Category: Banking

Big data is one of the most demanded technologies, being actively implemented in all spheres of human activity. The volume of information processed by the user is growing every year. In addition, the development of machine learning and the widespread use of smart devices contribute to this, which reinforces predictions of big data (Marr, 2016). However, besides the clear advantages, this technology has many weaknesses. The purpose of this essay is to analyze big data as technology concerning JPMorgan Chase and consider how it can be used shortly by this company.

Four main factors are making the basis of big data technologies. According to statistics, JPMorgan Chase has access to more than 150 petabytes of data, and 30 thousand databases and has over 3.5 billion users (How JPMorgan uses Hadoop, 2021). However, in the context of the volume factor, the lack of usefulness of the collected information can become a problem. Accordingly, JPMorgan needs to improve its data quality, as poor-quality information can do more harm than good (Powell, 2021). One approach to improving quality can be measured to analyze data heterogeneity within the variety factor (Reis et al., 2016). To provide better service to customers, a company must consider its variety, given the availability of data of different priorities. Setting clear priorities based on customer preferences will increase the satisfaction of existing customers and attract new ones.

One of the most critical issues of large amounts of data is its reliability, reflected in the veracity factor. This issue is even more relevant in banking operations, which should be as transparent as possible. Therefore, JPMorgan needs to create a secure environment in which the likelihood of data leaks and tampering goes to zero. This will allow the conglomerate to remain competitive and attractive to the user, demonstrating high-reliability standards. Finally, processing speed can be a significant obstacle when working with large amounts of data. Slow interaction with information and services usually hinders working with banking systems, making many clients change their minds about cooperation. On the other hand, excessively high speed increases the likelihood of various errors occurring, from malfunctions to the compilation of incorrect predictions. In this context, the company needs to prioritize developing and using high-quality equipment that balances the extremes.

The designated areas have many obstacles that can complicate decision-making. However, they can be eliminated by using additional developments related to big data and actively interacting with the technology sphere. The support of various standardizing organizations allows companies to create a more effective environment for developing new technological solutions (Leading through innovation, 2019). It is necessary to use unique analytical algorithms that connect many statistical systems, such as Fastbase, to filter unnecessary information (ACN Newswire, 2021). Another way to represent large amounts of data more effectively is through various visualization tools (Reis et al., 2016). This allows visually demonstrating and exploring different types of information, helping to rule out excessive variety problems.

To solve the problems of information reliability, it is necessary to improve cybersecurity measures and try to use methods that are inherently protected. Decentralized blockchain-based systems are distinguished by their transparency and security from external influences, which coincides with the need to filter out data. Finally, various neural network-based machine learning technologies have much higher performance than conventional computers (Reis et al., 2016). In addition, they allow increasing operating time to improve the efficiency and reliability of operations while reducing the number of errors.

Thus, big data technologies are quite controversial, but widespread solutions which make it possible to simplify the processing of many operations. Massive structures like JPMorgan can use them to accumulate vast amounts of data, which can then be used to analyze customers in more detail and change services according to their preferences. With the use of additional technologies, such as neural networks and blockchain, there is an opportunity to increase the efficiency of existing systems significantly, facilitate decision-making and bypass big data obstacles.

References

ACN Newswire (2021). Fastbase big data revolutionizing sales and marketing for small businesses. Benzinga. Web.

How JPMorgan uses Hadoop to leverage Big Data Analytics? (2021). ProjectPro. Web.

Leading through innovation: The data opportunity. (2019). J.P. Morgan. Web.

Marr, B. (2016). 17 predictions about the future of big data everyone should read. Forbes. Web.

Powell, A. (2021). 2 early vaccination surveys worse than worthless thanks to big data paradox, analysts say. The Harvard Gazette. Web.

Reis, M.S., Braatz, R.D, & Chiang, L.H. (2016). Challenges and future directions. Chemical Engineering Progress, 112(3), 46-50

Abstract

Many different ways of transacting and trading with money have been developed as a result of the current technological advancement. The introduction of mobile banking applications to help consumers in accessing banking services is a very brilliant strategy. In addition, it can greatly change the cost of operation in a bank as well as reducing the possibilities for errors to occur.

Current technological advancement has greatly contributed to the developments and changes in the banking industry. Some of the new trends of banking services to be supported by the current technologies are saving and withdrawing services online. This research will be discussing the application of a mobile banking application, its effects, and its benefits to the consumers.

Overview of the company

Our company is a banking service provider that specializes in loan processing and savings. The company is well established, and we have a workforce base of about 150 members of staff.

The system development project

We are currently contemplating on upgrading our performance by launching a mobile banking application that will allow our customers to access our services through their phones (Bagaria, 2013). We intend to change our operations from the conventional banking model that seems to be losing its viability for the last few years.

This project will include changing our service delivery systems and aligning them with the telecommunication department to enhance banking access through mobile phones. Therefore, the company needs to improve its IT department as well as changing the current servers to install better machines that can handle the anticipated rise in the number of clientele.

Industry overview

The companys decision has been influenced by the rising demand for easy access to banking services. While the company has been doing well in the market, the opportunities we are losing cannot be overlooked. The banking industry has experienced immense changes in the last few decades. Due to the current technological advancement, different trends in banking services are coming up (Chong, Chan & Ooi, 2012).

With the idea of a globalized world, it is imperative to utilize the mobile banking platform in order to keep up with the evolving industry. People are currently changing from using their smart cards to using the mobile money transfer service. This platform provides a secure and convenient means of receiving and sending money from one person to another. In addition to this, many people are using Smartphones today, which means having a mobile banking application will enhance the banks services reaching out to more customers.

Need Analysis and Systems Audit

Why we need a new system

The new generation of young people has grown in an era where every aspect of life is highly simplified. New technologies are being integrated into every service providing organization, including health companies, academic institutions, to mention but a few. In order to take advantage of the opportunities created by the new system, we need to upgrade and match our competitors in the industry (Dash & Tech, 2014).

Other players in the industry have changed their working systems to include mobile banking services. If we do not do the same, we are likely to lose our customers to our competitors. By complying with the markets demand, the company will not only be benefiting financially, but also it will be offering better services to its clients.

How the current system works

Our current system is outdated, considering the current digital innovations. The only way to access ones money from our bank is through the Automated Teller Machines or over the counter withdrawals. The company has not pursued other upcoming banking trends, such as online banking and mobile banking systems.

Currently used Softwares and Hardware

Our bank is a small entity; therefore, we do not have a large database that requires humongous servers and server rooms. Therefore, our main hardware equipment includes computers that run on a simple Windows 7 operating system. Our spreadsheets and financial records are done on Microsoft words excel program. Our company does not have a well equipped IT department to handle the current technologies.

Goals to achieve with the new system

With the new system, we hope to achieve a number of goals. First and foremost, we want to be able to serve our customers in the most convenient means possible (Martins, Oliveira & Popovi
, 2014). The mobile banking application will be very useful in achieving this goal. Secondly, we need to ensure that we keep up with the changing trends in the banking industry so that we are not left out in the benefits therein.

Thirdly, I believe by upgrading our systems. We will be able to expand the business since the new platform gives us the opportunity to serve more customers. This is in addition to the efficiency and accuracy provided by mobile banking. The room for errors will be minimal since customers will be in total control of their transactions (Zhou, 2012).

The scope of the project/ how it will achieve the set goals

This project is about the technical aspects of the money market and the probability of enhancing banking services through available platforms.

References

Bagaria, S. (2013). Inspiring mobility for banking enterprises. Journal of Innovation Management, 1(2): 18-20.

Chong, A. Y. L., Chan, F. T., & Ooi, K. B. (2012). Predicting consumer decisions to adopt mobile commerce: Cross country empirical examination between China and Malaysia. Decision Support Systems, 53(1): 34-43.

DASH, M., & Tech, M. (2014). Determinants of Customers Adoption of Mobile Banking: An Empirical Study by Integrating Diffusion of Innovation with Attitude. Journal of Internet Banking and Commerce, 19(3): 45.

Martins, C., Oliveira, T., & Popovi
, A. (2014). Understanding the Internet banking adoption: A unified theory of acceptance and use of technology and perceived risk application. International Journal of Information Management, 34(1): 1-13.

Zhou, T. (2012). Understanding users initial trust in mobile banking: An elaboration likelihood perspective. Computers in Human Behavior, 28(4), 1518-1525.

Statistics is all about deriving useful information about the population from the statistics derived from a representative samples. Population parameters like mean ¼ and standard deviation à are estimated from sample statistics like sample size n, sample average xand sample standard deviation s up to desired confidence interval. It is pretty obvious that there will be some error in such estimation as sample size n is less than population size N and also that increasing the sample size n will decrease the error until n becomes equal to the population size N, where the error will become zero as the sample becomes the entire population itself. However, increasing the sample size beyond a limit makes hardly any sense as there is cost involved in collecting data from the sample and this cost increases with increasing sample size. Also, if one has to collect data from entire population, then what is the use of statistics? Therefore, what is done is a trade off between the allowed error and sample size i.e. the cost of data collection. This is illustrated in the following example.

Given,

Allowed errore = x<¼ = $10

Population standard deviation = $500

Confidence Interval = 98%

Therefore, z = 2.33

Sample size n = ? (to be calculated)

Sample size n is given by the following formula

Therefore, at a confidence interval of 98%; an error of $10 can be ensured only if a sample size of 13573 is taken.

However, now the cost of data collection comes into the picture. As it cost $5 per person in the sample for data collection; therefore, a sample size of 13573 implies the total cost of data collection to be $67865. However, Piggy bank is not willing to spend this much amount, in stead the bank can afford only $10000 for this exercise. This results in a sample size of 2000.

Therefore, now the problem is to find the error.

Here, Allowed error e =x<¼= ? (to be calculated)

Population standard deviation = $500

Confidence Interval = 98%

Therefore, z = 2.33

Sample size n = 2000

Sample size n is given by the following formula

This means that the error now will be $136. This means reducing the sample size has increased the error and this is the trade off in the present circumstances.

To estimate a single population mean, the sample size should be the same as the population size, this means all the customers of the Piggy Bank will have to be included in the sample.

Abstract

Time management has been a very important skill since the dawn of time. Many students and employees need to learn time management skills in order to effectively balance their studies, work, social life, and various day-to-day activities. Studies show that in most cases, both understand the importance of time management and have basic time management skills, but are unable to implement them properly due to procrastination, the influence of social media, and other factors. This research is aimed to study the opinions and attitudes towards time management among the students in Bahrain University and the countrys financial sector.

Introduction

Time management is considered to be the very core of our civilization. Many historians consider the invention of the clock to be more significant to the world than the creation of the first steam engine, as the clock allowed individuals, communities, and even entire nations manage their schedules, work, and day-to-day practices in an organized and timely manner. Back then, personal clocks were the items of wealth and privilege, and large public clocks were found on top of city halls and town centres.

Nowadays, due to technology becoming increasingly available, a clock is considered a mundane item. We have clocks on our wrists, in our homes, and in our phones. Our schedules have become more and more elaborate, as we are expected to complete a great multitude of tasks within the same 24 hours. This is especially true for students and workers in the Bahrain banking and financial sector, as they have to manage a great multitude of tasks during daytime.

The overabundance of tasks to complete can be the leading cause of burnout, stress, and exhaustion. Therefore, time management skills are of paramount importance. However, the extent to which the population understands this varies and is related to educational efforts in promoting healthy time management and teaching time management techniques.

Purpose of Research

The purpose of this research is to study the attitudes and opinions of the students of Bahrain University and of various workers in Bahrain financial operations sector towards time management and their perception towards its importance. This data will be compared with similar academic researches. It will allow the researchers to construct an analysis and gain an understanding of the situation in regards to time management among students banking sector employees and offer suggestions for improving the situation.

Research Questions

The study is aimed to answer the following questions:

• Do the respondents perceive time management as important?
• How do they manage their time and do they find the techniques they implement as reliable?
• How frequent time management becomes an issue in achieving certain tasks?
• How does the social media affect time management?
• What motivates the students to complete their tasks and assignments?

Literature Review

All dedicated studies concur that time management is important in the successful completion of complicated tasks, relieving stress, and spending time more efficiently. At the same time, the perceived importance and implementation of time management strategies among students vary. MacCann, Fogarty, and Roberts (2012) have discovered that time management is more critical for part-time students than for full-time students. The study was performed among 556 college community students. According to the research, most part-time students also had to work during daytime, which motivated them to plan their time more carefully. Full-time students, in contrast, did not feel as pressured to manage their time and viewed it as non-critical.

This information is backed up by the study of non-traditional and traditional students in terms of their time management behaviours, performed by Forbus, Newbold, and Mehta (2011). The study was conducted in a four-year south-western university and studied stress factors and methods of coping with them while connecting it all to time management strategies. As the study discovered, non-traditional students, especially those that find part-time or full-time employment, were more interested in scholarly and study activities rather than leisure and social activities within the university, which contributed to their dedication to time management strategies.

Elliot Panek (2014) studied the effects of social media on time management and commitment to daily studies and routine tasks. The study found that while the majority of the respondents (n=458) were aware of the importance of time management and commitment to completion of certain tasks, they were unable to stop themselves from overusing mass media and prioritizing it over critical tasks. This shows that the use of gadgets, the Internet, and social media is detrimental to proper time management among students.

Research conducted by Xu, Du, and Fan (2013) indicated that time management could be possibly influenced by a number of social and psychological factors. It was conducted among 204 graduate students of South Eastern universities, split into 61 study groups. The research concluded that peer-oriented reasons, individual feedback, and arrangements in the workplace had a positive influence on the students time management skills.

Some student communities show a poor understanding of the importance of time management and the development of time managing skills. According to Kebriaei, Sabahi, and Saeedi (2014), students of Zahedan University of Medical Sciences (n=332) displayed low to moderate skills in managing their time, with the higher skills at time management displayed among female students. The study concluded that the lack of time management skills is associated with the lack of dedicated material on the subject available to the students and the lack of interest among the university staff to promote efficient time management strategies.

Some research dedicated to time management highlights the importance of differentiating between studies and leisure activities. Mirzaei, Oskouie, and Rafii (2012) indicate that most medical students in Iranian universities use unidirectional time management strategies in order to cope with the stressful study environment. In an attempt to alleviate stress, they dedicated most of their time to academic studies, which did not help them alleviate the feelings of tension. The researchers suggest that allocating time to leisure tasks and stress-coping strategies is paramount in proper time management.

While many studies indicate that the use of online tools, social media, and other Internet-based technological tools is detrimental to time management, not all researchers agree with this assessment of the situation. Armstrong (2011) states that while online studying has a certain degree of influence on the respondents performance due to how easy it is to be distracted by nonessential tasks and information available on the web, the benefits of extensive online education outweighs the trade-offs. The research concludes that any negative effects on the students time management can be overcome through self-discipline and peer control.

Methodology

In this study, questionnaires were dispensed to 40 students and employees in Bahrain banking sector. The sampling method used during the data collection period was the opportunity sampling, enlisting any students willing to participate in our research. The study included 23 female and 17 male students, with the majority of them being between 21 and 26 years of age. The data gathered from the questionnaires was then uploaded and analysed with the use of computerized survey software.

The limitations of the sampling method include the fact that the distribution between male and female participants is uneven, and no thought was given to diversifying the sample size to accurately represent all racial and age groups present among the population.

Findings

The survey found that among the sample group, nearly 40% of all respondents were either working full-time or part-time, with their occupation lying within the financial sector of Bahrain. When asked their opinion about the importance of time management, all of the respondents (100%) confirmed that it was important and necessary in their day-to-day lives. The most common ways of time management among the respondents include the use of schedules (40%), sticky notes (10%) and reminders on smartphones (~50%).

While the majority described their time management techniques as efficient and reliable (75% of respondents), roughly a quarter of the students (25%) were dissatisfied with the effectiveness of their chosen method of time management.

Despite the fact all respondents acknowledged the importance of time management and used a medium of some kind, be it schedules, sticky notes, or reminders, to manage their tasks, nearly all respondents have confirmed that time management was an issue on a frequent or even regular basis. Only three out of 40 stated to have no issues with time management and completion of important tasks, whereas the rest have indicated they encounter problems with time management all the time (36%) or frequently (56%). The majority of respondents (74%) have acknowledged that social media serves as a big detriment to effective time management.

When inquired about willingness to undertake unexpected or unplanned tasks which were not accounted for in the schedule, the majority of respondents answered Yes (72%), whereas the rest would either reject these tasks or accept them under certain conditions. When asked about motivations to complete tasks and reach objectives, the majority of the respondents answered that peer support (31%) and family support (44%) were the primary motivating factors. Rewards and benefits, surprisingly, were the core motivators for only 20% of respondents.

Discussion

The results of our survey mirror the statements made in various dedicated literature articles published in scientific journals in the last 5 years. The majority of the respondents acknowledge time management as a legitimate and useful concept that could be implemented in their student lives. In particular, the results of the survey resonated with the study conducted by Elliot Panek, which indicated that while the respondents are consciously aware of the importance of time management, they are not always ready or eager to actually implement the concept in real life (Panek, 2014).

Another similarity between the studies lies in the fact that social media tends to be among the main detriments to dedicated and timely studying efforts. The reasons for that likely correlate with the factors that motivate the students to commit to their own time schedules to a greater degree. According to the results of the survey, peer support and family support are the two main factors that motivate the majority of the respondents to avoid procrastination and complete their assignments on time.

This is supported by Xu, Du, and Fan (2013). At the same time, the majority of the assignments students receive are individual and require no peer feedback or group effort. With many students living in dorms, family participation and support is also rarely present. The absence of these motivating factors could be the reason why the majority of the students struggle with adequate time management.

The majority of the respondents displayed satisfaction with their chosen methods of time management. At the same time, the majority of the respondents claimed to have significant troubles with following their own time schedules and stated that time management is a frequent or a constant issue to them. This correlation indicates that time management methods have very little impact on the actual effectiveness of time management, as the greatest problem seems to lie in committing oneself to following the rules and time constraints that students establish for themselves.

Despite the fact that nearly a half of the respondents were part-time students or full-time workers occupied in Bahrain banking sector, the necessity to schedule time appropriately did not improve time management rates among them. Instead, it seemed to have worsened the situation for some of them, as lack of time management skills and dedicated efforts among part-time students and full-time workers brought unnecessary stress on them.

This contradicts the studies conducted MacCann et al. (2012), who stated that non-traditional students and people that have jobs tend to have greater dedication and discipline, as time management becomes necessary for them to succeed both in studies and work. This is likely due to the fact that the university does not feature any programs or educational information on time management. As a result, students are unable to use time management skills they do not have.

While they have the tools, they do not have the knowledge nor dedication to use them properly. In addition, when they leave university and seek employment in Bahrain banking sector, the issue of time-management skills becomes an even more pressing matter, as the intensity of working process grows, and there is little tolerance for failure.

Conclusions and Recommendations

As evidenced by the survey and the accompanying literature, the majority of the respondents realize the importance of time management and even use certain tools available at their disposal in order to do so. The issue in most cases lies in the fact that they are unable to follow their own time schedules due to a lack of motivation and self-discipline. Thus, recommendations and actions taken with the aim of improving said motivation and self-discipline, in order to improve the effectiveness of time management efforts.

Since peer-to-peer support has been stated as very important in actually following the established time constraints, it is recommended that a number of individual assignments and tasks is to be reduced in favour of group projects and peer-reviewed tasks. Once the respondents would be faced with the possibility of failing not only themselves but their friends and peers also, they ought to be more motivated in completing their assignments on time and making more use of time management strategies. This measure can be implemented both within a University and a financial sector setting, as collaborative and individual effort are present in both.

Family involvement and parental control are also important in preventing procrastination, which serves as one of the major detriments in proper time management. Feeling encouraged to complete the tasks on time, as well as the desire not to disappoint their families, could serve as a powerful catalyst to self-discipline. The university must strive for greater involvement of families in learning activities. Inviting family members to participate in communal projects and offering them tools to observe and control the academic efforts of their children in Universities is likely to improve accountability and willingness to follow self-established schedules and time constraints.

Eventually, once time management skills in a person would grow, these skills would transition well into a working environment, and provide a solid backbone for handling real-life managerial tasks and situations

Lastly, an effort must be made to promote proper planning and time-management skills. Both the students and the novice employees in Bahrain financial sector need to be explained about the dangers of social media and be taught effective strategies to counteract and resist its pull. The majority of the respondents simply do not know how to do it, and would never research the subject on their own. Offering training and information on time management is likely to improve the situation and help them become more efficient in managing their time.

References

Armstrong, D.A. (2011). Students perceptions of online learning and instructional tools: A qualitative study of undergraduate students use of online tools. The Turkish Online Journal of Educational Technology, 10(3), 222-227.

Forbus, P., Newbold, J.J., & Mehta, S.S. (2011). A study of non-traditional and traditional students in terms of their time management behaviors, stress factors, and coping strategies. Academy of Educational Leadership Journal, 15, 109-125.

Kebriaei, A., Sabahi, B.M., & Saeedi, A. (2014). Relationship between use of time management skills and satisfaction with spending time among students of Zahedan University of Medical Sciences. Journal of Medical Education Development, 6(12), 79-88.

MacCann, C., Fogarty, G.J., & Roberts, R.D. (2012). Strategies for success in education: Time management is more important for part-time than full-time community college students. Learning and Individual Differences, 22(5), 618-623.

Mirzaei, T., Oskouie, F., & Rafii, F. (2012). Nursing students time management, reducing stress and gaining satisfaction: A grounded theory study. Nursing & Health Sciences, 14(1), 46-51.

Panek, E. (2014). Left to their own devices: College students guilty pleasure media use and time management. Communication Research, 41(4), 561-577.

Xu, J., Du, J., & Fan, X. (2013). Finding our time: Predicting students time management in online collaborative groupwork. Computers and Education, 69, 139-147.

Introduction

Basel III necessitates banks to maintain specific leverage percentages and reserve capital levels to keep risk within international financial standards. The deadline for adopting the new standards has been continually shelved to its current date of 2023 (BIS, n.d.a). The United Kingdom delayed the adoption of the remaining Basel III financial requirements until March 2023. The UK postponed the introduction of Basel III standards in May 2020 owing to the effects of the COVID-19 outbreak.

Impact of the Changes

Minimum Required Capital

Banks necessity to uphold a minimum reserve capital of 7 percent will reduce their profitability. Even as they lessen the volume of loans provided to debtors, most banking institutions will attempt to retain a larger capital reserve to safeguard against monetary distress. They will be obliged to sustain a higher level of capital against their assets, reducing their account balance size (Jutasompakorn et al., 2021). Banks will be compelled to raise their lending margins and pass on the additional expense to their clients to remain solvent (Lileikien et al., 2021). Basel III capital rules emphasize the reduction of counterparty threat, which differs according to whether a banking institution trades via a broker or a dominant clearing counterparty. If a financial institution participates in a derivative exchange with a trader, Basel III creates an obligation and necessitates a substantial capital charge.

The Leverage Proportion

The Basel III leverage ratio was implemented to prevent the banking system from being too leveraged and improve bank stability. Leverage ratios encourage banks to take on more risk because of the non-risk-based character of the proportion (BIS, n.d.b). According to this specific feature, leverage ratio requirements for EU banks should only lead to restricted additional risk-taking based on theoretical considerations and practical facts, resulting in more stable institutions. Many advantages can be gained by requiring a leverage ratio under Basel III. Heavily leveraged institutions have a lesser ability to absorb losses and are presumably less able to withstand a financial shock.

As was the case in the run-up to the financial crisis, this is of special relevance if the buildup of excessive leverage affects all of the banking industry. The Bank of England upped the minimum necessary ratio to 3.25 percent, from 3 percent, to prevent banks from decreasing their leverage capital levels beneath sensible levels in reaction to the financial crisis (Bank of England, 2019). A leverage ratio requirement guarantees that banks with a substantial percentage of low-risk-weighted assets have an additional loss-absorbing capacity by regulating the overall level of leverage they can reach. Because the risk-based capital framework does not completely cover unusual and strongly linked losses in the banking markets, the leverage ratio may be a superior metric for limiting aggregate risk and safeguarding against such incidences.

Liquidity Prerequisites

Adopting new liquidity regulations under Basel III guidelines will significantly influence the bond markets functioning. To meet Liquidity Coverage Ratio liquid asset rules, banks will evade retaining high run-off properties, for instance, Special Purpose Vehicles (Schenk, 2021). Attributable to the Liquidity Coverage Ratio bias in favor of banks keeping government bonds and covered bonds, interest for secularized investments and lesser-quality funds will wane. To eliminate maturity misalignment and sustain a minimal Net Stable Funding Ratio, banks will keep more liquid assets and raise their percentage of long-term debt. Additionally, banks will limit investment activities that are more susceptible to liquidity problems (BIS, 2013). The introduction of Basel III affects the derivatives marketplaces as a greater number of clearing agents depart, attributable to increased costs.

Basel III Implementation in the UK

In 2021, the Prudential Regulation Authority (PRA) issued two policy statements addressing some globally accepted Basel III requirements that had not been adopted in the United Kingdom. Since then, the UK has developed Basel 3.1 recommendations to apply the remaining Basel III features (Buch & Goldberg, 2022). Basel 3.1 is the last set of practical banking regulations designed to retort to the economic crisis of 2008-2009 (Mdaghri & Oubdi, 2021). It is a comprehensive and substantial collection of metrics that will significantly alter how organizations compute Risk-Weighted Assets. The scheduling of the work on Basel 3.1 was indeterminate for several reasons, including the globally recognized interruption as part of the reaction to COVID-19 (Bank for International Settlements, 2017). Other rationales encompass the necessity to react to different preferences and the new systems that the PRA had to establish to transform Basel ethics into comprehensive rule-creating proposals within the UK legislative structure.

Basel IIIs rapid and consistent implementation is essential for a banking sector that can sustainably support business development and recovery. In addition, the consistent use of Basel standards will enhance uniformity across engaged banking institutions worldwide (Cantú et al., 2021). The Group of Banking System Governors and Heads of Supervision, the Basel Committees supervisory body, approved the completion of Basel III changes in December 2017 (Asghar et al., 2022). After a one-year delay to strengthen the operational ability of banks and managers to react to COVID-19, these changes will go into effect on 1 January 2023 and be phased in over five years. The United Kingdom has accelerated the implementation of the newest global bank capital norms, increasing the likelihood that British banks would be required to comply earlier than their competitors.

The economic effect of the final segments of Basel III on British banks is unclear because the UK has provided no information on its approach to regions where national lawmakers have authority. For example, banks must set the level of capital for potential failures among corporate clients without a credit-rating agency score (Papadamou et al., 2021). The EU has stated that the measures will boost capital requirements for European banks by 9 percent by 2030 (Zweifel, 2021). The impact in the United Kingdom might vary significantly between large banks, such as Standard Chartered, and institutions with a domestic concentration, such as Nationwide, as the restrictions could result in increased capital requirements for some lending-related sectors.

According to UK Finance, which characterizes banking institutions in Britain, the Bank of Englands declaration on the initiation of new capital regulations provides much-needed clarification. By delaying Basel IIIs implementation, not only will businesses design a more sophisticated and multifaceted project effectively, but they will also match their capital planning and strain testing for the next five years with the regulatory requirements. There will be a consultation document from the Bank of England describing how it intends to accomplish the remaining aspects of Basel III (Bank of England, 2021). The UK Parliament is now responsible for implementing global regulatory norms in domestic legislation instead of adopting new EU parameters, as the UK is no longer in the European Union. The PRA will be responsible for implementing the Basel Committee on Banking Supervision (BCBS) criteria once Parliament has approved it. The significant support for a more Basel-adherent approach to capital adequacy regulations among UK officials reinforces the PRAs connection to the BCBS principles.

Conclusion

Basel III is a global regulatory agreement that mandates banks to maintain particular leverage ratios and reserve capital levels. Due to the COVID-19 outbreak, the UK postponed implementing Basel III standards. The requirement for 7% reserve capital will diminish bank profitability. The impact in the UK may differ between major banks like Standard Chartered as the limits may result in higher capital requirements for various lending-related businesses.

References

Asghar, M., Rashid, A., & Abbas, Z. (2022). Basel III effects on bank stability: Empirical evidence from emerging countries. The Journal of Asian Finance, Economics and Business, 9(3), 347-354.

Bank for International Settlements. (2017). Basel committee on banking supervision. Web.

Bank of England. (2019). Interpretation of EU guidelines and recommendations: Bank of England and PRA approach after the UKs withdrawal from the EU. Web.

Bank of England. (2021). PS22/21  Implementation of Basel standards: Final rules. Web.

BIS. (2013). Basel III: The liquidity coverage ratio and liquidity risk monitoring tools. Web.

BIS. (n.d.a). Basel III: International regulatory framework for banks. Web.

BIS. (n.d.b). Implementation of the Basel standards. Web.

Buch, C. M., & Goldberg, L. S. (2022). Complexity and riskiness of banking organizations: Evidence from the International Banking Research Network. Journal of Banking & Finance, 134, 1-10.

Cantú, C., Cavallino, P., De Fiore, F., & Yetman, J. (2021). A global database on central banks monetary responses to COVID-19. Web.

Jutasompakorn, P., Lim, C. Y., Ranasinghe, T., & Yong, K. O. (2021). Impact of Basel III on the discretion and timeliness of Banks loan loss provisions. Journal of Contemporary Accounting & Economics, 17(2), 1-15.

Lileikien, A., Obi, P., & Valackien, A. (2021). An examination of the safety and profitability of EU and US Banks since Basel III. Journal of Management, 1(2), 37-43.

Mdaghri, A. A., & Oubdi, L. (2021). Basel III liquidity regulatory framework and bank liquidity creation in MENA countries. Journal of Financial Regulation and Compliance, 30(2), 129-148.

Papadamou, S., Sogiakas, D., Sogiakas, V., & Toudas, K. (2021). The prudential role of Basel III liquidity provisions towards financial stability. Journal of Forecasting, 40(7), 1133-1153.

Schenk, C. R. (2021). The global financial crisis and banking regulation: Another turn of the wheel? Journal of Modern European History, 19(1), 8-13. Web.

Zweifel, P. (2021). Solvency regulationAn assessment of Basel III for banks and of planned solvency iii for insurers. Journal of Risk and Financial Management, 14(6), 258-263. Web.

The introduction of big data analytics in the financial sector has provided bankers with countless opportunities to improve the quality of their services, enhance consumer segmentation, and modernize e-banking.

In my experience in the banking sector, I have utilized data mining techniques to improve the quality of customer segmentation. This approach refers to the extraction of useful data about consumers and its consequent application to solve existing problems (Provost and Fawcett, 2013; Hassani, Huang, and Silva, 2018). Each client has a set of categorical attributes, including demographic, psychographic, financial, behavioral, and transnational factors, that contribute to their consumer conduct (Hassan and Mirza, 2018). In my work, I employed the primary concepts of information gain and entropy to improve customer segmentation among consumers with a negative value  clients whose liabilities exceed their profitability for the bank. I inspected the information entropy values of economic factors  liabilities and creditworthiness  to understand the potential risks of customer interaction. Based on the entropy measures, I modified the values of categorical attributes by defining the information gain and entropy of the category. This approach allowed us to specify the numerical values of categorical attributes (e.g., creditworthiness: 400< FICO/FIRC Score <600), specifically, among customers with a negative value, making the consumer segmentation strategy more accurate.

Consequently, I would like to improve my knowledge concerning data mining techniques and machine learning in banking. For instance, the implementation of innovative applications in entropy analysis, such as EZ Entropy, might significantly improve the speed of customer segmentation analysis (Li, 2019). Consequently, the FIPA method with a focus on information entropy might increase the accuracy of entropy evaluation in categories (Atalay, Atalay, and Isin, 2019). Categorical clustering analysis with the use of entropy parameters is another prominent method to calculate the entropy within segments (Duan, Yang, and Li, 2017). Ultimately, the use of information gain and entropy parameters is an effective strategy for optimizing consumer segmentation, and I would like to improve my knowledge in this area.

Reference List

Atalay, K. D., Atalay, B. and Isin, F. B. (2019). FIPIA with information entropy: A new hybrid method to assess airline service quality. Journal of Air Transport Management, 76, pp. 67-77. Web.

Duan, Q., Yang, Y. L. and Li, Y. (2017). Rough k-models clustering algorithm based on entropy. International Journal of Computer Science, 44(1).

Hassan, M. M. and Mirza, T. (2018). Customer profiling and segmentation in retail banks using data mining techniques. International Journal of Advanced Research in Computer Science, 9(4), pp. 24-29. Web.

Hassani, H., Huang, X. and Silva, E. (2018). Digitalisation and big data mining in banking. Big Data and Cognitive Computing, 2(18).

Li, P. (2019). EZ entropy: A software application for the entropy analysis of physiological time-series. BioMed Online, 18(30).

Provost, F. and Fawcett, T. (2013). Data science for business: What you need to know about data mining and data-analytical thinking. California: OReilly.

The decrease in entropy or surprise achieved by modifying a dataset is known as information gain, and it is frequently employed in decision tree development. In order to estimate information gain, the entropy of a data sample before and after a modification is used (Kurniabudi et al., 2020). This phenomenon is possible by increasing the amount of data, as well as improving the methods of their analysis, which significantly elevates the possibility of assessing and predicting the conditions of the banking system. Information gain can be determined as a methodology that can be practically applied to the digitalization of payments in the banking sphere (Jadhav et al., 2018; (Jeske et al., 2021)). The first real-life example of the application of information gain is the use of not only demographic and economic data but also access to analysis of social media profiles of customers.

New data sources allowed the bank to significantly improve targeted analysis to improve products and marketing strategies, as well as to acquire new channels of communication with customers (Laksamana, 2018). The second example is the introduction of machine learning principles into the processes of data analysis used by the banking system. In comparison with the old approaches, this system allowed to significantly increase the possibility of risk assessment, which optimized the banks activities (Leo et al., 2019). The introduction of new approaches allowed to increase the banks revenue by 14%, and clientele by 16% over a six-month period. This growth was made possible by collecting more diverse data and analyzing more information to develop more relevant strategies.

The potential benefits offered by the use of information gain contribute to my professional development as a banker. First of all, it became possible for me to communicate more informedly with clients in order to determine their needs and form the best offers based on the data available about them. A potential benefit of implementing machine learning is that the banking system can now analyze more data, which allows it to identify current trends. On the basis of a larger set of data, the bank can form large arrays to analyze the patterns of behavior of banking consumers (Provost and Fawcett, 2013). For me, as for a banker, this is a paramount benefit, as I can better analyze the banking environment and help in the development of the organization based on the available data. From an initial perspective, these improvements in the future will allow me to delve into the study of various aspects of the digitalization of the banking system, which will open new career prospects for me.

First of all, I used decision trees to optimize offers for clients based on their personal data. On the basis of multiple data obtained during the analysis of various sources of information, I was able to obtain the most significant points that fit into the needs of the client. Secondly, I used decision trees when providing services to clients to optimize the response time to their questions. Using decision trees within the appropriate software, it is possible to reduce the number of steps for making a decision, which greatly simplifies communication and solving customer problems. Activity data allowed me to make more accurate decisions based on personalized data, as well as avoid mistakes when working with customer information and its processing. Thus, decision trees increased the effectiveness of both organizational and personal decision-making.

Reference List

Jadhav, S., He, H. & Jenkins, K. (2018) Information gain directed genetic algorithm wrapper feature selection for credit rating. Applied Soft Computing, 69, pp.541553.

Jeske, T., Würfels, M. and Lennings, F. (2021) Development of digitalization in production industry  impact on productivity, management and human work. Procedia Computer Science, 180, pp.371380.

Kurniabudi et al., (2020) CICIDS-2017 dataset feature analysis with information gain for anomaly detection. IEEE Access, 8, pp.132911132921.

Laksamana, P. (2018) Impact of social media marketing on purchase intention and brand loyalty: evidence from Indonesias banking industry. International Review of Management and Marketing, 8(1), pp.13-18.

Leo, M., Sharma, S. and Maddulety, K. (2019) Machine learning in banking risk management: a literature review. Risks, 29, pp.1-22.

Provost, F. and Fawcett, T. (2013) Data Sciences for Business: What you need to know about Data Mining and Data-Analytics Thinking, 1st edn. OReilly Media: Sebastopol, CA.

The changing nature of the modern business environment requires considering organizational development (OD) practices. To mitigate potential complications, corporations must address the issues in the surrounding business climate.

The Impact of the Covid-19 Pandemic

Due to the pandemic, the necessity to transfer most banking operations to digital platforms has contributed to increased digitalization levels. For instance, with the spread of Covid-19 in Africa, the Central Bank of Morrocco has moved its traditional services to web platforms to ensure personnel and clients safety (Nachit and Belhcen, 2020). Nevertheless, a pertinent negative outcome of the pandemic was the rising demand for electronic devices.

Remote Inclusion

The pandemic has also positively affected the area of remote inclusion, allowing banks to recruit more employees for remote work. Nonetheless, a predominantly remote working schedule has numerous adverse consequences, such as a lack of communication between the employees, decreasing their performance and the banks outputs (Amrani and Najab, 2020).

Corporate Social Responsibility (CSR)

Amidst the Covid-19, Corporate Social Responsibility (CSR) became of particular interest. As such, the Central Bank of Morrocco introduced new health control requirements for the employees (Elgin et al., 2021). However, many banking organizations might have been negatively impacted by such demands, having to incorporate new measures and maintain organizational growth during a worldwide health crisis.

Financial Inclusion

The onset of Covid-19 has also positively influenced the financial inclusion practices in the banking industry. For example, the Central Bank of Morrocco has expanded its financial coverages for different clients, from local households to large-scale businesses (Queyranne et al., 2021). Nevertheless, this decision has also significantly strained the bank, resulting in the depletion of available resources and financial constraints.

Cybersecurity and Information Security

The pandemic environment has also prompted the development of stricter protection measures. For instance, the Central Bank of Morrocco has integrated novel technological measures to counter possible issues with personal data storage (Amrani and Najab, 2020). On the other hand, In times of crisis, banking organizations become especially vulnerable to cyberattacks and information leaks (Anderson and Moore, 2006).

Prominent Limitations of the Key Learnings

Global digitalization can lead to the depletion of materials necessary for producing digital devices. Since the beginning of the pandemic, shortages of equipment required for establishing stable access to online banking services have been reported multiple times (Amrani and Najab, 2020). In addition, with information being stored electronically, hacking and data leaks have become especially prominent.

Remote Working

The remote working tendency can also negatively impact the banking sector, especially the performance of the organizations employees. As remote working does not involve consistent face-to-face communication, many workers begin experiencing the symptoms of isolation and loneliness (Bailey and Kurland, 2002). Furthermore, employees working remotely often demonstrate higher stress levels than office workers (Bailey and Kurland, 2002).

Corporate Social Responsibility

Adhering to CSR might have not only diminished the banks funds but also restricted its potential growth. For instance, the Central Bank of Morrocco has initiated several programs to limit the negative influence of Covid-19 on society, which resulted in the depletion of financial resources (Elgin et al., 2021). Moreover, as Morroccos exchange rate anchor is limited, the Central Bank might not be able to secure the money supply necessary for further expansion.

Financial Inclusion

Ensuring that the banks clients can withstand the devastating economic complications limits the corporations ability to focus on organizational growth. Rather than planning organizational development, banking enterprises must address the populations needs and appropriately distribute available resources (Elgin et al., 2021). Furthermore, given the variety of banks clientele, financial inclusion requires additional time and resources to establish, further decreasing the companys capacity to counter the health crisiss influence.

Cybersecurity and Information Security

Digital security and protection have become a vital issue for the banks during the epidemic. Establishing cybersecurity forced the banking organizations to experience difficulties due to the demand for digital services provision and considerably higher network load (Amrani and Najab, 2020). Additionally, protecting the stored information can result in additional expenses, compromising their financial stability.

Reference List

Amrani, O. and Najab, A. (2020) COVID-19 and Islamic banking services: digitalisation as a post-crisis solution (case of Morocco), European Journal of Islamic Finance [Preprint], (16).

Anderson, R. and Moore, T. (2006) The economics of information security, Science, 314(5799), pp. 610613.

Bailey, D.E. and Kurland, N.B. (2002) A review of telework research: findings, new directions, and lessons for the study of modern work, Journal of Organizational Behavior, 23(4), pp. 383400.

Elgin, C. et al. (2021) Economic policy responses to the COVID-19 pandemic: the role of central bank independence, Economics Letters, 204.

Nachit, H. and Belhcen, L. (2020) Digital transformation in times of COVID-19 pandemic: the case of Morocco, SSRN Electronic Journal [preprint].

Queyranne, M. et al. Moroccos monetary policy transmission in the wake of the Covid-19 pandemic. International Monetary Fund, 2021(249). Web.

Article Summary

The articles main focus is on the fundamental of the central bank currency in the monetary system. Armelius et al (2020) argues that individuals cannot be issued with the mandate of converting their commercial money into central bank money. The significant question is viewed from two perspectives because the currency available to individuals is the commercial and central bank currency (Armelius et al., 2020). However, a rapid decline has been illustrated in the public among many countries who want to use the central bank currency. The author finally concludes that the peoples need to have control over money is the reason for the need for the central bank currency.

Articles Main Idea

The main idea of the article is the ability to convert bank deposits into cash whenever a person deems it right for use in the monetary system. The banks as custodians where the deposits can be withdrawn anytime for use in the economy. Because the central banks of various countries offer forms of money, the convertibility through a central bank digital currency can help in serving the purpose (Armelius et al., 2020). Making the money deposits into a central bank available whenever the depositors need to use can help in promoting its use. Central banks using a digital currency will mean that people can have access to convert their deposits into cash irrespective of seeking the conversion services at the central bank premises.

Article Discussion

Issue at Hand

The issue at hand being analyzed by the author is the measure that can be taken on the central bank money. There should be laws, regulations, and supervision. Among the aspects required to be included in the central bank digital currency is enabling the last resort facility to a lender. Another issue addressed by the author is the safety of commercial banks and how essential it will be to the central bank money (Armelius et al., 2020). Despite shifting from commercial money to the central bank digital money, uniformity has to prevail. As a key feature of the issued money from any bank (commercial or central bank), the value and nature must be the same. For example, the same value of a depositors money to one commercial bank should be the same value of money that can be transferred to any other bank whenever such a transaction is executed.

Authors Point of View

The authors point of view is that neither cash nor a central bank digital currency (CBDC) tends to be important to a monetary system in countries where deposit insurance, macroeconomic policies, and government finances are applicable. The presence of these aspects makes the commercial banks money safe which rules out the need for a central bank currency (Armelius et al., 2020). The decision to make on whether the access to central bank money by the public in form of cash or CBDC is important to remain a ruling that the national context can come out with a solution. Before it can be concluded whether the central bank currency is equally important in a monetary system, the author suggests more research.

Substantiation of the Authors Opinion

In strengthening the authors opinion, he considers the central bank digital currency to be an alternative to the commercial bank currency. Because national governments offer policies and guidelines that dictate the nature and manner money can be converted into cash whenever needed, the central bank should retain its superiority and step in situations where commercial banks may not be able to convert depositors money into cash.

Other Literature Works about the Monetary System

Fractional-reserve banking is one of the integral roles of the central bank. In fractional-reserve banking, banks may hold money above the legal minimum to control its supply. The holding can be the in form of paper bills and coins, which are common currency types circulating among the public. The money in circulation in an economy is regulated by the central bank of a nation (Adrian, 2021). The central bank also oversees the banking system operations to ensure policies and guidelines are adhered to. Due to inflation, an economy is controlled using monetary policies that define the amount of money in circulation. When activities in an economy must be performed, traders leverage the transactions by borrowing money from commercial banks to supplement investments (IMF, 2022).

On occasions when commercial banks run out of money convertible into cash by depositors, the central bank increases the money through fed lending to commercial banks (Agarwal, 2022). The bank owners investment money in starting the banks is the bank capital that investors have put in to generate profit. Bank capital is what is used in calculating the return on capital invested.

Personal Opinion on the Matter

A personal opinion regarding money is to ensure its supply and availability are regulated to manage and facilitate the completion of transactions in the trade market. Commercial banks should be checked by the central bank and their regulations reviewed to receive enough money for deposit conversion whenever required. The important thing about the monetary system is to ensure a steady supply of money in moderate amounts.

References

Adrian, T. (2021). Digital technology: How it could transform the international monetary system. In Remarks at the 29th International Financial Congress of the Bank of Russia, juin. Web.

Agarwal, P., (2022). Monetary System. Web.

Armelius, H., Claussen, C. A., & Hendry, S. (2020). Is central bank currency fundamental to the monetary system? (No. 2020-2). Bank of Canada Staff Discussion Paper. Web.

IMF, (2022). Monetary Policy and Central Banking. Web.

Xu, Q., & Xiong, A. (2022). The impact of financial sanctions on the international monetary system. China Economic Journal, 1-10.

Introduction

The modern banking system presents a set of difficulties for an average consumer that can harm their best interests and lead to a loss of finances or inadequate handling. For various reasons, financial operations require a certain level of cognitive and psychological abilities that many potential bank clients lack. The abilities required to recognize and efficiently analyze all possibilities and specifics of banking operations include mental resolve, attention to detail, focus, specific education factors such as numeracy and literacy, and impulsivity (Cuesta-González et al., 2021a). According to Roa et al., levels of income and education are particularly relevant in forming the consumers attitudes toward financial operations, their trust, and confidence (as cited in Cuesta-González et al., 2021a). Despite the lack of practical research, some theoretical evidence confirms that cognitive and psychological factors significantly influence consumers experience with banks and the banking system in general (Cuesta-González et al., 2021a). The acuteness of this issue presents possibilities for further research on the matter.

Despite the seriousness and relevance of this issue, the information on the topic is scarce and requires more profound research. The article by Cuesta-González et al. (2021a) explores the factors that influence customers, particularly from vulnerable social groups, relations with the banking system, and what difficulties and barriers exist in such relations. Potential solutions that can be incorporated by the banks and directions for further scholarly and experimental research are also proposed. The authors conclude that customers distrust and shame lead to financial difficulties while dealing with banks. Barriers and difficulties in terms of access and ease of use arise as a result of affective and cognitive factors. These factors revolve primarily around poor financial education, low levels of literacy and numeracy, impulsiveness, fear of the systems complexity, and the resulting irrationality of choices.

Discussion

Identification

Theoretical Background

Scholars working in the area describe different factors influencing consumers banking experience and the importance of these factors in comparison to one another. An article by Cuesta-González et al. (2021a) presents an analysis of these psychological and cognitive aspects of consumer experience with financial systems and their impact on consumers financial stability. Gathergood argues that financial knowledge and general education are decisive in customers attitudes toward banking, playing the primary role in influencing their decisions (as cited in Cuesta-González et al., 2021a). However, according to De Meza et al., for many regular consumers, financial knowledge can be less important and impactful in making financial decisions than the psychological and cognitive factors mentioned above (as cited in Cuesta-González et al., 2021a). Particularly, customers emotional condition during dealing with their finances, banking system, and personnel can often lead to certain impulsive decisions or, to the contrary, to hesitation.

Since financial decisions are usually not entirely rational and the economic system, in general, is becoming increasingly complex and confusing for an unprepared consumer, some ethical questions arise. Emotional and cognitive factors can form biases which, when combined with the increasing digitalization, scaling, and constant transformation of the banking system, often lead to unknowledgeable and incompetent decisions (Cuesta-González et al., 2021a). The perceived instability of global and national financial systems, especially in the wake of the 2008-2009 financial crisis and the current rising inflation, puts additional stress on customers and introduces a degree of economic uncertainty. The rising degree of complexity and competitiveness in the banking system puts consumers who lack financial stability, general education, economic knowledge, and psychological resolve into an economically vulnerable position (Cuesta-González et al., 2021a). This situation leads to an increased risk of financial exclusion of certain social groups, particularly minorities and those who lack access to quality education and financial counselling.

Studys Purpose and Methodology

The issue of cognitive and psychological factors in financial decisions has not been extensively covered due to its inherent unquantifiable nature, while qualitative research remains scarce. The purpose of the article by Cuesta-González et al. (2021a), therefore, lies in identifying the affective and cognitive factors in customers financial behaviour, establishing relations between them and the degree of influence they have. Specifically, the article focuses on the access and use difficulties that arise under the influence of these factors (Cuesta-González et al., 2021a). The article includes the empirical qualitative study of vulnerable consumers perception of the digitalization of the banking system, the accessibility issues associated with it, and the role of competitiveness in customers banking experience and financial decisions. The study also analyzes how human-machine interactions in the context of ATM banking influence the rationality of financial decisions consumers tend to make in contrast to personal interactions with bank employees. The authors employ a qualitative empirical approach in their study that includes interviewees from vulnerable groups with low income to determine the role and influence of cognitive and psychological factors in their financial decision-making.

The results of the study show a significant influence of shame and distrust in consumers decision-making process while interacting with human employees in banks. Earlier bad experiences and the resulting biases were shown to affect the consumers perception of banking operations and interactions (Cuesta-González et al., 2021a). In combination with their lack of financial prowess, these factors further increase consumers distrust of banks (Cuesta-González et al., 2021a). The shame factor was shown to appear primarily due to the customers lack of financial stability, low income, and insufficient financial education, causing significant use difficulties while interacting with the banking system, particularly its digital aspects (de la Cuesta-González et al., 2021a). The subjective and objective psychological factors were shown to have a significant difference in influencing the consumers experience and attitude, with the latter playing a more distinct role than the former.

Evaluation of the Studys Relevance

The study employs an empirical qualitative approach to determine the degree of effect different cognitive and psychological factors affect customers interactions with banks and bank personnel. This approach is best suitable for this kind of research due to the difficulties of quantifiably measuring the effects of psychological and cognitive factors in often inherently irrational financial decisions. The choice of a qualitative research method allows for a more detailed and personalized analysis of the participants experience and impressions of interactions with banks. Additionally, the quantitative method was employed for statistical analysis of the qualitative data. The choice of a mixed-method methodology is relevant and beneficial to the study area due to a lack of quantitative research on the topic (de la Cuesta-González et al., 2021b). A middle-sized sample balanced by gender and age chosen for the experiment is consistent with the purpose of the study in terms of the participants social grouping, age, and financial background.

The article relies on previous research on the topic to establish the issues nature, roots, and relevance. Including. The article by Ottaviani & Vandone (2017) explains the impact of psychological factors, primarily impulsivity, in modern financial customers decision-making, hindering the positive effects of financial education. The authors arguments and evidence backed up by previous research on the matter give weight to the relevance of the work by de la Cuesta-González et al. (2021a). A study by Kusev et al. (2017) on the influence of cognitive and emotional factors in particular, on financial decision-making, provides similar conclusions as those presented by the authors. Bustamante and Amaya (2020) emphasize the importance of customers emotional well-being in their interactions with banks and their engagement in financial operations. This study provides additional ground for the claims of de la Cuesta-González et al. (2021a) regarding the influence of emotional and psychological factors on customers interactions with the banking system, particularly in terms of distrust and shame.

The article is also consistent and relevant in terms of the studied population. A study by de la Cuesta et al. (2021) puts emphasis on the particular vulnerability of low-income and poorly educated social groups in the context of a highly digitalized and complex modern banking system. This study is consistent with the claims of de la Cuesta-González et al. (2021a) regarding the relevance of the issue for these social groups specifically. With only a small number of studies focusing on low-income social groups and analyzing the effect of economic background on the psychological aspects of financial interactions, more research is needed. Therefore, the current study is crucial for a deeper understanding of the matter and for developing alternative approaches and tools for this kind of research.

Furthermore, the current study presents an alternative perspective on the factors that influence peoples attitudes toward financial institutions and interpersonal interactions with bank employees. So far, most studies have focused primarily on cultural background as a driver for economic exclusion (Thrassou et al., 2020). The role of geographical factors in the process was also studied in some recent articles, including a article by Mende et al. (2020). In it, the authors argue for the negative impact of territorial division on peoples attitudes toward engaging in banking operations. While those influences are equally relevant to the discussed issue, other factors studied by de la Cuesta-González et al. (2021a) must be addressed and taken into account. The works by Dandapani et al. (2018) and Filotto et al. (2021) analyze how financial institutions, including banks, tend to move away from interpersonal contact between workers and customers toward technological solutions. Those solutions include ATM and online banking, and while aiming to mitigate the psychological discomfort of live interactions for the customers, these options create additional problems in other aspects.

The negative repercussions of these solutions are presented in the current study, connecting it to the conclusions of other scholars in the field. Particularly, the growing digitalization and automation of financial operations put the responsibility for the acquisition of financial literacy and necessary skills on the customers (Filotto et al., 2021). This process is prevalent mainly in high-income, developed regions, as discussed in the article by Menrad and Varga (2020). However, the population of countries and communities with less advanced economies suffer the most from the complications associated with the increasing complexity of financial operations. This situation further deepens the psychological stress of unprepared customers while engaging in economic activities, relaying the issue back to the focus of the current study.

The article pays specific attention to the irrational nature of financial decisions. The study relies on the currently prevalent prospect theory of Daniel Kahneman and its reinterpretation by Richard Thaler. The theory postulates that the decision-making process in the context of financial operations is closely related to the specific context of the situation (de la Cuesta-González et al., 2021a). In this regard, personal financial background, emotional condition, cognitive biases, and education play a significant role in the theorys framework. In this context, the current article is consistent with the established scholarly views on the issue, bringing additional insights into the research topic.

Application of the Results

Due to the established theoretical relevance and importance of the study, it serves as a potentially helpful tool for application in the practical aspects of financial institutions public relations policies. The results of the study align with some of the previously prevalent scholarly views about the positive implications of introducing technological solutions into banking operations. The results of the study confirm that, despite psychological discomfort caused by distrust and the feeling of injustice, digital solutions lead to a higher degree of rationality in economic decision-making by financially vulnerable customers. The articles conclusions and the valuable personal experiences acquired through the interviews can be used by financial institutions to optimize their approach to utilizing modern technologies. As increased digitalization and the shift toward online banking services gains pace, the psychological aspects of different financial interactions must be considered for ethical purposes. The unique perspective of the studys participants can help theorists and practitioners in this area to improve their strategies.

In light of the present lack of scholarly studies backed by empirical evidence on the issue of cognitive and emotional aspects of financial decision-making, this article presents a valuable perspective on the matter. The findings of this study can potentially provide a framework for further theoretical and practical research on the topic. The article also raises a question of responsibility for improving the customers experience with banks and financial operations in the situation of unequal distribution of educational and economic possibilities. The results of the study suggest that customers should not be granted full responsibility for their perception and involvement in financial operations. The reason for that lies in their inability to influence the technological processes that take place in modern banking. Therefore, it is recommended that banks and other financial institutions take responsibility for how their services and operation strategies influence the consumer experience with regard to inherent cognitive and psychological biases.

Additionally, this perspective provides implications for the legal sphere of financial operations and banking. Several steps can be proposed based on the results of this study for governments and international organizations to take to ensure that the customers rights are protected. Obliging financial institutions to give clear information on the financial services they provide can prevent misunderstandings from customers regarding their actions and associated economic consequences. Furthermore, ensuring that all parties involved in the financial transactions and procedures are equally knowledgeable in the specifics of these interactions can prevent fraud and other unlawful operations with customers funds. Providing the necessary financial counseling, especially for vulnerable groups with an unstable financial background and a lack of required knowledge and skills, would ultimately serve the best interests of the customers. Establishing clear procedures in personal and impersonal interactions with the use of online technologies and automation can further optimize the operations of banks and other financial institutions. As a result of these measures, a more stable socioeconomic climate can be facilitated in local communities, additionally reducing the number of potential court cases involving financial operations.

The authors also point out practical implications for financial regulators and legal practitioners. As De la Cuesta-González et al. (2021a) point out, the existing risk or convenience surveys adapted by the Market in Financial Instruments Directive are incomplete in terms of the information they collect and analyze for customer profiling. The current regulations are primarily directed toward benefiting financial institutions, excluding cognitive and psychological dimensions of user experience (de la Cuesta-González et al., 2021a). The authors suggest that addressing these aspects can be productive for improving and optimizing the operational procedures of banks while simultaneously ensuring the protection of customers best interests and legal rights. Incorporating psychological training for bank employees to handle work interactions with customers from vulnerable groups properly is a potential step in this direction. Addressing this issue, as de la Cuesta-González et al. (2021a) argue, can lead to a reduction in the number of customer complaints and improve the banking institutions public image and reputation. Ultimately, the potential results of incorporating the study findings can benefit all parties involved.

Assessment and Remarks

The authors choice of a mixed research methodology allows to establish a quantitative relationship between cognitive and psychological factors and financial operations through detailed and extensive interviewing. Additionally, a qualitative approach helps achieve the statistical data that can potentially be applied to other geographical and cultural contexts and serve as a basis for future research. However, a small number of participants, though balanced by age and gender, hinders the variety and amount of experimental evidence in the research. This fact arises from the nature and format of a quantitative approach to data collection and the teams limited resources. Therefore, it is recommended for future research on the topic to include larger sample groups to ensure that the qualitative part of the research is representative of the actual situation. Including interviewees from different geographical and cultural backgrounds is another relevant issue that other scholars should address.

Combining interviewees from different financial backgrounds also presents possibilities for more extensive research on the topic. Analyzing the influence of economic systems and different cultural aspects of financing can provide helpful insights for theoretical works and practical applications. Comparing different socioeconomic contexts through the subject matter can also help test some alternative views on the topic of cognitive and psychological factors in banking mentioned in previous sections.

Conclusion

The article presents a comprehensive view and discussion of the influence of cognitive and psychological factors on financial decision-making. The authors rely on an extensive list of relevant literature that includes the latest research and earlier sources. The choice of literature represents different contexts and gives supporting evidence and alternative views of the discussed problem. The sources comprise similar practical research articles, theoretical scholarly works, and reviews, presenting an all-encompassing list of references. Nevertheless, most of the reference sources relate to the local geographical and cultural context, presenting data based on evidence from a single country, primarily Spain, or other European states. Additional research in other contexts must be carried out to determine whether the authors conclusions are applicable in other settings. It can help establish whether the underlying psychological and cognitive factors associated with banking operations are relevant in different societies or are a product of a specific cultural or geographical context.

References

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Filotto, U., Caratelli, M., & Fornezza, F. (2021). Shaping the digital transformation of the retail banking industry. Empirical evidence from Italy. European Management Journal, 39(3), 366375. Web.

De la Cuesta-González, M., Fernandez-Olit, B., Orenes-Casanova, I., Paredes-Gazquez, J. (2021a). Affective and cognitive factors that hinder the banking relationships of economically vulnerable consumers. International Journal of Bank Marketing. Web.

De la Cuesta-González, M., Paredes-Gázquez, H., Ruza, C., Fernández-Olit, B. (2021b). The relationship between vulnerable financial consumers and banking institutions. A qualitative study in Spain. Geoforum, 19, 163176. Web.

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