Paper Example. The Current Significant Issues Facing Domestic Banks and Their Regulators

What are the current significant issues facing domestic banks and their regulators?

Today the primary issue is the one surrounding the Covid-19 Virus. This virus also commonly known as Corona Virus does not yet have a known cure, and while the death toll is not 100%, the numbers on the charts are slowly rising. This is leading to anarchy and fear among those affected and those in affected areas (Federal Reserve, 2020). That means that some will run to their financial institutions to seek financial loans to cover the treatment. However, the issue is that these loans may lack collateral. Regulators advise that financial institutions should find a way to address this as soon as possible.

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Because the client is an international bank, what are the current significant issues facing international banks and their regulators?

The same covid-19 issue is seen internationally. Some of the workers have had to be retained to seek help, while others are unable to deliver in the current state fully (BIS, 2020). Lack of enough personnel to advise the influx of customers leads to slower response and therefore reduced revenue for financial institutions as well as lack of proper access for the customers.

How might these issues affect Mr. North's international bank client?

Mr North's client is likely to lose trust with his customers if the situation is not put under control. Besides that, there might be too many withdrawals due to the panic, and this will affect the bank's ability to give credit if the trend continues.

What different kinds of services do banks offer the public today? What services do their closest competitors provide?

Some of the most common services offered include checking accounts, management of wealth, credit and debit allocation as well as insurance in some cases. Competing companies will usually take on one of these services and offer it exclusively. A great example of competing institutions is credit card companies.

What are the reasons for regulating each of the critical areas or functions of a bank or financial institution these days?

The regulation allows customers to feel more secure when transacting with banks. They set the rules that protect people from fraud and unfair treatment. The regulation is also set to protect banks from overexposure.

What trends are affecting the way banks and their competitors are organized today?

Digital trends are, by far the most disruptive to the banking world. Online money management is rendering many bank services almost useless to the younger generations (House.gov, 2020). It is also more comfortable and faster to do transactions online making banks either have to catch up to the trends or lose a market segment to better methods.

Why is the establishment of new branch offices usually favored over the chartering of new financial firms as a vehicle for delivering financial services?

One reason this is preferred is that it makes the process of regulation easier. The bank will not need to establish new products or try different methods. They will address the market that they already understand and know how to serve.

References

Federal Reserve. (2020, March 9). Agencies encourage financial institutions to meet the financial needs of customers and members affected by the coronavirus. Board of Governors of the Federal Reserve System. https://www.federalreserve.gov/newsevents/pressreleases/bcreg20200309a.htm

BIS. (2020, March 1). Bank for International Settlements. https://www.bis.org/House.gov. (2020, March 11). Home | House.gov. https://www.house.gov/