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A bank front ofce is the network of bank branches located in its service area. The standard denition of a front ofce
is all of the departments that interface with the public. As service providers, banks are dened by the effectiveness of
their front ofce operations. A reputation for outstanding customer service can drive sales of nancial products and
provide a competitive advantage.
The Head Ofce and Regional/Zonal Ofces which do not conduct any banking activities directly with the clients are
called Back Ofces.
Outsourcing may be dened asa banks use of a third party (either an afliated entity within a corporate group or an
entity that is external to the corporate group) to perform activities on a continuing basis that would normally be
undertaken by the bank itself, now or in the future.
Banks cannot outsource core management functions like corporate planning, organisation, management and control
and decision-making functions like determining compliance with KYC norms for opening deposit accounts, according
sanction for loans and management of investment portfolio.
The key risks in outsourcing that need to be looked into by the banks are:
(a) Strategic Risk The service provider may conduct business on its own behalf, which is inconsistent with the overall
strategic goals of the bank
(b) Reputation Risk Poor service from the service provider, its customer interaction not being consistent with the
overall standards of the bank
(c) Compliance Risk Privacy, consumer and prudential laws not adequately complied with
(d) Operational Risk Arising due to technology failure, fraud, error, inadequate nancial capacity to full obligations
and/or provide remedies
(e) Exit Strategy Risk This could arise from overreliance on one rm, the loss of relevant skills in the bank itself
preventing it from bringing the activity back in-house and contracts entered into wherein speedy exits would be
prohibitively expensive
(f) Counterparty Risk Due to inappropriate underwriting or credit assessments
(g) Country Risk Due to the political, social or legal climate creating added risk
(h) Contractual risk arising from whether or not the bank has the ability to enforce the contract
I) Concentration and Systemic Risk Due to lack of control of individual banks over a service provider, more so when
overall banking industry has considerable exposure to one service provider.
A banking operations manual helps you get the very best out of each employee. It also helps to ensure that each one
knows not only their duties but also the policies, products and how to do things the right way.
A manual is all you will need to train your people effectively. It is cost effective and the items in it will be easier to
monitor for compliance. Using a manual to train the frontline will teach them everything they need to know to sell the
products and services offered by your bank.
The manual will also have detailed instructions on how to enter information into the system and if they should forget
something they can always count on it to show them how to get back on track. Manuals are great because they are
easy to adapt and to amend if needed. A banking manual should include all the policies that are to be adhered to as
well as the procedures that are needed to remain in compliance with all the laws, rules and regulations that govern
banking institutions.
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