Report Example on Retail Banking

Retail banking refers to the division of banks to serve retail customers (Clark et al. 2007). It is regarded as the visible face of a bank to the public. A lot of development has occurred concerning how the banks operate. Most banks are currently adopting new methods of operations aimed at increasing their output and efficiency. A such, this report provides three critical aspects that retail banks should consider during their operations.

Adopting A Technical Team as Opposed to Outsourcing

First, most banks outsource services to take advantage of the competitive market. Young and Hood (2003) posit that outsourcing involves the use of a third party to aid in conducting business activities that would otherwise be done by the business itself. Indeed, the third party can either be an affiliated entity of the bank, or an external organization. Outsourcing is beneficial since it allows the bank to increase its human resource base which enables it to acquire experts to operate some of its functions. However, it has several limitations. To start with, it leads to strategic risk which arises from the poor decision-making processes which affect the earning of the bank (Young and Hood, 2003). Indeed, by not choosing the right provider, a bank may suffer the unnecessary cost. Moreover, a bank may fail to conduct oversight functions to the service provider which could make it not to understand and manage the problems caused by the vendor. Besides, the operational risk may result hence causing technology failure (Young and Hood,2003). Because of these challenges, it is important for the banks to develop their technical team which will ensure that they are trained according to the needs of the bank. In addition, the bank will be able to save a lot of financial resources that would boost other functions of the bank.

Block Chain Technology

A blockchain refers to digitized and decentralized methods used to conduct a financial transaction (Sun, Yan & Zhang, 2016). Of course, this technology is necessary for the retail banking industry because it allows effective servicing. It also provides a good security for the operations made. Banks need to secure their transaction and ensure that their client details are safe. Through blockchain transaction, this can be made possible.

According to Sun, Yan and Zhang, (2016), transparency on how transactions are made is a critical requirement of the retail banking. Clients and stakeholders need to understand how the bank operates. Therefore, blockchain enables banks operations and balances be seen by all the users on the network. The decentralization forms the core principles of the blockchain hence emerging as the most important benefit of this technology. The retail banking operates in a decentralized manner hence blockchain technology would work the best during financial transactions.

Banks are susceptible to hacking and robberies since most of them use central storage system for both data and assets (Sun, Yan & Zhang, 2016). However, blockchain technology makes it difficult to infiltrate the banking system. Indeed, this is because for one to hack it, one requires access to every computer system on the network at the same time. This implies that it prevents data manipulation by ill-intentioned people. Nonetheless, it eliminates the cost of intermediaries hence aiding the bank in saving billions of dollars. Blockchain implementation determines the authority of documents; therefore, improving their originality. Besides, it can lead to speedier resolutions and better evidence for a case (Sun, Yan & Zhang, 2016). As such, it becomes easy to follow any financial case when it occurs. Based on the advantages mentioned above, banks should develop blockchain technology to ensure efficiencies of their works.

Al Chatbots

Chatbot refers to a computer program that aid conversation through textual and auditory techniques (Reynolds, 2017). The technology important in banking industries since it boosts customer experience including the provision of client services. Besides, it can be utilized for product recommendations and engage customers through marketing campaigns. The technology has made communication quicker hence eliminating slower ones such as phone calls and emails.

According to Reynolds. banks can also use chatbots to increase their sales. The program is no longer limited to conversational options since it can significantly improve customer service reputations hence increasing sales. Depending on the types of services, the technology can be useful in the banking sector which demands lot customer care services. Therefore, it necessary for the retail banks to develop such a technology.

In conclusion, retail banking should adopt techniques that would increase its efficiency; therefore, increasing customer satisfaction. It is beneficial to initiate a technical team since it ensures that a bank develops personnel capable of handling banks operations. Moreover, a bank should develop blockchain technology that would enable quicker transactions. Notably, this technology will also improve both the security of the clients and the bank. Besides, the chatbot plays a crucial role in ensuring that customer service is conducted as quickly as possible. Of course, this technology is eliminating other slow methods such as phone calls and email. It is, therefore, important for the bank to adopt these measures to operate effectively and efficiently.

References

Clark, T., Dick, A., Hirtle, B., Stiroh, K. J., & Williams, R. (2007). The role of retail banking in the U.S. banking industry: risk, return, and industry structure. Federal Reserve Bank of New York Economic Policy Review, (3). 39.

Reynolds, M. (2017). Chatbots learn how to drive a hard bargain. New Scientist, 234(3130), 7. http://dx.doi.org/10.1016/s0262-4079(17)31142-9

Sun, J., Yan, J., & Zhang, K. (2016). Blockchain-based sharing services: What blockchain technology can contribute to smart cities. Financial Innovation, 2(1), 20-34. http://dx.doi.org/10.1186/s40854-016-0040-y

Young, P. C., & Hood, J. (2003). Risk and the Outsourcing of Risk Management Services: The Case of Claims Management. Public Budgeting & Finance, 23(3), 109-119.