Summry – Essay Example

Summary: Shrinking Bank Revenue Signals Worst Decade of Growth The article en d Shrinking Bank Revenue Signals Worst Decade of Growth written byKopecki and Moore and published in the Bloomberg Businessweek on October 26, 2010 presented the continuing problems faced by the banking industry in the US due to the financial crisis. The authors indicated that “the trend over the last two quarters is hitting almost every line of income statements and is spread across the sector, affecting investment banks, consumer banks and commercial lenders. It’s eating away at profits, depressing stock prices and threatening bonuses and new hiring” (Kopecki & Moore, par. 3).
Several banks, financial institutions and trading companies were cited to have shared the decline in revenues coming from decreases in community-based banking, bad credit card loans, lower trading results, new restrictions on fees, and decreases in fixed income trading, among others. Other drastic repercussions of the decline in revenues are inability to pay dividends, compensation set-backs through pay cuts and decreases in workforce.
To address the decline in revenues, some financial institutions, devise alternative strategies which aim to spur increased activities such as reliance on brokering services to expanded clientele; Wells Fargo “is making up for lost revenue growth by offering customers service across multiple platforms -- where they shop, at ATMs, online, via telephone and mobile banking” (Kopecki & Moore, par. 22); and expansion of operations to other emerging markets.
Finally, the authors reported that the trends continue due to “the size of the biggest banks places them at a disadvantage to increase revenue relative to smaller competitors” (Kopecki & Moore, par. 36). The problem remains to besiege financial institutions in the US and is seen to possibly persist in the next few years as business operations remain sluggish due to economic and financial woes.
Work Cited
Kopecki, Dawn & Moore, Michael J. “Shrinking Bank Revenue Signals Worst Decade of
Growth.” Bloomberg Businessweek. 26 October 2010. Web. 27 October 2010.
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