FSO Challenges

Branch Banking

Branch banking is the act of a bank doing business in a place that is independent of the location of the central bank business. Many large and small banks use bank branches to extend the scope of its services to different places in a community, state or country. Smaller branches are also less expensive to operate and often easier access for customers, while providing all the functions of a larger bank (Cronin 12).

Challenges of Branch Banking

Deregulation

The continuing deregulation has made the highly competitive banking market, with greater autonomy, operational flexibility and runaway interest rates and the rules of the exchange rate liberalization. The deregulation of the industry, along with decontrol of interest rates has led to the entry of a number of players in the banking industry (James 51). At the same time, reduce corporate credit be due to the sluggish economy has led to large numbers of competitors hitting the same cake.

New Rules

As a result, the market has been redefined with the new rules. Banks are becoming a universal bank, creating new channels at a price to offer lucrative and freebees. Natural falling of what has led to a series of innovative product offerings that cater to different customer segments, namely retail credit (Maddala 14).

Efficiency

This in turn has forced to seek efficiency in the business. Banks need access to low cost funds while improving efficiency. Banks are facing pricing pressure, tightening the spread and have to give thrust to retail assets.

Issued Customer Loyalty

This definitely will impact customers' preferences, as they are forced to react to the value-added offerings. The customers have become demanding and loyalties are disseminated. There are multiple options, the share of the portfolio reduce the bank with the demand for flexibility and customization. Given the relatively low costs of switching, customer retention calls personalized service and hassle free delivery, impeccable service (Ostrolen 32).

Misaligned Mentality

These changes are creating challenges, as employees are made to adapt to changing conditions. There is resistance to changing the mindset of employees and seller's market has not been changed along with the fear of uncertainty and control orientation. The acceptance of technology is slowly progressive, but the use is not maximized.

Gap Competition

Placing the right skills in the right place will determine the success. The difference in competition should be addressed at the same time the opportunities would not otherwise be missed. The approach is to make people work but do not ...