Question

The concept of Financial Holding Companies (FHCs) came from

Select one:

a. The Financial Services Modernization Act

b. The USA Patriot Act

c. The Riegle-Neal Interstate Banking & Branching Efficiency Act

d. The Dodd-Frank Wall Street Reform and Consumer Protection Act

e. The Bank Holding Company Act

In Net Stable Funding ratio, sources of available stable funding include the following except:

Select one:

a. customer deposits

b. long-term wholesale funding

c. equity

d. loans

e. all of the above

The rise of payment service providers (PSPs):

Select one:

a. has provided a better profitability performance than before.

b. has resulted or will result in a less competitive market.

c. has no impact on banks.

d. will help banks to save cost on their investments.

e. has caused banks to constantly look for skills and technologies outside the core competency of a bank.

Answer 1

The concept of Financial Holding Companies (FHCs) came from :

Answer - a) The Financial Services Modernization Act : which is also called the Gramm-Leach-Bliley Act of 1999. This act created the concept of Financial Holding Companies (FHCs). FHCs are a type of banking holding company that are allowed to engage in various types of non-banking financial activities, such as underwriting securities, investment advisory, etc.

In Net Stable Funding ratio, sources of available stable funding include the following except:

Answer - d) loans

The Net Stable Funding ratio is the proportion of Available Stable Funding to Required Stable Funding. The sources of Available Stable Funding include customer deposits, long-term wholesale funding and equity, but does not include loans. Available stable funding is the portion of capital and liabilities that is expected to be reliable over a period of one year.

The rise of payment service providers (PSPs):

Answer - e) has caused banks to constantly look for skills and technologies outside the core competency of a bank.

A payment service provider is a third party that offers online services to merchants to help accept electronic payments through various methods such as credit cards, bank transfers, direct debit and other types.

Banks are definitely facing increased competition from such PSPs. PSPs are able to leverage digital techonologies to offer faster and more convenient services to their clients.

As a result, in order to keep up with the competition, Banks are having to make investments in digitizing their operations and customer offerings, which requires substantial initial costs of investments.

The increase in competition has also caused banks to adopt newer non-traditional technologies that enable them to better offer their core services.