Selection of Banking Services for a company

                Choosing a right bank is highly significant for any company because a suitable and a good bank can be an invaluable partner , who can not only facilitate to borrow the loans abut also can advice eon future and can provide the assurance to potential customers of the  company’s credibility and stability.  Therefore, company’s finance manager should be looking for a bank which can prove to be reliable and supportive. In addition, decision to select a bank primarily depends on the needs of the company, and finance manager has to decide whether, it needs a simple banking checking account or complex account with the line of credit.

 

               As finance manager, in the given hypothetical situation, since our company has grown and from a small business it has grown to become a medium size company with bright future a head. However, company has underperformed in recent years and has failed to generate enough liquidity due to down turn experienced lately due to subdued demand, company has decide dto change its baking partner and opt for a bank which can support it in this situation, so it can sustain its operations and could allow its expansion after the recessionary period is fully gone and economic environment becomes more encouraging.

Short Paper: Selection of Banking Services for a company: Choosing a right bank is highly significant for any company because a suitable and a good bank can be an invaluable partner , who can not only facilitate to borrow the loans abut also can advice eon future and can provide the assurance to potential customers of the company’s credibility and stability. Therefore, company’s finance manager should be looking for a bank which can prove to be reliable and supportive. In addition, decision to select a bank primarily depends on the needs of the company, and finance manager has to decide whether, it needs a simple banking checking account or complex account with the line of credit. As finance manager, in the given hypothetical situation, since our company has grown and from a small business it has grown to become a medium size company with bright future a head. However, company has underperformed in recent years and has failed to generate enough liquidity due to down turn experienced lately due to subdued demand, company has decide dto change its baking partner and opt for a bank which can support it in this situation, so it can sustain its operations and could allow its expansion after the recessionary period is fully gone and economic environment becomes more encouraging. As a growing business post crises, I would opt for small bank in the high street offering its services and will choose a service fee banking model for as finance manager. Since company’s cash reserves are not large enough, therefore, balancing banking model is avoided and I have opted for service fee model. The fundamental reason why the service fee model is best for my organization is that it can help my company to avoid paying more than required service availed that a time. Since the company is yet to apply for loan prior to this expansionary and consolidating stage, therefore, it is a viable approach for accompany in need of a cash injection and much needed liquidity to ensure smooth running of the business. According to the study conducted by E. Scott Reckard, almost half of the surveyed customers argued that they favour fee-per-service model over the other options available in the market; such as tiered usage plans and monthly fees CITATION Rec13 \l 1033 (Reckard, 2013). This model is exceedingly attractive, if it is structured transparently, and specially customized for the high frequency users. As argued earlier, one of the primary reasons in selection of bank is the futuristic approach of the bank where, it will devise a mutually beneficial strategy with good rate of return for both the parties. In addition, bank should be able to provide re-evaluations of the financial needs of the company especially related with periodic finance charges and loan interest rate issues. To further reemphasize, as the needs of the company has changed, therefore as finance manager, company should reflect on and likely changes in the business should be discussed with the bank, and bank should be made aware of the changes needed, so the experts sitting there can advice the company on these crucial steps. Important issues in selecting a bank In addition to that, other issues which are considered if not equally but exceedingly important for the company are how conveniently, bank can be accessed. The proximity with the bank as it needs frequent visits is a major help and a customer, any company official visiting the bank should not be feeling inconvenient. The banking services provided by the bank should be tailored made for the requirements of the business and besides, financial benefits and reputation of the bank and communication services should be excellent to ensure the beneficial mutual benefit of both the parties. Before selecting the bank, it is important that as finance manager considers their relevance of rational choice. Therefore, it’s important that bank compares the costs and benefits of its actions. So, comparisons should be made among the available local banks and finally a bank will be chosen depending on the greatest rewards and benefits drawn from it. According to the study conducted by Kaynak et al, banking industry is highly competitive, and banks not only compete among themselves but also with other institutions, as banking products are easily to emulate, therefore banking services can only be differentiated depending on the quality of services and costly of their service. CITATION Kuc92 \l 1033 (Kuchukemiroglu, 1992). Besides, the other factors which includes the speed of services, competence related factors, friendliness of bank personnel and convenience of location are the prime factors which are perceived as critically important for the company when in partnership ship with a bank. In addition, reputation of the bank, its credibility, its past financial performance over the years, opening hours, quality of technological used at the bank are all important on making decision about the bank. According to the study conducted by Ome, the most important factors selection criterion for a bank are quality of the services and products offered, branch environment, service and after service satisfaction, interest rates and fees, educational and personal contacts CITATION Are11 \l 1033 (Aregbeyen, 2011). He further argues that safety of funds and minimum waiting time, robust compliance department, dependability and innovative product and services and low service charges and pleasing staff are important factor for a company or an individual to get into banking with any particular bank. Consolidating the relationship with a bank Once the relationship is established with a bank as customer, it is important to maintain and consolidate the relationship between both the parties to take the relationship to the next level. It can be achieved by conducting active dialogue sessions and communication between both parties with clear and concise mindset. It is important that company keep sits bank informed about the new developments or any new emerging trends in the business. They should be informed of any setback encountered or operational issues and company’s financial statements should be accurate and prepared on time to allow bank to have insight into company’s performance. Being a finance manager, it is critical to build a certain level of trust with the company. It can allow the company to get better interest rates in the future than what are set in the advertisements for general public, and a solid relationship can allow for better rates on deposits in the future when company become more stable. Also, with growing proximity between the parties can lead to added convenience, higher level of customer services and can help the company in identifying the opportunities to enhance the financial positioning and grown in the future. Especially, in the kind of tough economic environment business has endured, such a close partnership can help businesses to expand and ensures its growth. References: BIBLIOGRAPHY \l 1033 Aregbeyen, O. (2011). The Determinants of Bank Selection Choices by Customers: Recent and Extensive Evidence from Nigeria. International Journal of Business and Social Science. Retrieved May 13, 2015, from http://ijbssnet.com/journals/Vol_2_No_22_December_2011/32.pdf Kuchukemiroglu, K. E. (1992). Bank an dproduct selction: Hong Kong. International journal of Bank Marketing, 2-17. Retrieved May 13, 2015 Reckard, E. S. (2013, February 5). Retrieved May 13, 2015, from Los Angles times: http://articles.latimes.com/2013/feb/15/business/la-fi-unbundled-banking-20130216

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