Managing a Banks Sources and Uses of Funds - Essay Example

Managing a Bank’s Sources and Uses of Funds Dominique Mangoua Arbeiter Joseph FIN 410 6/15 Provide an overview of the principal types of deposits offered by this bank, indicating the competitiveness of these offerings.  TD Bank offers a wide range of products that cater to these evolving needs of the individual and corporate customers. Banking products have evolved over the years to include a wide variety of choices and alternatives that are customized to meet the customer’s specific banking needs and requirements. The retail banking products range from savings accounts to remote deposits and direct deposits. Among other deposit products offered by the TD Bank are mobile deposit, express deposit, and rapid deposits. These deposit schemes enable the customers round the clock banking facilities and instant access to funds. Direct deposits enables the account holder to avail the designated salary amounts payable through salary checks or social security checks without having to wait for the checks to clear. Funds are made available to the account holder on the designated date (TD-Bank, 2014). Remote deposits are yet another product offered by the TD Bank. This enables the account holders to deposit their checks from their office by scanning the check and sending the image to the bank. The bank captures the image and the funds are available to the account holder on the very next business day. It has been voted as one of the best national banks that offers its customers high quality services and convenience in banking through odd hours (Zhen, 2012). The bank offers competitive rates of interest on its deposits. The bank’s interest rates on savings accounts and other deposit accounts are much higher than other banks (Douglas, 2012). The bank offers its customers a number of value added benefits that include a waiver on charges on access to online statements for 7 years, free online banking, free bill pay services, access to mobile banking with free mobile deposits, and waiver on purchase fees for gift cards (TD-Bank, 2014). Analyze how the bank manages its non-deposit liabilities. Focus on the options that are open for investors and what the bank does with its customers’ funds. The non-deposit liabilities of the TD Bank include mortgages, capital notes, and debentures. The interest earned from these products is much higher when compared to the market rates offered by other financial institutions (Heffernan, 2005). TD Bank offers a wide range of options to its wealthy clients who seek attractive investment opportunities. Some of these include portfolio management, trust management, estate planning, life insurance, and personal financial services. These products are suited and customized to meet individual client needs based on their specific requirements and futuristic plans. The wealth management plans provide the customers with a comprehensive risk management assessment report and detailed assessment of how the plans can help them meet their future goals (TD-Bank, 2014). The customer funds are used by the bank to invest in diverse financial portfolios that seeks to multiply the amounts. The funds are invested in various business sectors and the returns from these sectors help in multiplying the amounts invested by the customers. Banking operations involve a high level of involvement in securing its liabilities and managing the various sources of funding to limit risks in operations. The immediate funding needs of the banks are regulated through the inflow of funds secured through various deposit schemes, the interests offered on deposits and loans. Considering the impact of these banking activities on the effective management of the bank’s liabilities, there is greater need for the banks to achieve a better control over the sources of funds. Recommend improvements needed for more effective management. Provide support for your recommendations. Effective management of the TD Bank’s operations requires a strong focus on strengthening the bank’s performance in context to its customer service and innovation in designing effective banking products. TD Bank is one of the largest banks in US and its web of operations cover a vast geographical area around the various provinces catering to millions of customers every day. Banking and financial services across the globe are witnessing widespread transformations in response to the evolving business conditions that shape customer needs and expectations. Customer service and product offerings form distinctive aspects that guide the bank’s performance and reputation within the region. The increasing competition in this sector has also created the need for banks to establish their niche through effective delivery of customer service, tools and techniques that improve banking efficiency and product features that are constantly redefined to meet the individual needs and requirements (Douglas, 2012). Technology is one significant aspect that has introduced wide possibilities in terms of exploring customer needs, new range of services, and efficient banking practices. The bank’s services can be further improved through the introduction of effective rates of interests, reducing fees and charges levied on the customers and efforts to attract and retain customers over a longer period of time. Value addition and innovation are the key factors defining the service scope and efficiency of the banks today. TD Bank needs to explore innovative uses of emerging technology platforms and provide distinctive products and services that cater to the growing demand for efficiency and instant solutions to customer needs. Analyze the principal types of investment banking, insurance, and other nontraditional banking products offered by this bank, indicating the competitiveness of these offerings. TD Bank offers a wide range of products that cater to the customer investment banking needs, insurance requirements and other non traditional banking products. The primary investment banking products offered by the bank include personal financial services that allow the customers to avail the services of expert advice of its financial consultants that help them in choosing the right products and alternatives from a range of investment alternatives. The choice of financial products depend on the extent to which the product features match the customer’s risk assumption profiles and their short term or long term financial goals.  TD Ameritrade is an affiliate that offers the bank customers with financial consultation services that help in improving the client knowledge on various banking products and guide them in making the right choices. The Ameritrade offers its expertise in managing future financial objectives based on the parameters and specifications provided by the customers. The bank also offers insurance services that help in safeguarding the customer’s future needs. Annuities are yet another service plan that enables the customers to avail a steady income after retirement. The customer can invest in an annuity to ensure a steady income during post retirement phase of life. The customer can choose to be paid on a monthly, quarterly or bi-annually or annually depending on their future needs. Financial consultants and professionals provide the customers with expert knowledge and guidance on the best financial plans depending on their requirements. The bank’s financial services have been rated highly on account of their ability to deliver customized solutions to the customers. Individual plans and alternatives follow a flexible path that enables the customers to arrive at effective solutions (TD-Bank, 2014). Assess the major regulatory hurdles that a bank must consider when managing its capital. Recommend ways that the regulatory impact can be minimized to operational performance. The bank faces several regulatory hurdles in the effective management of its capital. Regulations that govern the bank charges and fees levied on the customer for various services provided by the bank is one such hurdle that impact the bank’s customer service ratings. The banks are forced to increase or levy service charges on various customer transactions due to these regulations. These include charges levied if customers are unable to maintain the minimum account balance, or use ATMs outside the bank’s networked ATMs, and fees levied on debit card transactions (Douglas, 2012). Compliance to regulatory frameworks is a vital aspect guiding the banking operations and its market performance. Such frameworks play an important role in shaping the bank’s performance, market reputation and the extent to which it evokes customer confidence in itself. Financial regulatory environment has evolved over the years to assume new dimensions in terms of safeguarding customer interests, evaluating risks accurately and defining new modes of banking services and its scope of operations to ensure safe and reliable operations. Among the various regulatory guidelines, customer information and transparency in bank dealings is an important clause. Banks need to ensure that customers are well informed on how their money is being treated at the bank, the kind of return they can expect from their investments and the key features that identify the products and offerings of the bank. The primary issues such guidelines address is to identify the nature and type of risk associated to banking transactions, the expected returns, value addition features, financial growth opportunities supported by the bank’s products or services, portfolio management, and performance. It is always advisable for the banks to market their financial products under the purview of the financial regulatory framework. Customers need to be encouraged in knowing more about the financial products so that they are not misled by any of the banks. This is an important area where the regulatory authorities should also provide more and more information on the financial products so that banks cannot mislead them on any product. Determine the categories of loans the bank offers and the terms of these loans, indicating how each contributes to the bank’s performance. The Bank offers a wide variety of loans to its customers. Auto loans, personal loans, home or equity loans, and business loans are some of the key types of loans offered by the Bank. The loans are offered at attractive rates that enable the customers to avail of these loans at reduced interest rates than the ones offered by other banks. The competitive rates of these loans have contributed to the bank’s performance and reputation as a convenient banking source. References Douglas, D. (2012). TD Bank extends deposit hours. Retrieved 12 June 2014 from http://www.washingtonpost.com/business/economy/td-bank-extends-deposit-hours/2012/07/20/gJQANHS52W_story.html Heffernan, S. (2005). Modern Banking. Chichester: John Wiley & Sons. TD-Bank (2014). TD Bank – America’s most convenient bank. Retrieved 12 June 2014, from http://www.tdbank.com/business/treasury-management-remote-deposit.html Zhen, S. (2012). TD Bank extends same day deposit cut off time by two hours. Retrieved 12 June 2014 from http://www.mybanktracker.com/news/2012/07/12/td-bank-extends-sameday-deposit-cutoff-time-hours/ Read More