1.explain the concept of quality and diversification in banking industry?
In banking industry, Service quality is defined as the degree of discrepancy between customers' normative expectations for service and their perceptions of service performance. Basically, quality of service refers to the range of intangible activities offered by banks to achieve customer satisfaction and meet their expectations. Reliability, assurance, tangibility, empathy and responsiveness are used to measure the quality of service offered by the banks. Good quality service is important especially in encouraging current customers to seek more services and also attracting other potential customers.
Diversification in banking is the development strategy that take advantage on market chances by issuing investment danger in various categories of asset. The banks can diversify its credit portfolio to reduce the risk of credit portfolio and to enhance the performance. It has been also observed that, the diversification of bank also affects the risk taking of competitors. In the process of diversification, the asset diversification is associated positively with the bank performance, whereas, loan diversification is negatively related to it. Also, diversification raises the lending capacity of the banks but it does not increase the individual profits of the banks and this causes the failure in banking industry.
2.differentiate between traditional banking and e-banking ? (please give at least 10 points for difference)
In traditional banking, banks exist physically for serving the customers, while e-banking do not have physical presence as services are provided online.
Tradtional banking consumes a lot of time as customers have to visit banks to carry out bank transactions like — checking bank balances, transferring money from one account to another. On the other hand, e-banking does not consume time as customers do not have to visit banks to check bank balances or to transfer money from one account to another. Customers can access their account readily from anywhere with a computer and internet access.
In traditional banking, People have to visit banks only during the working hours while in e-banking, internet banking is available at any time and it provides 24 hours access.
Traditional banking does not encounter e-security threats while e-banking is the tempting target for hackers. Security is one of the problems faced by customers in accessing accounts throu h internet.
For traditional banking, customers who often travel abroad cannot pay close attention and control of their finances while in e-banking customers who often travel abroad can have greater control over their finances.
Traditional banking can be expensive for customers who have to spend money for visiting banks. On the other hand, in e-banking, customers do not have to spend money for visiting banks. They can avoid bank charges that may be charged for certain teller transactions or when they pay bills electronically — directly from their account to the merchant. It helps to save money on postal charges.
The cost incurred by traditional banks includes a lot of operating and fixed costs while in e-banking, such costs are eliminated as the banks do not have physical presence.
ln traditional banks, the employees and clerical staff of the bank can attend only few customers at a time while In e-banking, the customers do not have to stand in queues to carry out certain bank transactions.
Customers can have face to face contact in traditional banking while in e-banking customers can have only electronic contacts.
In traditional banking customers often required authorization from a bank official to deposit or withdraw money while in e-banking the customer has all the authorzation to perform any legal transaction.