Advanced Commercial Bank Management - BNF412 - Midterm Exam ✓ Solved

Advanced Commercial Bank Management -BNF412- MIDTERM EXAM INTRODUC

International banking is that kind of banking that is done on an international scale and which is used by the companies to provide ease to their customers. International banking is working for the welfare of the people. Usually, these banks are profitable, but they are not good and effective from a cost point of view. Usually, the banks offer larger loans to their customers for their popularity and also for productivity, but the main advantage of this banking is that the customers can do international banking throughout the world the companies and the business can connect internationally to share their identification and also to exchange their assets with each other for the benefits that can be obtained as the result of the international banking.

International banking is like the other banking systems, but it meets the needs of the people internationally. Many multinational companies would take the advantage of this thing and they would invest their money in such type of banking systems. The profit of international banking can be increased by increasing the capital income which is very fruitful for the national economy of the country. For the continuous growth, it is essential to note that the growth can be increased by enhancing the profits related to the companies and other banking systems.

Defined International Banking: International banking is a procedure in which banks interact with money and credit between nations that are separated by political borders. Foreign/offshore banking is another name for it. To put it another way, international banking refers to banking activities that take place beyond national borders. It covers offshore branching, correspondent banking, representative offices, branches and agencies, limited branches, subsidiary banking, acquisitions and mergers with other foreign banks, as well as the international movement of money and provision of financial services.

Understanding International Banking: An international bank is a financial organization that offers various sorts of financial accounts to customers who are not citizens of the country in which the accounts are held. Individual banking and investing services may be the primary emphasis of these firms, which are sometimes referred to as offshore banks. Other banks of this sort could specialize in providing commercial or business accounts to eligible businesses. An international bank's policies, processes, and general operations must abide by all applicable laws in the jurisdiction where the bank is established to operate.

Features of International Banking:

1. Flexibility: Multinational enterprises benefit from the international banking facility since it allows them to transact in numerous currencies.

2. Accessibility: International banking can provide ease of accessibility means the person or the business can share their money intentionally without any effort.

3. Transactions Across Borders: Overseas banking enables the company to pay international bills with ease due to currency conversion features.

4. Maintenance of Accounts: The support of international banking allows multinational corporations to keep accurate records of worldwide accounting.

Growing customer use of securities markets to raise funds in a more volatile and riskier world can be approached by capturing market shares through effective policies. Concentrating on services and needs can further enhance growth by adopting successful practices seen in neighboring banks.

Implementing a digital system is increasingly important as larger banks have achieved success by meeting customer requirements through technology. Service delivery must also be enhanced to ensure customer satisfaction and access to the appropriate banking services.

Types of International Banking Offices include Correspondent Banks, Representative Offices, Foreign Branches, Subsidiary and Affiliate Banks, Edge Act Banks, Offshore Banking Centers, and International Banking Facilities.

Risks in International Banking include Currency Risk, Political Risk, and Risk Management challenges that require strict adherence to established financial standards. Strategies for effective international banking should include assessing sovereign ratings, adopting risk-reducing measures, and continuously updating risk exposure based on the latest financial data.

The future of the banking sector is shaped by trends such as deregulation, which presents new financial service opportunities, but also poses challenges in security and accessibility for certain populations not familiar with international banking services.

In conclusion, the international banking system faces numerous challenges involving market growth and the pressures of globalization. Emphasizing the expansion of capital income and adapting to technological changes are critical for sustaining the profitability and effectiveness of international banking while supporting the national economy.

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International banking, a vital component of the global economy, provides essential services to individuals and businesses worldwide. It allows for the movement of capital across borders, enabling companies to engage in international trade and investments while benefiting from various financial services tailored to their needs. Understanding the complexities of international banking is critical for businesses that wish to thrive in an increasingly interconnected world.

One significant advantage of international banking is its flexibility. Multinational enterprises often operate in multiple currencies, necessitating a banking system that can accommodate these transactions. Global banks enable seamless currency conversions, which facilitate international commerce by allowing companies to pay their suppliers and employees in their local currencies, thus minimizing foreign exchange risk (Guda, 2014).

Moreover, international banking increases accessibility for business customers. It simplifies the process of managing funds across various jurisdictions, allowing individuals and businesses to access their accounts anytime and from any location globally. This ease of access is particularly crucial for companies that need to operate on a 24/7 basis to meet international customer demands (Hilmarsson, 2014).

Another feature of international banking is its ability to support transactions across borders. As businesses expand their operations internationally, they often face the challenge of paying international bills. International banks simplify this process by providing various financial products, including loans, overdrafts, and deposit services specifically designed for cross-border transactions (Hilmarsson, 2015).

The maintenance of global accounts is also a vital aspect of international banking. Companies can keep precise records of their worldwide financial transactions, which aids in financial planning and reporting. Accurate accounting is essential for companies operating in diverse regulatory environments, ensuring compliance with local laws and global financial standards (Koryakov, 2012).

However, international banking is fraught with risks. Currency risk poses significant challenges as companies conduct transactions in multiple foreign currencies. Fluctuations in exchange rates can significantly impact profit margins and overall financial stability (Guda, 2014). Moreover, political instability in certain regions can deter businesses from engaging in international banking, as changes in government or economic policies can drastically affect their investment (Koryakov, 2012).

To mitigate these risks, banks must adopt effective risk management strategies, including continuous monitoring of political climates and market conditions. Companies should assess their exposure to various risks and adjust their strategies accordingly to safeguard their investments (Hilmarsson, 2014).

The future of international banking is heavily influenced by technological advancements. Retail banks are increasingly utilizing technology to enhance operational efficiency and improve customer experiences. Adoption of mobile banking technologies has surged, with customers preferring mobile platforms for transactions over traditional internet banking, which is witnessing a decline (Hilmarsson, 2015). This shift necessitates that banks invest in mobile banking infrastructure to meet customer expectations and stay competitive in the market.

Despite the challenges posed by rapid technological advancements, international banks must also navigate regulatory environments tightening around data security and privacy. As legislation evolves, banks will need to ensure compliance while leveraging technology to deliver improved services to their clients (Guda, 2014).

In conclusion, international banking plays a critical role in enhancing global commerce and economic interconnectivity. The ongoing evolution of market dynamics demands that banks remain agile, adaptive, and responsive to meet changing customer needs while effectively managing inherent risks. Emphasizing customer service, technological integration, and risk management will be essential for sustained growth and profitability in the international banking landscape.

References

• Guda, O.P. (2014). “Ways of achievements the competitive advantages of banks”, Journal of Applied Management and Investments, Vol. 1 No. 2.
• Hilmarsson, H. (2014). The Small States in a Global Economy - Crisis, Cooperation and Contributions. Series on Economic Issues, Problems and Perspectives, Nova Science Publishers, New York.
• Hilmarsson, H. (2015). “The Collapse of the Icelandic Banking System and the Inaction of the International Community", Journal of Applied Management and Investments, Vol. 4 No. 3.
• Koryakov, R.I. (2012). “Impact of high credit interest rates on establishing risk management in a bank”, Journal of Applied Management and Investments, Vol. 1 No. 3.