Extinction of Banks Assignment Example | Topics and Well Written Essays - 2500 words

Extinction of Banks - Assignment Example Financial innovations and deregulations have enabled the financial markets to achieve perfection with institution that do not adopt deregulatory measures lagging behind in the provision of services to customers1. Financial innovations and deregulation have facilitated contractual agreements with governments seeking to institute reforms adopting relevant measures. Discussion Diminishing roles for banks In the contemporary society, banking institutions are being faced by a likelihood of extinction in case they do not formulate measures of keeping up with the times. The increasingly interconnected world, owing to globalization, is a threat to the banking institutions due to the emergence of mobile financial solutions. Customers are becoming more and more accustomed to faster and time-conscious responses from the companies while banks are lagging behind when it comes to finding means of proactively responding to the needs of their customers2. Lack of relevant targeted offers on the part of the banks is to blame for this development as it is vivid that the banks are not focusing on the needs of their customers. According to Gorton and Rosen (1993, p. 22), banks have plenty of funds to invest but are unable to notice emerging opportunities in the financial world. In the light of this, there is a need for the banks to see themselves as not only playing the traditional role of banking but also providing customer services that go beyond convectional boundaries of their present duties. Banks have for a long time been playing the role of consumer trusted advisors but this trust is slowly fading. In case necessary measures are not instituted to embrace innovation in order to capture newer grounds, the banks will lose out. Brigham and Ehrhardt (2010, p. 565) indicate that in the near future, customers will realize that they do not need banks but they need banking services. This will be a dangerous scenario for banks, as they will be at the verge of becoming extinct just lik e dinosaurs3. In addressing this problem, the banks need to have a new outlook. Investing in innovation will be instrumental in boosting banking operations. Moreover, bankers need to find other avenues of inspiration in order to secure a wide customer base. Although the technology that banks need in order to become responsive to the needs of their customers and in order to open up new streams of revenues already exists, the banks can look up to other avenues. Among these avenues are algorithmic trading, borrowing technology from the telecommunications industries and offering services that are location-based. Consequently, the banks can make use of information about what customers are likely to buy and when to develop new and more targeted products and services4. There is the need by the future banks to embrace technologies from various sectors in order to respond to customers’ actions and turn such scenarios into opportunities for securing more revenue and garnering consumer loyalty. In the near future, consumer will be buying most of their items on their credit card and this will enable them to access promotions and offers from traders in their vicinity. These traders are also banks’ customers who are likely to be bought in by the banks since the providers of their payments become an important avenue of accessing new customers. There is the need to tap into the trends of the consumers, if the banks are keen on