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  1. 1. Banking Industry Analysis Presented To: Board of Directors of Fifth Third Bank
  2. 2. Purpose of Report <ul><li>Conduct a Banking Industry Analysis with a focus on: </li></ul><ul><ul><li>Globalization </li></ul></ul><ul><ul><li>Deregulation </li></ul></ul><ul><ul><li>Technology </li></ul></ul>
  3. 3. Topics Discussed <ul><li>History of Banking </li></ul><ul><li>Banking Regulations and Deregulations </li></ul><ul><li>Effects of Deregulation on Industry </li></ul><ul><li>Globalization of Industry </li></ul><ul><li>Banking Technology </li></ul>
  4. 4. History of Banking <ul><ul><li>Panic of 1907 </li></ul></ul><ul><ul><ul><li>Federal Reserve Act of 1913 </li></ul></ul></ul><ul><ul><li>The Great Depression </li></ul></ul><ul><ul><ul><li>9,000 of 25,000 banks closed </li></ul></ul></ul><ul><ul><li>Post WWII </li></ul></ul>
  5. 5. History of Banking <ul><li>Modern banking </li></ul><ul><ul><li>Deregulation </li></ul></ul><ul><ul><ul><li>Bank transformation into supermarket </li></ul></ul></ul><ul><ul><li>Globalization </li></ul></ul><ul><ul><ul><li>As the economy has globalized, so has the banking industry </li></ul></ul></ul>
  6. 6. Regulations and Deregulations <ul><li>Glass Stegall Act – 1933 </li></ul><ul><li>Gramm-Leach-Bliley Act – 1999 </li></ul><ul><ul><li>Allows the following to merge: </li></ul></ul><ul><ul><ul><li>Banks </li></ul></ul></ul><ul><ul><ul><li>Brokerages </li></ul></ul></ul><ul><ul><ul><li>Investment banks </li></ul></ul></ul><ul><ul><ul><li>Insurance Companies </li></ul></ul></ul>
  7. 7. Benefits of Legislation <ul><li>White House estimates it will save consumers $18 Billion annually </li></ul><ul><li>Keeps US firms competitive in today’s global marketplace </li></ul>
  8. 8. Regulating Bodies <ul><li>FDIC – Insures deposits and promotes safe banking practices </li></ul><ul><li>Federal Reserve – Acts as central bank promoting a stable monetary system </li></ul>
  9. 9. Regulating Bodies <ul><li>SEC – Protect investors and maintain integrity of securities market </li></ul><ul><li>OCC – Charters, regulates, and supervises all national banks </li></ul>
  10. 10. Effects of Deregulations <ul><li>Savings and Loan industry no longer profitable </li></ul><ul><li>Adapt to industry by offering other financial services </li></ul><ul><li>Consolidation </li></ul>
  11. 11. Effects of Deregulations <ul><li>Bank fees – </li></ul><ul><ul><li>Banks needed to replace revenue lost due to increased competition </li></ul></ul><ul><li>Common fees: </li></ul><ul><ul><li>ATM, late payment fees, monthly service charges and minimum balance fees </li></ul></ul>
  12. 12. Common Services <ul><li>Capital markets </li></ul><ul><li>Asset management </li></ul><ul><li>Mutual funds </li></ul><ul><li>Investment banking </li></ul><ul><li>Credit Cards (bankruptcy) </li></ul>
  13. 13. Marketing and Management Evolution <ul><li>“Customers seek service” </li></ul><ul><li>vs. </li></ul><ul><li>“Clients are sought to be served” </li></ul><ul><li>“Let things happen” </li></ul><ul><li>vs. </li></ul><ul><li>“Make things happen” </li></ul>
  14. 14. International Banking <ul><li>What is International Banking? </li></ul><ul><ul><li>Opening of banks outside country of origin </li></ul></ul><ul><ul><li>Mechanism by which one can maintain bank accounts outside their country of residence </li></ul></ul><ul><li>The competitive global market place requires banks to expand internationally </li></ul>
  15. 15. Global Marketplace <ul><li>With corporations conducting business overseas, banks must help these companies handle international business transactions. </li></ul><ul><li>As banks and businesses work together, they take the first step into the heart of the competition for the new markets worldwide. </li></ul>
  16. 16. Foreign Exchange Market <ul><li>Foreign Market is increasing immensely </li></ul><ul><li>The foreign exchange market is one of the most unpredictable aspects of international business </li></ul><ul><li>Many banks now offer companies experienced “foreign exchange traders” to help them conduct business overseas. </li></ul>
  17. 17. International Retail Services <ul><li>Makes international travel easier </li></ul><ul><ul><li>Foreign Currency </li></ul></ul><ul><ul><li>International traveler’s checks </li></ul></ul><ul><ul><li>Domestic/International wire transfers </li></ul></ul>
  18. 18. Banking Technologies <ul><li>The field of banking is experiencing rapid change due to developing technologies </li></ul><ul><li>Traditional banks may become obsolete as less costly measures are implemented </li></ul><ul><li>Internet banking is the wave of the future </li></ul>
  19. 19. Individual Technologies <ul><li>WingspanBank seeks to expand upon Bank One’s previously established website </li></ul><ul><li>Intuit offers a comprehensive software package that is based on partnerships with numerous financial services </li></ul>
  20. 20. Individual Technologies <ul><li>Netzee offers community banks the technology needed to transform themselves to full service financial institutions </li></ul><ul><li>W-Bank offers a wireless banking option </li></ul>
  21. 21. Banking in the Future <ul><li>Banking in the future will focus on offering the client fast and full service </li></ul><ul><li>E-banking will be a major force in shaping the banks of the future </li></ul><ul><li>Constant technological advancements in the field of financial services will continue to revolutionize the industry </li></ul>
  22. 22. Conclusion <ul><li>The financial service industry has undergone significant change </li></ul><ul><li>Deregulation, globalization and technological advances have led to the growth and development of financial supermarkets </li></ul>