Banque et e-banking (document en anglais)

Banking and E-Banking

Final Paper - Winter semester 2013

Table of content

Role of banks in the financial system 3

Introduction 3

Roles for private and companies 3

Roles for private 3

Roles for companies 4

Modern Risk Management in banks 5

What is a risk? 5

The main risks of banks 5

Credit risks 5

Market risks 5

Operational risk 6

How does a bank attempt to manage these risks? 6

Main concept and trends of modern E-banking 8

Sources 12

Role of banks in the financial system

Introduction

Banks is primordial tools of countries ‘economy and household as they ensure transfer of money from one actor to another, finance the project of companies and families and allow them to save and to manage their deposits.

Banks have a role of collecting money from saving and to distributing it back to companies or household which need money to invest. However independent people can also directly invest by buying equity bounds. It’s the difference between direct financing and indirect financing.

Banks are the only one to have the right to “create money”; each time they issue credit, the money is credited on an account. They play a crucial role in increasing amount of money.

To macroeconomics levels, banks are also leading money transfer with the central bank.

First at all we have to make some differences between all the banks:

• Deposit banks or commercial banks which are the most known; customers are household and SMB; the bank collect and distribute money according to need : everyday account management

• Private banks, investment banks which are the intermediary between their customer and finance market

• Global banks which are group of different finance actors together.

Roles for private and companies

For companies as for household banks allow them to have a current account in order to get their wages or payment but also to be aware of their financial situation thanks to statement. Banks are dealing with two kind of money:

• Coins and banknote which can be used in everyday life

• Deposit money which transfer from account to another with check, credit card and transfer

Tools for payment quick and safe

Check, credit card and transfer are tools for companies as household which allow transferring money from an account to another in a quick and safe way (credit card and transfer) thanks to secret code and IBAN (international bank account number). Checks are less safe as the signatory can make one even if he doesn’t have the money on the account, the addressee cannot know if there is a problem of solvability before quit a long time. On the other hand check can be used for guarantee as an example for a rent (we make a check but the addressee doesn’t cash it until there is a problem).

Roles for private

Banks purpose for household is to collect their money and to inform them about how their money can be productive.

First service is about opening a courant account, where household can put money they need every day and is instantly available. Most of the time there are no wages but the bank provides a credit card, check and allow them to make money transfer.

Second service is savings account, the money is also quit easily available, the difference is that you have interests. There are different savings accounts:

• Saving account planning to buy a house for example, the interest is higher and your bank will make you a better rate for your loan

• Account where you have your equity which give you dividends and interest

Banks can also provide a loan to household. There are also different kinds of credit according to how you want to repay their loan. The borrower has to be solvent and the bank will calculate in rate according to all the information they have about you. A credit can be:

• Overdraft

• Revolving credit

• Consummation credit

• Real estate credit

Roles for companies

Companies need an important amount of money in order to invest and grow up but they also need money to function. Indeed most of companies need to buy stock and raw material; they can have a deal with their banks as they know the money will come when the companies will sell.

Modern Risk Management in banks

What is a risk?

Whether it is skiing, driving a car, bungee jumping or simply walking down the street, everyone takes different risks – every day. Not only our personality but also the lifestyle plays an immense role in how much risk someone takes.

Risk is defined as the chance that an investment's actual return will be different than expected. This includes the possibility of losing some or all of the original investment but also the chance of winning some additional money. (Investopedia, 2012)

People who work hard for every cent they earn most likely have a harder time parting with money. Therefore, these people tend to be less risk averse then others. On the hand, day traders feel if they are not making dozens of trades a day that there is a problem – these investors are called risk lovers. (Investopedia, 2012)

The main risks of banks

Every company whose aim is the maximising of profit holds a certain degree of risk or through microeconomic or macroeconomic factors. Additionally,

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