Concept of banking, various system and norms for attracting the customers, explain and illustrate in the world wide aspect.


 Two conceptually distinct functions are bound together under the term banking.  These are: Deposit banking and Loan banking. In the first case, a bank is functioning merely as a money warehouse, for safely storing money that people are not comfortable storing in their own homes.  The depositor pays the bank a fee for the trouble of storing the money in their vaults.  The bank provides a moderately useful function in society, but little more than any other warehouse does.

In the second case, the bank is redistributing money.  It makes profit from the interest income it receives on its loan, minus the interest paid out to the saver.  This can be more lucrative for the bank, so long as it chooses wisely who to lend to.  This is a vital function of the free market that this type of bank provides.  It enables capable entrepreneurs to attain the money they need for improving the structure of production.  It ensures that capital is allocated in the most efficient way possible.  The development of banking was an essential prerequisite for the Renaissance in Europe.

 In a libertarian society, fractional reserve banking would be banned[1].  However, even if the bankers are allowed to get away with it, there are severe limitations on how effectively it can be done in a system of “free banking”.  Free banking refers to a banking system where there is no government involvement[2], whether or not the practice is treated as fraud.  For this reason, banks and governments allied to gradually remove the market limitations on the practice.  This is the development of central banking.

Let us know take a closer look at each of the two different functions of banking: deposit banking, and loan banking.

1. Loan Banking

·    Loan banking – a bank lends out saved funds to borrowers.  This requires capital, either from individuals (as in merchant banking),[3] shareholders, or savers, who have deposited money at the bank not as a simple bailment, but as a loan, which will be loaned out by the bank (hence the money is not available on demand).  The saver receives a return on his savings.

 2. Deposit Banking


Deposit banking – a bank stores the money belonging to an individual for safekeeping.  The bank will issue bank notes, which are receipts for the stored money.  It may issue the depositor with an open-book account on which cheques can be written.  In any case, deposits are redeemable on demand to the holder of the account or bank note[4].  The actual money (cash – gold or paper) deposited at the bank is not a loan to the bank, but a bailment; the money remains the property of the depositor at all times and the bank may not use the money.

Norms & System for Attract Customers of Bank Worldwide

•   Invest in customer analysis – Capturing and successfully leveraging customer information and insight to optimize offer development, pricing decisions and rewarding loyalty will be a major competitive differentiator.

•   Identify advocates – Make it easy for customers to provide feedback at all touch points with the bank. This will allow a better understanding of which customers are likely to promote, detract or be passive. This will allow banks to more proactively engage those customers at risk of attrition.

•   Target switching offers – Maximize the opportunity to acquire new customers and prevent the most damaging impacts of attrition[5].

•   Review employee key performance indicators – Setting and consistently delivering clear customer standards that are demonstrably market-leading will pay dividends in terms of customer acquisition and retention.

1.Enhancing the customer experience 

Banks need to reconnect with their customer base by improving the customer experience. There is a clear demand for greater personal attention among our respondents, and it is also evident that banks need to invest in channels and become more customer-centric across their operations. There is considerable room[6] for improvement in the levels of channel efficiency, personalization and integration that banks offer their customers.

2.Building on satisfaction

Despite an ever-increasing array of sophisticated demands, the good news for banks is that a significant number of customers around the globe – 63% – are satisfied with their main bank. However, this means that more than a third of global customers are not currently satisfied with the service they are receiving from their banks. Customers in the US, Canada, China, India and Brazil are the most satisfied – an interesting mix of countries incorporating those that have been severely affected by a decrease in trust and those that have not. It is apparent that customers can remain satisfied with their individual banking

provider regardless of the impact the credit crisis has had on their confidence and trust in the industry at a macro level. Across Europe, Polish, Hungarian and Dutch customers are the most satisfied[7]. The least satisfied with their main bank are customers from Germany, where 54% give their bank a low score of just one or two out of five. These levels of satisfaction suggest that efforts by banks to improve customer satisfaction have had only limited success and that much more needs to be done to reward loyalty among customers and to focus on getting to know customers’ needs to ensure that their satisfaction prevails. Banks should incentivize satisfied customers to access more products, and tailor their product offerings to create further customer advocates. Banks can also learn from their satisfied customers’ experience through feedback to gain insights with the view toward increasing satisfaction across the entire customer base.

3.A Personalized Service

Globally, 43% of customers say they get no, or only occasional, personal attention from their main bank. Our results show that across the globe, Indian (81%), US (67%) and Canadian (66%) respondents rate the personalized service they receive the highest, while only 11% of Japanese customers say their receive a good or very personalized service and 45% say they receive absolutely no attention[8]. Across Europe, 56% of respondents receive good or very personalized service with the highest satisfaction levels evident in Belgium (66%) and Spain (65%). But not all customers believe that they are receiving personalized service: the highest levels of European customers who say they receive absolutely no attention or only occasional contact are in Italy (55%), Germany (53%) and the UK (53%).Given the significance of personal attention in the bank-customer relationship, banks need to review how this personalized service[9] can be delivered at a competitive cost. While branch closures have been a feature of mature Western European banking markets for some time, our findings suggest that branches remain an important part of the future of banking, as more customers are satisfied with their branch experiences than any other channel. Branches are usually the channels used by customers for their most complex transactions, so these should be invested in and process simplification, staff training and customer knowledge should all be improved to fully leverage investment in the branch channel. Banks also need to combine their knowledge of the customer base with the technology available to improve their service offerings. Internet technologies can be employed to give a better customer experience online, but while internet banking is reducing the need for call centers, customers are still demanding greater access and availability to advisors on the phone, and it is the call center channel that most respondents want to see improved in terms of service quality.

4.Efficient Delivery

When asked about their degree of satisfaction with channels, customers are responding positively to the convenience, accessibility and reliability provided by digital channels. We found that 79% of customers worldwide are satisfied with branches and ATMs, with an even higher number, 83%, satisfied with internet services. In 2010, channels like email, mobile banking and call centers were used by the majority of respondents much less frequently than the other channels. Overall, 42% of respondents say they never use mobile banking, and 30% never access call centers or email services. Mobile banking and other new channels are more popular in emerging markets, where we see less skepticism among customers toward such innovations. This is perhaps a result of less-developed networks of traditional channels like branches and ATMs in these markets[10]. Customers in the US (86%), Canada (85%), India (84%) and South Africa (82%) have the highest levels of satisfaction when it comes to branch banking, while Canadian (82%) and Chinese (87%) customers are most satisfied with ATMs. South African and European customers, along with US and Canadian customers, have the highest degree of satisfaction with their internet services, while mobile banking has low satisfaction rates and  a low uptake. When asked about the improvements they are looking for in channels, customers globally are seeking better service quality and increased access from their branches, ATMs and call centers, and they want internet and mobile banking services to be easier to use. We are seeing customers expecting the convenience and reliability that they receive from digital channels to be replicated alongside the enhanced personalization delivered by more traditional channels. Improving the customer experience[11]

•   Measure and reduce customer effort – Simplify branch processes and improve online capabilities using methods such as digital banking to help create a consistent and integrated personalized service without the need for extensive manual intervention for time-poor customers. This, in turn, demonstrates the banks’ visible commitment to a more responsible banking approach.

•   Improve personalization across channels – Make better use of customer information and leverage new technology capabilities such as Web 2.0 to increase the level of context and personalization in customer interactions.

•   Create differentiated customer value propositions – Increase customer loyalty by offering individuals a combination of product bundling, pricing and access to value-added services to make multiple product holdings more attractive and rewarding.

•   Invest in traditional and future distribution channels – Branch investment should include staff training and knowledge, while a strong mobile strategy will help meet the need for personalized services at a low cost.

5.Hearing the customer’s voice

Banks have recognized that there are some customers who want the touch and feel of branch-based banking relationships, and there are others who demand efficient, faster direct services, whether those are delivered over the internet or on a mobile phone. While it is clearly different across markets, generally providers are investing in opening new branches, staying open later and increasing staffing, while at the same time developing new technologies to serve customers more efficiently. There is a recognition that banks need to identify exactly who their customers are, segment that population, understand what those customers want, and then provide it.

6.The competitive landscape

It is clear from our research that enhancing individual customer relationships is critically important to future competitive success. In the wake of the credit crisis, retail banks need to continually review their strategies, business models and routes to market to ensure that they are responding to customer expectations. Across the local retail banking markets, regardless of the differing challenges, banks will need to adopt an agile approach to meet the pace of change. We are seeing innovations in channels worldwide, with mobile banking initiatives proving successful in emerging markets, and banks are continuing the development of applications to help customers manage their money more intelligently on their mobile phones. We are also seeing the increasing integration of channels, so that customers who begin transactions online can seamlessly switch to speaking to call center staff midway through the process if they want a more personalized interaction. As well as adopting multichannel strategies, many banks are also investing in loyalty programs to reward fidelity, with offerings such as discounted mortgage rates for customers who already hold current accounts with them. We are also seeing many banks investing in complaint handling procedures with a view to responding quickly, addressing issues, and capitalizing on intelligence gained in the process. Banks have recognized that customers want to be in control and bank when and where it suits them, so future success will come through combining customer knowledge with technology to make banking easier and more accessible[12]. Such an approach relies on customer analytics, and banks are also investing in more precise measurement of customer satisfaction, the number of products they hold, the reasons for attrition and complaints.

7.Investing In Service

Even though we have seen consolidation across many local markets, customers still have a choice of provider, and service quality is a key differentiator between banks. The advent of customer charters that promise to make banking simpler and commit to minimum service standards, and a move away from a product-push approach toward a customer-centric attitude, will gather pace. In a recent Ernst & Young report titled Competing for Growth, high-performing bank respondents identified product and service innovation as the most critical factor to competitive advantage[13] over the next two years, closely followed by brand and reputation. They told us they are introducing new products and services and increasing their focus on marketing, and said that innovation was becoming increasingly important for survival in the market. We see a clear message emerging that customer- focused innovation will drive success in retail banking in the years ahead. Banks cannot take the customer relationship for granted but must identify and respond proactively and innovatively to their customers’ needs.


Customer behavior in retail banking has changed dramatically over the past few years. This survey has touched on some of the key changes in customer expectations, and the ways in which these changing demands can be met by banks that offer customer–focused innovative services. Those that do so will be able to differentiate their organization and drive growth. We suggest that banks embrace the following action points to capitalize on these opportunities:

•   Rebuild trust – by refocusing on the customer relationship, paying particular attention to clarity of language, transparency of pricing and simplicity of interaction

•   Focus on loyalty – by building customer insights, tailoring offerings, incentivizing customers to access more products and effectively responding to complaints

•   Enhance the customer experience – by investing in branches, delivering personal attention across channels and combining customer insights with technology to improve offerings


  • “Man, Economy and State” – Murray Rothbard
  • “Economics in One Lesson” – Henry Hazlitt
  • “Economics, the Social Order and the Ron Paul Revolution” – Jorge Besada
  • “The Case Against The Fed” – Murray Rothbard
  • “The Mystery of Banking” – Murray Rothbard

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[1] Accountability can be thought of either normatively or structurally. It can characterize a demand that may be made or a condition that exists. To say that police are accountable for their authority can be to say either that they should be answerable (held to account) for what they do, or that they are able to answer for what they do.


[2] Accountability is a necessary ingredient for two reasons-it ensures that the police act responsibly and it ensures that the police act on behalf of the community.


[3] A new era of customer expectation global consumer banking survey

[4] A new era of customer expectation global consumer banking survey


[5] “The Case Against The Fed” – Murray Rothbard


[6] “The Mystery of Banking” – Murray Rothbard


[7]“ Economics in One Lesson” – Henry Hazlitt

[8] Economics, the Social Order and the Ron Paul Revolution” – Jorge Besada

[9] [9] Accordingly, the phrase ‘commensurate with the seriousness of the offence’ must mean commensurate with the punishment and deterrence which the seriousness of the offence requires. Cunningham (1993) 14 Cr App p-447.The court in El Karhani, in the course of noting that general deterrence is one of ‘the fundamental principles of sentencing, inherited from the ages’ 54 put down the legislative omission of general deterrence to a ‘legislative slip’. It stated that it is still an important sentencing consideration and no less important than the other factors expressly mentioned, although it is absent from the detailed list of relevant sentencing criteria

[10] One of the main reasons why operational issues have emphasised in this case, because these have been at the heart of the controversies of policing. The centrality of the operational to policing controversies is evident even in those instances which appear to be about non-operational matters. Where a non-operational matter, like finance, for example, has been controversial, it is an operational issue that makes it so. For example, the financial question of who was to fund the extensive mutual aid during the miners’ strike 1984-5 became controversial because of disagreement over the operational question of the numbers of officers needed to police the picket lines


[11] [11]The strictures of the proportionality requirement are often avoided by arguing that there is something about an offender, usually the offenders past or future conduct, that justifies indeterminate detention in the form of a life sentence. This consideration arises where the offender is found to be an habitual offender or a dangerous offender or both

[12] Crucial issues in police organizational accountability involve consideration of matters like the appointment of the chief officer, means whereby a chief officer can be dismissed, and to whom (and about what matters) a chief officer is obliged to report. . The police service in Northern Ireland costs the taxpayer more than £600 million per year. The size of this budget and the importance of getting good value for public money call both for good management within the police service and for close, expert scrutiny by those responsible for holding the police accountable. Neither of these requirements seems to us to have been adequately met. At present the principal accounting officer for the Northern Ireland block (including the policing budget) is the Permanent Under Secretary at the Northern Ireland Office, and the Chief Executive of the Police Authority is a sub-accounting officer. The Chief Constable, however, is not designated as an accounting officer, which in our view is a flaw in the accountability arrangements. The senior official of the organization that actually spends the money should in principle be accountable for how it is spent.


[13] See “A new era of customer expectation global consumer banking survey” PDF