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Digital Cash and Financial Institution Management (2)Filed Under: General

1) Overall decrease in the number of bank branches and staff.
2) Banks with fewer of their own branches (commercial mega-banks and some trust banks, etc.) have an advantage (Orr, 1997; Cline, 1998).
3) A reduction in service fees in the case of net settlements or immediate settlements (The Banker, 1997), as well as through use of one’s personal computer for banking transactions.
4) By the acquisition of business information concerning commercial distribution, a bank has the means to create a monopoly.
5) When institutions other than banks join the settlement network, it increases the possibilities of systemic risk.
6) Likely to occur are tie-ups with credit-card companies and similar institutions having their own set infrastructures (Business Week, 1995).
7) Shifts in these types of risks are forecast. Rather than the traditional concerns such as interest rates, liquidity, and market fluctuations being at the center of attention (Basle Commitment on Banking Supervision, 1998), operation risks may become the focus. Having to lower the cost of information acquisition while globalization continues to influence worldwide business trends makes it difficult for banks to establish a central standard of technology and risk-management operations6.
If competition turns severe, confidence and reputation become more important than before.

Each is trying to provide a better way of streamlining digital payments or replacing cash. Of course, some new trend in the financial realm will have a ripple effect. There is the view that any move to ensure that banks are not deprived of their vested right to profit from certain transactions, for instance, would disturb the development of electronic banking. Paper-based transactions are still the mainstay, according to Humphrey and Pulley (1998), BIS (2000), and Weiner (2000), not only in the United States but in the other
countries as well.

Banks have a vested interest in keeping payment systems as slow as possible — the longer money takes to get from one bank account to another, the more use can be made of it. This is why banks are not pioneers when it comes to more efficient ways of making payment. Yet if they do not establish a relationship with the new payment schemes, theyrisk losing their franchise (Shirreff, 2001).

New banks entered the market for merchant acquisition and a price war broke out, reducing profit margins. All sorts of banks now complete fiercely to act as acquirers for individual traders (Revell, 2001).

Taken From: 10 Minute Guide to Conducting a Job Interview