Banking and Its Influential Factors in the Economy

Banking is ane of the around influential figures on the economies of instantlys society. As with e realthing these days, engineering science is changing where, when and most of all, how we do things, specifically banking and new(prenominal) related pecuniary transactions and arrangements such as mortgages, etc.Recently, in Toronto, the genuinely city we live in, we were in the midst of two possible bank mergers, which would discombobulate changed banking and on a larger scale the entire providence, in m any(prenominal) ways.In comparison to the larger banks of the world, Canadas most major banks are not even close to the size and caliber of international banks standardized ING Direct, for example. This would not typically be a problem for Canadian banks, barely when these international banks move into Canada, which has happened already, and is bound to happen even to a greater extent as time passes and Canada becomes a more(prenominal) prosperous country, it quickly b ecomes a very large problem. Banks are an extremely affluent business. Regardless of where you are in the world banks are right at the top of the list when it comes to capital, honor and earnings. Canada fits right in, in comparison to the rest of Canada. But when we compare Canadas banks to those of former(a) countries, or even better, international banks, they are simply insignifi merchantmant.For example, hypothetically speaking, if the entire world were opting whether or not to adopt a angiotensin-converting enzyme currency, most deciding factors would be made by the banks of each mortal country. Canada, although it is a major world leader in many an(prenominal) other categories, would not be looked upon as a country that knew much approximately international stature, in terms of banking. In this essay I lead try to prove how banking is one of the most influential factors on the economy by using factual cases from recent times.What does better guest dealing mean? Increa singly, customers are demanding more convenient ways to do their banking. An Ernst and schoolboyish arena (Technology in Banking Report) concluded, nothing changes in the banking world if customers quite a littlenot get financial work when and where they wishthis means anywhere, at any time. Statistics show that ambiences telephone banking, and home banking account for over fifty pct of all banking transactions today, and total non-branch activity is growing at fifteen percent a year. In one survey (Web-Tech, Inc., May 17, 1995), 82 percent of 18- to 34-year olds polled preferred banks with 24-hour service.Customers are also demanding a more advanced mix of products tailored specifically to their financial needs, and non-bank competitors are better fulfilling these needs. Banks today hold but 20% of ho affairhold financial assets, versus 34% twenty dollar bill years ago they have 30% of business deposits, versus 42% only seven years ago. Non-bank credit card providers have gained inroads against banks, holding a 25% market share versus 5% in 1986 (WebTech, Inc., May 17, 1995). earnings banking offers an attractive solution to this redesigned products and services. Customers have 24-hour graphical-interface access to their accounts and appreciate that their bank is doing something to pay back banking easier for them.A country, like a business or a person, is unceasingly doing anything in its power to better itself. A business, like a society, is every growing or declining the competitive world allows no other options. pitying nature depart allow no state of rest. Economics is the study of production, distribution, exchange, and consumption of goods and services (Ammer, pg. 186), all of which, if stopped, would cause a business or a country to grind to a halt. From these statements we realize that change is an intrinsic part of the world of economics.Not necessarily a change in what we stool, rather the way we do it. Technology, that is, the devel opment of new materials, products, machinery, and processes can create new products and concepts as well as improve production and capacity for existing products a few key factors that determine economic growth. As a result, new jobs are created, existing ones are made easier and more efficient, and the in the end thither is a greater profit permissiveness (Thurow, pg. 69, 304). To understand this topic I leave behind look at the effectuate of technology on economic growth compared to those of the other four factors, there are five factors, which affect a countrys economic growth,Each factor has its own effect on economic growth, however together they upgrade a greater overall effect.Picture a bank without any branches. No tellers. No rows of desks. No racks of brochures, no automated teller machines outside. Picture, in fact, a virtual bank, one that for the customer exists only in his or her office or home, as images on a computer screen. US financial institutions are moving towards virtual banking. This strategy is about make bank products and services available to customers any time and any fleck they want them. As virtual banking becomes more popular, it is very likely that more customer service will be seen while the number of traditional teller-staffed branches will decline.Bank customers will move away from traditional banking and will become more dependent on electronic transactions using ATMs or PCs (Britt, Savings&Community Banker, February 1995, p.9). Thanks to this technical revolution, financial institutions are using computer packet product programs, online services, and even the meshwork to allow customers to nurse balances, pay bills, and transfer funds among accounts. Bankers promise that, in the near future, we will also be able to more easily buy certificates of deposit, vernacular funds, and other investments, and even apply for loans electronically.For most people, todays best option whitethorn be plug into their bank through one of three star(p) home-budgeting software programs, these programs areBy charging $5 to $20 a month for such services, banks are sure to cash in on the advanced superhighway. This would make everything much easier for customers. All that is required is a personal computer, software and a modem, all of which the majority of people in todays society have. On-screen instructions, filled with colorful graphics and pictures, explain how to select and constitute on various tasks. The system automatically calculates and updates account balances and keeps records of bills. A fistful of banks have already set up home pages on the net to provide schooling to their existing and potential customers about upcoming services. They started their transactions.Internet banking differs from the traditional PC banking model in several ways. In most home banking ventures, the bank sends an application software program to the customer which runs on the customers PC. The customer then dials into the bank with their modem, downloads data, and runs the programs that are resident on their computer, mayhap sending back a batch of requests such as transfers amongst accounts. It demands more and more space and speed from the customers computer.With Internet banking, on the other hand, there are potential customers who already have all the software they need to do their banking, since all they need is a browser. The actual banking software resides on the banks server in the form of their home page. This software can be updated at any moment with new information, such as new prices or products, without having to send anything to the customer it can also cover to expand and become more sophisticated without becoming cumbersome for the customer to operate. Banking with a browser, on the other hand, involves a continuous, interactive session, initiated by a local telephone call to a local access provider or online service. By developing internal expertise today, banks can forge th emselves to react quickly and efficiently to competitive moves and consumer trends as the financial services industry changes.Employees at Bank of America, Chemical, Wells Fargo, and other large U.S. banks use them to buy lunch and snacks. Smart card game-plastic separate with computer chips-are starting to be used for prepayment, debit, and credit purchases all over the world. In the U.S., smart cards can be only used at a contained company of machines, or for one purpose. They are part of the broader shift to electronic delivery, to fashioning ATMs more functional, to using PCs and the Internet to do home banking. says Edgar Brown, senior vice-president of alternating(a) delivery products at First Union, Charlotte, N.C.One of the advantages of using chips on cards with or instead of magnetic stripes is better security. Microprocessor chips are very difficult to alter or forge. Chips can carry more information than magnetic stripes can. A microprocessor chip can store up to eig ht kilobytes of data. Smart cards make cheaper and faster payments possible. Money can be deducted from a chip without on-line authorization. This makes for a two-second transaction versus an up-to-two-minutes one, and telecommunications cost are saved (Lunt, P., ABA Banking Journal, September 1995, p.46).We can plainly see that there are many factors having great importance, when dealing with the economy. There are many things we must take into consideration in order to make any kind of an informed economic decision.