The study of the service provision function of banks. Direct and indirect benefits and classification of banking services.
THE SERVICE PROVISION FUNCTION
One of the main functions of banks today is the provision of services , which is associated with the traditional activity of financial intermediation and assumes importance for credit institutions.
In recent years in particular, we have witnessed a significant growth in the importance of banking services , which can be explained by:
- the reduction of bank deposits , or the phenomenon known as credit disintermediation, which forced banks to create new tools to attract and retain customers;
- financial innovation , with the appearance of many companies that provided alternative financing services to those offered by banks, with the consequence that banks updated themselves and began to provide those services themselves so as not to run the risk of losing customers;
- the increase in the technological level , which has made it possible to provide some services that previously seemed particularly complex and expensive in an immediate, efficient and less costly way for credit institutions;
- the increase in customer needs , which has begun to ask banks for increasingly sophisticated services to be associated with the traditional current account;
- the particularly important entry into force of the consolidated text of the laws on banking and credit , which has allowed banks to carry out a long list of activities not strictly connected to financial intermediation.
SERVICE PROVISION: DIRECT AND INDIRECT BENEFITS
Providing services is particularly important for banks because it allows them to obtain two types of benefits at the same time, namely:
- direct advantages , linked to the fact that the services offered are paid for and therefore generate revenue for the bank, which contributes to improving both the company’s profitability and its financial situation;
- indirect benefits , consisting in the improvement of the banking company’s image and customer loyalty.
BANKING SERVICES: CLASSIFICATION
When talking about banking services , a fundamental distinction that must be made is between:
- complementary services, also called traditional, which are closely linked to the credit intermediation activity. Some examples are bank transfers, checks , ATMs, credit cards, safety deposit boxes and so on;
- collateral services , also called innovative, or new services that banks have only recently begun to offer directly or through associated companies. Significant examples are leasing and factoring.
Another important type of classification that we can make of banking services is the one that divides the services according to the needs of the customers that they tend to satisfy. Thus we have:
