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Will Neo banks break the monopoly of the traditional banking systems?

A gradual loss of monopoly is being experience by the banks as there are these new players arriving to the game, born from the digital transformation. To win back their title these banks need to adopt new strategies to face these new challenges and compete with the developing market. The development of technology and the subsequent introduction of open banking systems, payment automation and instant payment means that the banking system is gradually adopting the new methods and that the community needs more drastic transformation, says Professor Catherine Karyotis from NEOMA Business School.

Neo banks are one the biggest competitors of traditional banking systems. Neo banks are the financial tech firms which offer only internet services and lacks the physical branches. It is an appeal of sorts to the people who don’t mind doing most of their money management through mobile apps. Competing with these direct banks which wok exclusive online can be a challenging job. “In order to contend with these new platforms, traditional banks must adapt in order to stand out and capitalize on the trusted relationships that have been established between them and their customers,” says Professor Karyotis. The only effective way to stand out is focusing on the consumers and continuing to add more value to them to have the edge on the digital players. More efforts in understanding the consumers and paying heed to their behavior in order to provide the best possible solutions as the response.

“A new type of customer relationship needs to be established and the sources of value creation need to be revised to improve customer experience. To be customer-centric is to put the customer, and not the product offer, at the center of the company’s concerns.” says Professor Karyotis. This new type of relationship , if established can bring in the trust and by updating the source of value added creation like providing alternate services or revising the outdates methods which is no longer is use, all helps in adding more quality to the customer experience. Being customer centric means to pay more attention to what the customers are lacking or what the customers are expecting from the bank to make their work easier and hassle free. In simple words it means to put the customer first and not the product or the offer at the centre of the bank or the company’s concerns. Addressing the consumer’s issues will bring more trust to the table and this in turn will help the products which are offered by the banks. So putting the consumer first means solving their queries before launching new services, instead there can be a launch of new schemes or products or services which addresses the previous concerns of the consumers.

The traditional banks requests and appeals are disappearing as the time is passing by very quickly. It is high time and a great opportunity as well for the traditional banks to re-invent and re-introduce themselves as worthy of the game. The new innovations to their economic models and new schemes of partnerships with the new entries in order to emphasize their knowledge about the ongoing digital transformation and to adapt the skills which are built on trust and benefits their presence in helping their valuable consumers. In order to achieve all these key points, the most required step is to upgrade the social skill set of the employees. Organizing training programs to their staff can help speed up the process. By following all these little steps , a drastic change is sure to be seen in the traditional banks.

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Banking

Goldman banker hired by the Citi bank

Citigroup has hired Luisa Leyenaar-Huntingford from Goldman Sachs. This new hire is to co-head its global infrastructure franchise. Because, it seeks to win more business from cash-rich investment firms focusing on infrastructure deals. Leyenaar-Huntingford will be based in London. Responsibility will be shared with Todd Guenther in New York.

The pair will work closely with industry teams covering healthcare, industrials, natural resources and clean energy transition (NRCET), technology and communications. Leyenaar-Huntingford helped in the establishment of the Goldman’s infrastructure franchise in her time at the Wall Street bank. They will team up with Citi’s Iberia co-head of banking, capital markets and advisory (BCMA) Jorge Ramos will continue to be a senior member of the global infrastructure franchise.

The infrastructure sector is poised for further growth, according to the memo. The memo was released by Citi’s global co-heads of the alternative assets group Anthony Diamandakis and John Eydenberg, and its EMEA head of BCMA Nacho Gutierrez-Orrantia. There was significant private investment demand across the globe to deal with environmental, energy, transportation, waste, communication, digital and other social needs.

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Banking

Banks make slow progress on UK gender pay

Major banks in Britain made a slight dent in their gender pay gaps. Several insurers went backwards. Companies in Britain with more than 250 employees have been required to publish the difference between the pay and bonuses of their male and female employees. They got a reprieve due to the pandemic, last year. The financial services sector has shown one of the largest genders pay gaps in Britain. The lack of women in senior jobs is the main reason.

Pay gap data from 21 major financial institutions showed a narrowing in their average mean gender pay gap. This is just 0.4 percentage points. Banks alone had a pay gap which narrowed by one percentage point. Ann Francke, chief executive of the Chartered Management Institute said that the UK’s financial services industry has often been singled out. It really does have to get its house in order. Goldman Sachs had the widest gender pay gap in the year to April 2020. Goldman posted a gender pay gap of 51.8%. The bank told the staffs that narrowing the gap further was a critical priority. A spokesperson for banking lobby group UK Finance said, that there is clearly more still to be done.

FTSE 100 insurers Prudential, Legal & General and M&G reported a widening in their pay gaps. Prudential’s UK gender pay gap widened to 45.2%. M&G also reported a widening in its pay gap in the most recent year to 30.5%. The M&G spokesperson said that they are determined to narrow their gender pay gap and will do this by achieving better representation of women in all roles at all levels of our organization. Legal & General’s mean gender pay gap widened to 30.8%.

The insurer said that the legal & general is tackling the underlying causes of its pay gap. This is by creating a more diverse workforce and a more inclusive culture through sustained, long-term action. Admiral had a gender pay gap last year of 12.8%. The 21 firms surveyed were Barclays, HSBC, Lloyds, NatWest, Standard Chartered, Bank of America Merrill Lynch, Goldman Sachs International, JPMorgan, Morgan Stanley, UBS, Credit Suisse, Deutsche Bank, PGMS (a Phoenix unit), abrdn, Schroder Investment Management, St James’s Place, Legal & General, Prudential, Admiral Group, Aviva and M&G.

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Banking

BOJ to lower inflation target-Japan’s finance minister

Japan’s outgoing finance minister, Taro Aso, said that he had proposed lowering the central bank’s 2% inflation target. This is when the prices took a hit from plunging oil prices. He was the finance minister for nearly nine years. The slump in oil price was among the main reasons the government could not officially declare an end to deflation. In his final news conference as finance minister, Aso said that he proposed to Governor Kuroda that, with oil prices falling this much, it would be hard to achieve 2% inflation. Hence, the target must be lowered at some point. He stated this by referring to Bank of Japan (BOJ) chief Haruhiko Kuroda.

Aso also said that the governor said he would do his best to achieve the target. This is stated by adding that policymakers must scrutinise at some point, why the BOJ’s inflation target of 2% has not been met. The remarks highlight how the government and lawmakers distanced themselves from the BOJ’s target years ago, despite central bank reassurances that achieving the target was possible by maintaining or increasing stimulus.

Aso was deeply involved in negotiations with the BOJ. After Kuroda took over as governor, he deployed a massive asset-buying program. This is for pulling Japan out of deflation. Aso supported the BOJ’s stimulus efforts. He is a member of the cabinet. And also, had raised many doubts that monetary policy alone can reflate the economy out of the doldrums. New Prime Minister Fumio Kishida is set to form a cabinet.

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