Banking and Finance - Essay Example

Globalisation has not only offered a whole range of opportunities to the corporate world, but the retail customer too has a whole range of options to carry out banking transactions. The banking industry too has implemented a wide range of strategies in order to make its services more attractive to the customers, while taking best advantage of the advancements in the IT. In this study an effort would be made to form a reliable strategic analysis about the banking industry in general with particular emphasis about the industry in Cyprus.

Banking services in general are broadly of two types namely, retail banking and corporate banking or business banking. While retail banking serves the individual customer, Corporate Banking, as the name itself suggests, implies that the services are extended by banks and financial institutions towards fulfilling the diverse banking needs of the corporate world. The banking and financial services offered for local as well as global operations by banks forms the working capital of the companies.

Different banks have different types of strategies to deal with corporate customers, but Tyler and Stanley (2001) emphasize that a strong inclination towards the use of personal relationship between banker and company client continues to be the cornerstone of this type of banking. In today's context such interactions become all the more crucial because more alternatives are available to the customers now. Banks and financial institutions also realize the heightened levels of competition and try to adopt as many customer friendly measures as possible to have good customer profile.

The ongoing economic recession has had an adverse impact on the Cyprus economy as well. If recent reports are an indication, the economic activity in Cyprus is yet to see an upward trend. News reports indicate that despite some indications of revival in the economic conditions of rest of the European region, the Cypriot economy appear to see a full year of contraction (EIU, 2009). Slump in construction activity, falling investment spending and weak external demand are termed as major factors contributing towards this scenario.

This might result in a challenging situation for the banking industry in Cyprus. 1.4. Banking Industry in Cyprus: PESTLE AnalysisTools like PESTLE and Porter's five forces analysis help in analyzing the overall situation prevailing in the market in an effective manner. PESTLE stands for political, economical, socio-cultural, technological, legal and ecological factors. It is