The strategic theory of financial innovation explains that the core determinants of the value added services innovation should be firms’ strategy. The strategy is formulated within the firms’ strategy to prevent firms’ activities from deviating from its goals and objectives. This system involves deliberate financial engineering, where innovation is systematically planned and strategically operationalized to improve performance of specific sections. This reduces the cost of transactions and gives participants greater freedom of investment of choice thereby satisfying all participants in the finance industry. This theory is relevant to the study because banks adopt various value added services like offering credit cards facilities and cheque truncating process systems which may induce customer royalty, increase their income and enables them to provide better service to their customers through greater efficiency. 2.5 Conceptual framework Independent variables Dependent variable Figure 2.1: Conceptual framework Cheque truncating system In the strategic theory of financial innovation, Merton (1992) found that companies come up with new products that are less costly and friendlier to …show more content…
Credit card is a card issued by commercial banks granting the holder an option to borrow funds. Credit cards attract interest and are basically used for short-term financing. Interest usually begins one month after a purchase is made, and borrowing limits are pre-set according to the holder’s credit rating.This research postulates that credit cards usage has a positive effect on competitiveness of commercial banks in
Threats to the organization involve the various competitors in the financial services industry as well as key partners in the supply chain. When discussing competitors, an obvious threat will be loss of market share to other institutions. With the negative media, many customers have switched their banking relationships to another financial services provider. Because the products in the financial services industry are generally the same from firm to firm, it is imperative that the service provided sets the organization apart. The threat of a negative image of Wells Fargo & Co. could tarnish the way the public views its service provided. Because of this, it is necessary to switch from a results driven model to that of simply serving the
They expressed that credit card companies began directing their focus on college students in an attempt to broaden their market share in the late 1980s (Robb and Sharpe, 2009, p. 25). During that time, students were encouraged to obtain credit cards by way of on-campus enrollment, direct mail promotions, on/ off-campus advertisement. “By 2001, over three-quarters of all undergraduates had one or more credit cards” (Robb and Sharpe, 2009, p. 25). These elemental advancements in how and to whom credit cards were advertised resulted in credit cards becoming a way of life for today’s college student. As the rate of college students who own credit cards grew so did the apprehension that credit card
The banking industry is under pressure in today’s business climate. Banks have been through big changes. There is opportunity, but there is also increasing competition. To be the preferred bank means changing “good enough” into a unique value proposition. And that means changing the way people have always done things, change on this level requires cutting edge technology. Change cannot be achieved with a simple directive or surface adjustment especially within the banking industry. It requires an innovative rethink of the entire system, in a strong partnership between bank leaders and their change agents. New systems and policies must support the strategy to be successful. The real test of a good strategy implementation plan is whether the people understand the strategy, are motivated and enabled to implement it, and actually start achieving its goals.
Credit cards have a history stemming back to the mid 1900's, when there were two types of cards, both of which are still around, the card for specific stores, such as Sears, and the card for the occasional convenient spending when you didn't have the money you needed right away. The difference, however, between now and then is that only the extremely financially stable were using the latter of the two cards. The cards, such ...
Noda, Tomo. “Sharp Corporation: Technology Strategy.” Harvard Business School Boston: Harvard Business School Publishing, 1993. Print.
Credit cards: for some they are the paths to financial freedom, for others they are a necessity for daily purchases. During the recent economic crisis, many have sought out to find the cause. One common suspect is the credit card industry, which is comprised of more than six thousand card issuers (Clayton 209). This issue is debated in the two-part article “Should Congress Regulate Credit Card Rates and Fees?” “Yes” and “No.” Tamara Draut, Director of Economic Opportunity, Demos, argues yes, claiming the credit card companies’ ability to adjust terms and interest rates traps cardholders in everlasting debt. On the contrary, Kenneth J. Clayton, Managing Director of Card Policy for the American Bankers Association, argues no, stating that regulating credit card companies would hinder many people from obtaining credit and further damage the economy. Although both Draut and Clayton present strong evidence for some aspects of their arguments, both writers make assumptions which they fail to support and ignore the complexity of the issue, making their arguments overall unpersuasive.
Initially the bank’s core banking system was product oriented, but the need of the hour was to develop a customer oriented system, because the challenge is to build customer loyalty, cross sell, and enhance repeat business.
Porter, M. E., 1999. The Five Forces that Shape Competitive Strategy. Harvard business review, p. 80.
This paper will analyze the mission and vision statements of JPMorgan Chase & Co against the performance of the organization. An evaluation of how well the company lives out its mission and vision statement will be provided. The organization’s strategic goals link to the company’s mission and vision will be assessed. An analysis of the company’s financial performance to determine the link between the company’s strategic goals, strategy, and its financial performance. A competitive and marketing analysis of JPMorgan Chase & Co will be conducted to determine its strengths and opportunities.
The book has used peer-reviewed resources to enhance the use of professional approaches to innovation and management strategies by the readers who uses the book. The authors have given different management strategies and their practical application in business fields. As the title states, a strategy in business require innovative strategies for efficient development of the firm. More importantly, the book offers modern innovative ideas that need to be integrated with management strategies to develop modern businesses. The innovative approach provides a practical guide to the management strategies easing the execution of the strategies in the respectful environment. The book has given the strong relationships between innovation and strategies. These relationships are known to increase profitability in business organizations that use them efficiently. It offers how business managers can create successful value through innovation. Value creation in companies is done through examining untapped markets, clients ' needs and investing in new businesses. Therefore, this remarkable book helps readers in innovating and managing business
Porter, M. E. (2008). The five competitive forces that shape strategy. Harvard business review, 25-40.
The introduction of the credit card first came around while the economy was booming in the early 1950’s. American consumers were in buy mode and the credit card was a genius idea to let people buy now and pay later. At first look this idea seemed great but what looks and sounds great does not always mean that it is going to be great overall. Over the years credit agencies have released thousands of credit cards with several questionable polices and high interest rates. “Any given American family in the present day possesses an average of eight credit cards with about 15,000 dollars of debt”(Canner 8). Many consumers have become addicted to wasteful cyclic consumption and living beyond their income due to the ownership of credit cards. The invention and continued implementation of credit cards into the American economic and social systems appears to be the cause of the struggling economy, the weakened U.S. dollar, the sky rocketing prices of gas and grocery store goods, the all-time highs of American debt, and social deprivation in some regions.
One of the most integral qualities of an entrepreneur as well as that of a successful business is the degree of innovation it possesses. Innovation refers to the creation of new ideas, improvement of existing production processes, and effective problem solving. Innovation allows for increased efficiency in a business, which in turn increases its supply potential and productive capacity. Being innovative may involve either improving upon old methods o...
Financial theories are the building blocks of today's corporate world. "The basic building blocks of finance theory lay the foundation for many modern tools used in areas such asset pricing and investment. Many of these theoretical concepts such as general equilibrium analysis, information economics and theory of contracts are firmly rooted in classical Microeconomics" (Oaktree, 2005)
Do capitalized bank is contribute more on bank performance compare to other variables? Did relationships between determinants of banks’ profitability change during the financial crisis? This study therefore, intends to examine the bank specific and macro determinants on banks’ profitability, the impact capital and financial crisis on banks profit. To answer the research questions, the dissertation selected 27 commercial banks in Malaysia including local and foreign banks to fill this gap.