Question

What are the challenges of universal bank nowadays?

Answer 1

Universal bank provides not only banking services but rather than that it also provides other financial services. Universal bank refers to a bank which provides three main services of bank at a single place. The three main main services include wholesale banking, retail banking as well as investment banking. Under retail banking, bank provides services like saving account, current account, overdraft, safe deposit lockers etc. Under wholesale banking, bank provides various services like borrowing and lending huge amount of money to government as well as company, pension etc. Under investment banking, bank provides services like merger and acquisition, capital raising, asset management, securities underwriting etc.

✓Challenge of universal bank:

1. Establishment of new private banks as well as foreign banks affect the performance of the universal bank. Due to new established banks there will be increase in the competition and due to there is need to provide all the services more effectively to maintain and attract their customer base. So, this is the challenge for the universal banks.

2. Some banks are not having proper supervisory instruments so this is also challenge for the universal banks. Those who are not having proper supervisory instruments they have to work on it.

3. In universal bank risk management also plays an important role as due to improper management it leads to poor performance of bank which is not good sign for sustaining in the competitive market. Thus risk management can be a challenge for the universal bank.

4. Another challenge for universal bank is volatiivol of prices in the stock market. High level of volatility makes complexity in the working of bank which is not good for bank. Thus this can be challenge for universal bank.

5. To determine precise nature of risks associated with the use of particular financial structure and transaction is also challenge for universal bank. Sometimes it happens that bank do some mistake at the time of choosing financial structure which can be a reason for the poor performance of universal bank.