Question

Globalisation is at work in the banking industry, where globalisation refers to an increase in competition by foreign competitors and home institutions’ doing business in the global market. To face up to the challenges of the internationalisation process banks of all sizes and from different countries should deal with long‐term issues and industry analysis as well as firm-specific strategies. Banks are no longer in the business of buying (i.e. saving) and selling (i.e. lending) money but that of offering complete financial services to the banking public. Australia’s major banks include CMA, ANZ, NAB and Westpack.

Analyse how the development of technologies such as BlockChain and the emergence of Bitcoin affect (average) profitability of the four banks. (worth 6 marks and 350-400 word required)

Answer 1

As advised in the above article, today banking sector is not limited to lending and saving of the money however it includes all the other financial and investment need of the person. Hence the core business of the banking sectors now includes

• Saving
• Lending
• Investment accounts and advisory
• Investment products
• Money Transfers
• Currency exchange etc.

So as the services offered by banks has increased simultaneously it has increased globalisation and competition among the banks.

Now if we specifically speak about the below banks

1. CMA
2. ANZ
3. NAB
4. Westpack

All these four banks are the major banks of Australian Banking industry as the Globalisations increase, it will directly impact on this bank as they influence most of the economic dimensions of the country. in other way it will make them difficult to cope up with many financial instruments which are beyond there limitation such as Blockchains including Bitcoin.

Today the demand of cryptocurrency has increased as major platforms are working on Intranet. However, I believe that such type of financial instruments can be risky as they don’t have any centre authority to control more or less many countries has banned this cryptocurrency. Hence dealing in such scenarios for such major banks seems to be a difficult and can impact their profitability.

Also, BITCOINS today has made Havoc in financial market due to its volatility and as it is proving to make huge profit many of the investors are moving towards BTICOIN rather than the traditional instruments provided by this banks such as Fixed Deposits, Bonds and Equity market.This is the main reason the profitabiltiy of this banks has been impacting.