers. Banks finance loans to buy equipment for farmers, provide financial planning and investment advice through “Agriculture Banking Specialists”, provide crop loans and production or season based loan products.
Corporates & Corporations
Banking industry is very important for Corporate or institutional clients. Companies generally have huge surpluses of money or need money to invest. Banks help them keep their surplus money or provide them with funds when they are in need of it.
Funded Products provide short and medium term funding facilities to overcome challenges and complexities faced by corporations in managing cash flows. Banking channels provide finance to manage working capital needs of businesses. Treasury Products help to manage and mitigate business risks by providing money market and foreign exchange facilities. Foreign Exchange products deal with money market and various investment products help organizations achieve their financial goals. Some examples of investment products are term deposit and mutual funds. They may include a range of debt and fixed income products to suit the dynamic and varied needs of customers across segments.
Banks make lot of transactions with other banks. Many countries have “Central Banks” that are owned and managed by Governments. Banks borrow and lend money to each other. They get into consortium advances where two or more banks join together to offer credit to a large borrower. They enter into various agreements with each other to provide services in the regions where they don’t have branches.
Businesses and governments cannot be completely self-sufficient when it comes to availability of funds they need. They need money to operate, and banks act as intermediaries between the suppliers of funds and users of funds. Over the period of time banking has transformed itself into an important and powerful undertaking. Today the movement of capital handled by banks allows economies to grow and prosper. They maintain the delicate balance between the supply and demand of money by controlling borrowing and lending interest rates.
Institutional investors are organizations which pool large sums of money and invest those sums in securities, real property and other investment assets. They can also include operating companies which decide to invest their profits to some degree in these types of assets. Types of typical investors include banks, insurance companies, retirement or pension funds, hedge funds, investment advisors and mutual funds. Their role in the economy is to act as highly specialized investors on behalf of others. Many banks act as institutional investors and most of them provide wide range of services to such investment bodies.
Wide range of services are provided under this umbrella and may include assessment of investment needs, evaluation of asset structure and the liability-management requirements, cash-flow analysis, development of investment policy, portfolio-construction, custody services, portfolio rebalancing, fundraising and philanthropic services.
Non Profit Organizations:
A nonprofit organization are organizations pursuing a special cause, generally philanthropic in nature, and which uses surplus revenues to achieve its goals rather than distributing them as profit or dividends. Some NPOs may also be a charity or a service organization.
Banks serve not-for-profit customers in variety of ways and generally have specialized products and services for such organizations. Most common service is the collect membership and other fees on behalf of them at various locations. Many banks offer Not-For-Profit Accounts which offers convenience of current account and also collected balances accumulated in the account earn interest like a saving back account. Many banks provide these banking services to nonprofit organizations at concessional or nominal cost. Specialized banking products could be available for organizations like churches, executors and administrators and trustees.
Banks offer financial services, such as payment accounts and lending opportunities, to foreign clients. These foreign clients can be individuals and companies, though every international bank has its own policies, most of them offer various products and services to cater to the needs of their international clientele.
Banking products for this sector includes offshore banking, savings, investments, and mortgages clubbed with a broad range of FX services including forward and spot transactions. International clients generally require offshore banking facilities to secure their money outside their country of residence or to facilitate the business activities in another country. Many banks offer accounts in all major currencies and that helps international clients protect their money against local and international volatile economic and political environments. Banking channels facilitate easier trading across international borders and provide electronic banking with access to SWIFT.