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QuestionDiscuss the customer-banker relationship in UK
AnswerThe customer-banker relationship in United Kingdom is reflective of the roles each party plays. Banks core operations support the provision of different types of bank accounts, including current and savings accounts, as well as a role of lender. Customers, which include domestic and commercial customers, provide the money held in accounts, as well as being borrowers. Banks operate as financial intermediaries, bringing together the customers which hold financial resources in savings, and those who wish to borrow money (Howells and Bain, 2007). The intermediary role is necessary due to a mismatch between the needs of the borrowers and savers (Howells and Bain, 2007). The borrowers often take out loans, or other debt obligations such as overdrafts, for different periods, with a bias toward middle to long term (Koch and MacDonald, 2009). Conversely, many of the customers who place financial assets of the bank will require short-term access, while wishing to gain an income on their savings (Howells and Bain, 2007). The mismatch between the savers and the borrowers is mediated through the bank, which aggregates the savings from many diverse customers in order to create a pool which can be utilised by borrowers (Howells and Bain, 2007). To ensure banks have sufficient reserves, especially with the increased requirement under Basel III (Rojas-Suarez, 2015), they undertake marketing in order to attract and retain customers. This includes the development of additional financial products and services which help to support the customer relationship. Banks also leverage the relationship to support profit creation from the sale of additional products and services. However, the relationship may be seen as increasingly disintermediated as a result of technology, with Internet banking, apps, and centralised technology guiding banking decisions (Lipton, Shrier and Pentland, 2016). Therefore, the customer banker relationship is complex and constantly evolving, with a high level of mutual dependence.
ReferencesHowells, P.G.A., and Bain, K., 2007. Financial Institutions and Markets. London: Longman. Koch, T.W., and MacDonald, S.S., 2009. Bank Management. Mason, OH: South-Western CENGAGE Learning. Lipton, A.,, Shrier, D., and Pentland, A., 2016. Digital Banking Manifesto: The End of Banks? Financial Technology Innovation. [online] Available at: . Rojas-Suarez, R., 2015. Basel III in Chile: Advantages, Disadvantages and Challenges of Implementing the New International Standard for Bank Capital. [online] Available at: .
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