Globalization has opened up new areas of business. Companies are really excited about the expansion of financial services and the earnings they are set to make but this brings several areas which need detailed understanding before actually divulging into the area.
In the current globalization era it is not easy for a financial institution to survive until unless they make a proper strategy to run their business. It is important for them to provide proper and attractive services to customers. It is important for them to know and understand the need of the customer as to provide them with best offers and services.
This is not just sufficient but they need to look for the business opportunities across the globe and also need to be aware of the threats and competition which can impact their business. Anyone sitting in US should not be thinking that their businesses will not be affected by the happenings anywhere in the world. It can be better understood with the fact that the markets in the developing countries have reached a level where satisfying the customers requires a wholesome effort and the markets are also getting limited by each passing day. However, if the businesses look up to the developing countries they can find a huge demand for their products.
It is always a good idea to diversify into other countries for the business opportunities but one should remember that each country has a diverse culture people who are governed by the laws of the land. In such a scenario it is best to understand that the if a business opens up centers in new countries they should be well prepared to embrace the law and the other areas for carrying out smooth operations.
Financial institutions have to merge with other business to provide best and valuable services to customers which will be beneficial for both the business. It has been noticed that in 2008, there were the maximum mergers and acquisitions of business.
When these mergers started taking place in large extent, there was negative impact faced by many firms which increased domestic competitions. In the very beginning of 1980s, monetary control act of 1980 depository institutions deregulation and the Germaine depository act of 1982 were passed.
By these acts non-member banks were not allowed to merge else every banks and credit unions, mutual saving banks have right to merge. These marriages were very beneficial and made a better financial condition since 2008.
After a good success of these acts, second banking directive deregulated market in 1993 of European countries. The European insurance market also copied this method and changed their policies accordingly for the third generation insurance directive in 1994. These changes increased competition between European and United States financial services.
In the financial services arena the use of internet by businessmen for delivery of financial services made a great positive impact.
After the great success of this act in the United States and Europe it went global and was used by many Asian markets. The Japanese market also started to use this trend to make their financial market more strong. By the end of 1999, all the transactions between Japan and other countries started easily.
After these systems started getting famous in Asian market, the United States continued to upgrade his deregulation under Gramm-leach-Bliley act of 1999. Under this law the consolidation of major financial players took place. This deregulation increased business of U.S financial companies $200 billion in 2000. According to the survey of Elizabeth harper Broglie and Joseph toilet in 2001, expansion of companies and technological advancement is a common trend.
This deregulation increased competitions, market efficiency and gave consumer best choice. This deregulation gave whole power in consumer’s hands which were very sophisticated earlier. According to studies, diverse regulatory effected the managing and running of financial institutions by the increment in the bureaucracy and the number of regulations.
Internet also played an important role in the improvement of financial market. A financial market is trying to target his customer from narrow services to gain better profit. But this deregulation makes customer so powerful that for financial institution it was important to keep customer services better than to focus on the rate setting and transaction processing. Customer’s satisfaction was their first priority for smooth running of business.
Since 1998, United States have experienced geographical expansion and a financial services industry is the most successful industry. Customers were treated by local financial institutions earlier and later at global level. It is said by Robert DE young, and Allen Berger “Technological Progress and the Geographic Expansion of the Banking Industry” which means that money banking and credit banking has increased up to 50% between 1985 to 1988 in the united states. This tells that how United States have increased his economic condition and has made him a strong nation. Deregulation is the major factor behind all the geographic expansion in the nation.
In Europe, policy was introduced which increased authority of banking and financial institutions which enable them to increase their operation across the member-states. All the transactions were allowed as it increased the power and financial condition of the county. Foreign transactions were also an important part in increasing the financial condition of the country. Multinational financial institutions also settled headquarters in other countries.
There was high business costs involved in foreign transaction. For this ATM and banking websites have made it easy for customers and financial institutions to maintain long distance interactions. This facility is so much helpful for customers that they are fully dependent on it and can easily do boundary-less financial transactions.
Consolidation of firms also proved to be very beneficial for these firms as if they are weak at any part then they can easily cover up that part in less cost if they merged with the firm which is very good at that part where you are weak. Consolidation also lowered down the production cost up to a great extent which is also beneficial for customers in an indirect way. They freely merge with another firm to increase their growth and make the business profitable by lowering down the production cost. Shareholders are also increased by this consolidation.
Financial services including loans have seen a major shift in the ways they were given earlier to the people. Cross boundary operations require a lot of consideration by the companies and they have to abide by the law of the states in which they are operating. While this has given major business opportunities to companies, citizens of the countries and the seats are set to benefit from the competition in the sector.
Conclusion: The globalization of financial services has played a very beneficial role in the financial industry for all the nations around the world. Many firms and financial services have succeeded in their business because of the globalization of financial industries. It is because of this only that finance is easily handled from anywhere in the world and at any span of time. Most of the countries have started growing its economic condition because of the inflow of foreign currencies in their country.
Alice is an experienced real estate blogger. Here she discuss about new strategy and share information of real estate as well as home improvement.
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