Modern Banking And Strategic Portfolio Management

Abstract

In this research, an analysis of modern banking in a competitive environment is provided.  Modern banking operations would involve dynamic strategic planning, in which a clear mission is declared, various strategies are formulated, and certain objectives and goals are placed in order.  The banking industry in various countries has gone through some evolution.  The growing competitive conditions, both inside and outside the industry, have influenced the banks’ investment in diverse assets and adoption of various forms of liabilities, which will be discussed here.  Risk analysis, risk management, and operations under uncertainties would put a bank’s survival and/or failure under a critical observation.  This research provides a practical manual on bank investment under uncertain conditions, in which various kinds of risk are involved.  While a competitive treatment of customers has always been of a critical significance to financial stability of banks, appropriate strategic decisions on investment choices and techniques have distinguished the thriving from the struggling banks.  Among those alternative investment choices, one may clearly find the investment practices under varying interest-rate conditions of prime significance.  The influence of cyber-technology on banks’ services, policy making, forms of money & credit, including, e-money, electronic payments, digital cash, smart cards, online banking, etc., has attracted special attention by all the stakeholders.  The authors will address the following three questions: 1. What portfolio structure in a variable interest-rate environment is proven to be most profitable?  2. What are the most appropriate products that modern banks must provide to their customers? 3.  How is the task of risk management implemented by some successful banks?