There are several banks and financial institutions across the world. These banks and institutions provide a specific set of services to the people. The bank’s operations are the back-end support system responsible for executing and managing the transactions from the front-end terms. Let’s know about Banking Careers here.
UNDERSTANDING THE BANK OPERATIONS
Banking operations means the procedure that a bank uses to make sure that customer’s transactions complete appropriately. Bank performs various operations from primary functions to day-to-day functions. The banking operational aspect is necessary for its functioning system.
For example, When a customer wishes to purchase a stock share, its bank duty is to ensure that all the stocks are ready for all the trades. They make sure that the bank reports all the transactions and the client’s finances are protected.
Each bank has its own operations team that executes all the transactions within the bank. Even each department like IT, HR, cashier department, risk management have their operations team.
WHO ADMINISTRATE THE OPERATIONS DEPARTMENT
The banking operations manager is the person who supervises the operations of the bank. Their responsibility is to oversee the data processing activities at the bank. They also administrate the operations staff and direct the workflow. Bank operating managers ensure that customers’ issues are solved while the banks’ customer service is up to the company’s standard.
1- Retail banking: The services that they provide are loans, deposits, checking accounts, and more. There is high competition between the banks that offer services to the general people. Banks also give convenient and accessible service to their clients to build a customer base. Some retail bank operations involve services like opening a new account, checking money, transferring money.
2- Business banking: Business banks work moreover similar to retail banks. But what makes it different from retail banks? Business banking is for businesses/companies owning clients. As we know, all the companies require money and other banking services such as start-up loans, investments, paper works, collecting deposits. These services include many complexities, which makes it a more complex and sophisticated bank than retail banking.
3- Private banking: The grace of private banking has become less in use because of a recent trend of large banks opening. Only wealthy clients with a net worth of $1 million get tailored by these private banks. The banks provide services to the customers such as checking accounts, saving accounts, estate planning services, and paper works on large transactions.
4- Investment banking: These banks have advanced and highly sophisticated banking operations. Investment banking provides services to their clients such as equity, debt, engaging in the stock market, creating security, consultancy services, and a lot more. This banking system earns an enormous financial gain although it’s a very volatile bank. It is more complex than business banks.
JOB DESCRIPTION
The operation team which performs tasks in the banks is dependent on both front and middle office teams. Being from different departments the common thread between all the operation teams is they facilitate and execute transactions.
As we know, different departments of banks have their operations teams. Let us see how this department observation team works.
1- Investment banking operation: This team helps front-end investment bankers in providing various services and transactions. The investment banking operations teams are responsible for monitoring financial operations and taking out the bank from risks. They also help clients in meeting their investment process.
This team is divided into two parts: the M & A team and the capital market team.
a) The Mergers & Acquisitions team is only known as the M&A team. This team assists the clients with corporate mergers and acquisitions. This operation includes technological aspects like processing of data, its maintenance, and storing.
Mergers mean the equal partnership between two companies when they decide to join together for strategic reasons.
Acquisitions are taking over the company by a dominant company.
b) Capital market is the place where various financial trades get entitled. They include the stock market, bond market, foreign exchange market, and more. They also assist in data analyzing, documentation, data presentation, and so on.
2- Trade support operations: This team assists and interacts with the front office and with the sales and trading desks of the bank. They are responsible for:
a) Ensuring the development of innovative ways for improving the procedure.
b) Solving queries and issues of the clients.
c) Identifying risks and providing troubleshoots.
d) They communicate with managers and project team leads to ensure all the services are effectively delivered.
e) Provides analytical support to the traders.
3) Corporate banking operations: This team assists the corporate clients in operational works like KYC checks, transmitting trade finances, transferring of money and documentation to the other banks situated across the world. These types of banks are the profit center for different banks. Corporate banking operations are responsible for:
A) Providing credit, treasury services, employee services
B) Fixing financial asset requirements.
C) Maintaining contracts and other records
D) Make sure that client accounts are operational.
E) Work directly with the business.
4) Risk operations: This team monitors and reports all the risks related to banks and client’s transactions. They ensure the establishment and work process of the risk management team. The risk operations team operates numerous risk management data systems.
The risk operations are divided into various subdivisions like credit risk, market risk, process risk, external event risk, and legal and compliance risk.
There are three types of risk:
Business risk
Non-business risk
Financial risk
5) Clients service operations: This team offers support and assists the management team related to clients’ quarries like maintaining clients’ accounts, documentation, storage retrieval of records, and others. The team members directly engage with the customers for services like sales, stock market.
They are responsible for:
a) Scheduling time for the team members according to customer’s demand and convenience.
b) Maintaining performance reports of the team members.
c) Working closely with the management team to help customer’s queries.
d) They analyze the work efficiency of the bank and implement it according to that.
e) Assisting the design for new service offerings.
6) Technology operations: The technology and development department is assisted by the tech operation team. This team monitors manages and controls the computer and communication system.
They are responsible for:
a) Provides information security and resilience for their client’s businesses.
b) Launches technical services to protect client’s financial information
c) Uses data analytics to improve services.
d) Develops digital services for convenience in client interaction.
e) Offers digitized payment methods.
7) Branch operations: The branch operations assist services for customers like cash handling, scheduling visits, handling accounts, opening and closing the branch, and many more. The branch operation manager is the head who coordinates and takes the bank’s responsibility. Overall they are responsible for all the operations of the bank.
8) Internal operations: The internal operations team handles all the inner work of the bank. They produce strategies to optimize the daily operations. Some of their roles are:
a) Performing assessment
b) Analysing and evaluating daily works
c) Setting guidelines
d) Managing and supervising the staff.
e) Maintains all the compliances.
9) HR Operations: This team includes services like administrating, job analysis, recruitment, and employee management. They uphold the employees’ entire lifecycle.
They hold the responsibility such as
a) Payroll process
b) Employees onboarding
c) Leave management system
d) Evaluating the employee’s performance
e) Maintenance of employee’s database records.
QUALIFICATIONS AND SKILLS REQUIRED
1- Rigor, commitment, and self-motivation: The operation professionals should be diligent, committed towards work, and self-motivated. The operation professionals do several repetitive tasks, so they have to perform well with self-motivation and commitment to the job.
They often have a workload because of deadlines and stress from front-end teams. For them, it is necessary to maintain focus and deliver an accurate result.
2- Good communication with Great teamwork: The operational specialist must be a good communicator as it helps the team members to understand the work or conversation easily. They deal with front-end teams regularly along with other departments. The operation specialist should have the spirit to work in a team in the bank.
3- IT Skills: Operations members work on numerous applications and internal software, so they need to be skilled with technical knowledge. The operations team uses their IT skills for different purposes such as risk management, document retrieval, interbank communication, and many more.
They need to learn these skills specifically for getting a job as an operations team member.
4- Specific skills- The operation team helps specific departments, so they must know those specific skills needed for the specific department. For example, if they are supporting the investment team, they must have analytical and technical skills. Like this, they must know about each specific department.
BANKING OPERATIONS
There are various types of transactions and activities that support the bank in providing services to the customers. These activities and transactions are coordinated and observed by operations teams. The transmission and activities involve services for their clients such as clearing the checks, online banking, accepting payments, stock trading, settlement of accounts, and others.
Let us look at the operational activities. They are:
1. Acceptance of Deposits
2. Lending of Funds
3. Clearing of Cheques
4. Remittance of Funds
5. Lockers & Safe Deposits
6. Bill Payment Services
7. Online Banking
8. Credit & Debit Cards
9. Overseas Banking Services
10. Wealth Management
11. Investment Banking
12. Social Objectives
In this article, I will discuss in detail the support system of the bank that supports the bank in performing the activities. These activities and transactions are incidental to sales and for sustaining the business. The list below is the essential operational activities. Let us deep drive into these activities.
- Acceptance of deposits: Method through which companies acquire funding by taking deposits. The deposited fund is the basis for loan operations, as the banks are both lenders and borrowers of the money. The banks take deposits from the clients who have a current account, saving account, and fixed account. They take money from the public in different ways.
The current account holder can deposit and withdraw the fund at any time before the time. In the saving account, the saving account holders are encouraged to save the deposits individually. Central banks decide the rate of interest that banks pay. Fixed account holders deposit their money for a specific time and receive a higher interest. If they withdraw their deposited money before time, the percentage of interest is forfeited.
Let us see a list of banks with their total deposits (2021)
1 JPMorgan Chase Bank- $2,253,482,000
2 Bank of America- $1,906,458,000
3 Wells Fargo Bank – $1,479,499,000
4 Citibank – $1,282,071,000
5 U.S. Bank National Association – $442,835,836
6 Trust Bank – $395,781,000
7 PNC Bank – $380,920,825
8 TD Bank – $351,716,058
9 The Bank of New York Mellon – $341,999,000
10 Capital One – $303,536,222
2- Leading of Funds: The banks provide loans and advances to their people. It is the second majorly important activity of the bank. There are various reasons for taking loans either, for business or personal purposes.
In business terms, the loans get used for trading, industry, and other business activities. In personal/individual loans, the reason could be for paying emergency medical bills and others. The advances provided by the banks can be in the form of cash, term loan, overdrafts, and other miscellaneous advances.
Banks do this to secure the new deposits to attract more customers.
3- Cheques clearance: The process of moving cash is known as check clearance or bank clearance. A person having an account in any bank gets a checkbook. The check is the most used, convenient, and negotiable instrument. A business that involves the endorsement and withdrawal of deposits through cheques could be facilitated easily. Customers receive services from the bank in various forms like cheque collection and others. This method is the easiest and convenient way to exchange cash from one bank to another.
There are two types of the cheque. They are:
a) Bearer cheque: This cheque means the cheque can be payable to the bearer. It could get cashed immediately at the bank counter.
b) Crossed cheque: This cheque could only get deposited directly to an account. It cannot get cashed by the cheque holder.
4- Remittance of Fund: The transfer of funds is the actual meaning of remittance of funds. It is one of the activities of the bank that facilitates the funds from one place to another. Nowadays, people use this method for transferring or sending money to someone who lives abroad.
For transferring funds from one account to another, banks need some instruments such as bank drafts, mail transfers, pay orders, and others. On some of the transactions, banks earn nominal commissions charged by the customer who is transferring. Banks the amount on behalf of the depositor for their convenience, It is also known as the clearing process.
5- Lockers and safe deposits: This is one of the facilities that banks provide to their customers to safely keep their valuables like jewelry, important documents, certificates, and other precious things. These safe deposit lockers are handled and operated by the two sets of keys. One key is for the customer, and another is with the bank.
The lockers can only get opened with the combination of these two sets of keys. For the opening, a locker bank charges a nominal fee from the locker opener.
6- Bill payment services: The banks also provide bill-related payments. Payments like insurance premiums, collection of dividends, and so on. Bill payment service is generally more expensive than any other service of a bank. The banks automated recurring payments for making the services modern.
The account holder can directly pay through online bill payment from their credit/debits card. These modes of payment are more secure than any other transaction mode.
The account holder can directly pay their gas bill, electricity bill, and many more by using credit/debit cards.
7- Online banking: Through Online banking, a bank account holder can transfer their funds via the internet/ online mode of payment. You can also call it internet banking or web banking. The growth of the internet has made everything fast. It has also changed the banking system and customers to adapt virtual banking from branch banking. Customers with mobile or Personal computers can connect their accounts for online transactions through the bank’s official website.
The account holder can pay online bills through various options such as
IMPS method
Internet banking
Bill desk
Mobile wallets
NEFT/RTGS
These transactions are best because
Transactions are more secure
IT saves you time
An account holder can administer their account.
It is a more efficient way for payment
It also offers rewards on every transaction
Lower the transaction cost
8- Credit and debit card: A credit card gives us the power to purchase items and pay for them later. It is another way to lend money.
A debit card is a process in which payment gets deducted from the consumer account when they use it.
Issuing a credit card to the bank account holder gives a good business opportunity. Each bank charges different interest rates to their customers and provides various discounts on the use and purchase. There is also a risk in the use of this card. If you judiciously use a credit card, it can stimulate the economy.
ADVANTAGE OF CREDIT CARD
After every transaction, it increases your credit score.
Zero percent interest on ATM cash withdrawal
Earns rewards
You can use it to make a big purchase.
Faster payment
ADVANTAGE OF DEBIT CARD
More secured
Zero-interest charge
Avoid service charge
Earn rewards
Faster payment
9- Overseas Banking services: Banks offer various services like trade finance, foreign currency and exchange services, import and export, leading opportunities, and many more services. Each bank has its policies for its foreign clients.
10- Wealth management: It is a process of investment advisory services for the needs of affluent customers. Services provided by wealth management include a range of financial services and advisory services. Wealth management includes financial services like tax services, investment advice, retirement plans, and many more. The advantage of this kind of service is
Increase clients wealth
Securing financial position
Securing money for long term
Wealthy clients with a broad array can benefit from this service. The wealth management department gets coordinated by high-level professionals.
11- Investment Banking: This bank provides help to its clients in raising funds and offering consultancy services to them. They look into matters related to issuing stock, negotiating the acquisition, managing portfolio, and many other wide ranges of services to the customers.
They also offer services like portfolio rebalancing, fundraising, changing investment policy, and many others.
The list given below are some positions of investment banking
Analyst
Associate
VP (account manager)
Director
Managing director
12- Fulfilment of social objectives: With the growth of the internet and development, the banks are also shifting towards urban-oriented to rural orientation for the convenience of rural people. Banks have also changed their policy for achieving social objectives. They are allowing mass banking allowing the poor to start a bank account with zero balance.
HOW TO GET INTO BANKING OPERATIONS
The operation department at the bank is vast, so the bank needs a lot of people for hiring for an operations team. The candidate who wants to apply for this job needs to get graduated in a related field.
For example,
If a job seeker wants to get a job as an investment banking operations team or risk management team, you need to get a bachelor’s degree in courses like business, finance, or accounting. There are some available certifications for some specific roles that may add value to your cv/resume.
RESOURCES FOR OPERATIONS CAREER
Here is the list which would help you in getting an Operations role at the bank.
- Best Bank Ops Certification: some of the best ops banking certifications are-
Chartered Finance Analysts
Finance risk management
From the New York Institute of finance and accounting.
- Best Bank Ops Certification (Advanced): Professional Certificate in Operations and Compliance.
- Best Book: Financial Markets Operations Management
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