DISCUSS AND CRITICALLY EVALUATE THE MAJOR FACTORS SHAPING THE DEVELOPMENT AND

EVOLUTION OF RETAIL FINANCIAL SERVICES AROUND THE WORLD.

The financial system has evolved over the last few decades. A few factors that have contributed to this
evolution are globalization, changes in customer preference , Increase sophistication and technological
innovation and change in the banking framework.

GLOBALIZATION

Since the mid- 1980s, we have seen a tremendous appearance of foreign companies within our local
economies. Predominately, large multinational firms from developed countries have found their way
into developing countries. Within the group of multinational firms appearing are financial institutions.
The financial institutions bring a tremendous amount of knowledge and information into their host
countries. They have also led a dramatic increase in competition with local banks already operating. As
many indigenous banks have falling customer confidence they have sought to revamp their services to
include wire transfers, drafts, customer support ATMs among other services as a way to curtail advances
from the opposition. Globalization has opened the doors to integrated markets being the norm and
though physical geographical boarders still exist the market boarders have been largely eroded. This
erosion has meant that financial institutions now have become congruent with actions of a
systematically important institution having an indelible impact on the financial system.

TECHNOLOGY

Technology has been an essential partner in the financial services industry, providing the innovative
incremental advances necessary for the industry to upgrade and expand its services. Gone are the days
in which a passbook is used to keep account balances or files are used to hold accounts. Computers have
revolutionized the financial system in terms of how transactions are recorded. Improvements in storage
capacity and processing speed have had a impact on data management and transactional capabilities
with accompanying reduction cost. Technology integrate and process information from a range of
sources which in return enables proper risk management which opens new opportunities for retail
financing . Retail firms use vastly increased information resources therefore to offer a wide range of
services at significantly lower costs. Technology created strategies for enriching data to achieve larger
business objectives. Such strategies allowed better reporting and analytical capabilities for example the
use of data to test risk and investment assumptions. Internet banking has received the most coverage in
the past decade.

THE INCREASING SOPHISTICATION AND CUSTOMER

SOPHISTICATION The increasing sophistication of shoppers has forced retailers to tailor their services
and create unique goods to satisfy them. Banks must move beyond simply meeting their profit and
growth goals to delivering more complexity in the customer experience. An example of customer need is
that some customers have a series of financial preferences that are slightly different from those of
traditional retail banking customers. Customer preferences have played a part in the evolution of the
financial system. Thanks to the now available online shopping, banks have been pressured into making
depositors funds more accessible to make purchases. Many customers are also very busy people who do
not have the time stand in the line to make a withdrawal or pay bills. This has led to the introduction of
ATM (Automated Teller Machine) and internet banking which has allowed customers to check their
balances and pay their bills.

CHANGES IN THE REGULATORY ENVIRONMENT

With all these innovations we must bear in mind that the regulatory environment had to evolve to cope
with the growing sophisticated system. Changes in the regulatory environment are altering the playing
field. According to Deloitte " Evolving Models of Retail Banking Distribution"written by Deloitte Center
for Banking Solutions, many recent regulatory changes were designed to foster innovation and enhance
efficiency in the payment system. The implementation of Basel 2 focused primarily in capital adequacy,
this development likely led or will eventually lead to differential pricing by product and channels
because of strategies implemented to try to attract certain segments of customers. Also, the
infrastructure that banks create to comply with Basel 2 will provide retail banks with enriched insights
into their books of customers behaviour. this is all i came up with. feel free to make corrections and
additional information . thank you