Big Banks Vs Small Banks Essay

Big and small banks, is size, the key? Elucidated through key benchmarks

The banking industry has undergone a tremendous amount of change in the past 8 years as a result of the 2008 financial crisis. During this period, many small and large banks performed badly, several were bailed out and various others changed their business strategies and operating models. These steps were taken in order to accommodate cost savings measures and enforce stricter regulations. However, the degree, method and impact differed in large and small banks.

Small banks generally thrive on local community knowledge, product customization and strong client relation management, with their thin network of ATMs or branches. Most of their income is generated through traditional banking business such as taking deposits and giving loans. On the other hand, large banks are full-service universal banks. They function like a huge multinational corporation, having multiple arms or segments including bancassurance, investment and advisory services, wealth management services and the likes other than the traditional banking service. Large banks provide commoditized products with ease of access to their customers, through their wide network of

small banks, the factors that affect them are different. For instance, the quality of customer service in small banks would depend on the degree of product, fees, interest rate customization offered, the value derived by customers and customer retention ability. However, quality of service for large banks would be a factor of ease of access to products via multiple branches/ATM network, comfort in transferring accounts, efficiency of the online portal, and quick redressal of customer grievances. Moreover, financial and operational benchmarks need to be interpreted depending on the size of the bank. Let us reflect on few vital parameters for small and large banks and how it affect their