What Is Universal Banking?

Almighty Bank is also called "Integrated Bank". Banks that are not restricted by the division of financial services and can conduct all types of currency credit business The main businesses are: Comprehensive deposit business. It can run demand, term, savings, and other different types of deposits. Comprehensive loan business. It is free to issue loans with different purposes, different maturities and different methods. Comprehensive securities business. It can buy and sell all kinds of securities, and can run gold business. Comprehensive payment and settlement business. Comprehensive trust business. It undertakes trust investment, property custody, agency insurance, equipment leasing, information consulting and agency custody of securities, and agency receipt and payment of securities principal and interest. Universal banking has a wide business scope, can provide multiple services to customers at the same time, low operating costs, and has unique advantages in protecting the profitability, security and liquidity of funds, so it has become a trend for banks in all countries. Germany's universal bank is the most typical in the world. ^[1]

Universal bank

Almighty Bank is also called "Integrated Bank". Banks that are not restricted by the division of financial services and can operate all types of currency credit business. The main businesses are: Comprehensive deposit business. It can run demand, term, savings, and other different types of deposits. Comprehensive loan business. It is free to issue loans with different purposes, different maturities and different methods. Comprehensive securities business. It can buy and sell all kinds of securities, and can run gold business. Comprehensive payment and settlement business. Comprehensive trust business. It undertakes trust investment, property custody, agency insurance, equipment leasing, information consulting and agency custody of securities, and agency receipt and payment of securities principal and interest. Universal banking has a wide business scope, can provide multiple services to customers at the same time, low operating costs, and has unique advantages in protecting the profitability, security and liquidity of funds, so it has become a trend for banks in all countries. Germany's universal bank is the most typical in the world. ^[1]

Universal Banking originated in Germany, which is a classification concept of the German banking industry, but its meaning in modern finance has exceeded the scope of statistical concepts. A universal bank is a type of bank that not only operates banking business, but also operates securities, insurance, financial derivatives and other emerging financial businesses, and some can also hold equity in non-financial companies. Almighty banks can buy the stocks of enterprises, and their equity in many enterprises often exceeds 25%, becoming a major shareholder of the enterprise and directly interfering with the company's operating decisions. The generalized universal bank is equal to the commercial bank plus

Universal banks have three different meanings: universal banks = commercial banks + investment banks; universal banks = commercial banks + investment banks + insurance companies; universal banks = commercial banks + investment banks + insurance companies + non-financial company shareholders. The most commonly used definition is the second. The financing range of universal banks ranges from traditional working capital loans to private bonds, international bonds and all kinds of stock issuance. The service targets all sectors of society, including trade, industry, various types of companies, individuals and the public sector. No matter what the organizational structure of a universal bank is, its essential characteristics are only one point: it can use a comprehensive business platform to provide customers with efficient, one-stop, comprehensive financial services.

Universal banks can be divided into two types of business models with different operating styles: financial holding universal banks and internal comprehensive operating universal banks.

Regardless of the model of the universal bank, in the increasingly fierce market competition, it has the following obvious advantages:

With the further marketization and internationalization of our economy, and as mentioned above, driven by the tide of economic and financial globalization, while foreign universal banks have entered the Chinese market, our banks have developed into mixed-business universal banks. It is the general trend to go global.

1. The development of a universal bank is to meet the requirements of the international economic and financial environment

The globalization trend of universal banks urges Chinese banks to go abroad and develop universal banks in order to be in line with international standards. China has now opened its doors to the world. Large universal banks in developed western countries are rushing in. While driving the development of universal banks in China, they are also grabbing domestic financial markets. If Chinese banks are not to be swallowed up, they must grow and grow Turning from defense to attack, using the reciprocity and mutual benefit that can be achieved by opening up your own market, we have developed financial services from domestic to foreign countries, and developed from regional traditional business activities to global, innovative business activities.

2. The development of China's capital market also requires a transformation to a universal bank

The stable development of the capital market requires strong and rational institutional investors as "stabilizers". Commercial banks operate investment banking services such as agency of various funds, insurance funds, social security funds, etc. based on long-term goals such as sharing the growth of listed companies Investment can play a role in curbing abnormal fluctuations in the capital market. Moreover, the development of the capital market also requires commercial banks to carry out financial innovation, and to continuously create new financial instruments that attract investors. Therefore, the development of a universal bank, giving full play to the complementary functions of various financial markets and financial instruments, and promoting the efficiency of resource allocation and economic growth, should be a realistic and reasonable choice for China's financial development strategy.

3.Developing a universal bank will help reduce the risks of China's commercial banks

As a rational economic person, a commercial bank itself, the maximization of profits is the essential goal of commercial banks and the operating principles they follow. If the space for the development of banking business is positioned only in traditional intermediate businesses such as deposits, loans, exchanges, and settlements, it is not only contrary to the nature of commercial banks, but also the risk of banks is increased due to the narrow space for profit sources. Judging from the development trend, banks rely more on services and investment to make profits, and the proportion of traditional deposit and loan spreads will become smaller and smaller. Therefore, expanding the banking business area is an effective way for banks to improve their financial conditions. The universal stability of universal banks due to the diversification of their businesses allows them to use internal compensation mechanisms to stabilize the bank's profit income. Therefore, the development of a universal bank is of particular significance for improving the financial situation of China's commercial banks, especially state-owned commercial banks, and reducing financial risks.

4. Developing universal banks is the need for the reform of state-owned enterprises in China

At present, the focus and difficulty of state-owned enterprise reform is to implement strategic reorganization of state-owned enterprises. The reorganization of state-owned enterprises requires commercial banks to provide them with comprehensive and multi-functional financial services, remove financial obstacles, and establish new types of bank-enterprise relations. Therefore, relaxation of restrictions on commercial banks 'participation in capital market activities, relaxation of restrictions on commercial banks' direct investment and participation in corporate management are essential steps.

5.Developing a universal bank is also a need for the bank's own development

Under the current conditions of rapid development of electronics, communications and information technology, through transnational scale operations and reasonable layout, it is possible to realize the global transfer of funds within the banking system, information sharing, sharing of integrated service platforms, and the establishment of low-cost internal transactions. Capital markets and so on.

In summary, universal banks have unparalleled advantages of other banking models of their own. It is the successful operating experience of developed countries. In order to adapt to the requirements of globalization, universal banks will also be the general trend in China. The development of a universal bank is a necessary way for China to go abroad and go global.