Internal factors of environment of banking

Internal factors of environment of banking are divided into two parts:

A)Factors relating to organization

B)Factors relating to bank employees

 The factor relating to the organization:

Internal factors of the environment of banking

Location of bank: The bank and its branches situated in urban area can easily progress in business because people of urban area are mostly educated and habituated in banking activities. The economic  activities are wider in the urban area. For this reason, these banks can easily reach their goal. But in rural area, the rate of literacy is very low and they are not habituated that much in banking transaction. Their economic activities are limited to particular seasons. So, banking activities are also limited to those areas, bank business may be relatively more profitable. On the other hand, bank business faces a problem in undeveloped and unhealthy environment.

  1. Lay out-Designing of a bank: A bank with sufficient sitting and movement arrangements and other advantages for its employees and customers can prosper easily by its daily business activities. Employees can work with satisfaction and clients also like to be with that bank. If the employees get enough air, light and space to walk easily, they get interest to work for the bank attentively.
  2. Defined Golas and policies: To be successful, every bank must have its own target and defined policies. But, if this goal and policy is not defined specifically, the bank may fail to achieve its goal. If the goal and policy is defined in clear terms and words, there remains no scope for confusion and misunderstanding.
  3. Clear cut responsibility and duty: If the responsibilities and duties of the bankers are not defined clearly, it is not possible for bank employees to do their jobs properly and consequently the bank cannot achieve its goal and success.
  4. Adequate place and logistics for work: For the lack of adequate place, furniture and other essential logistics, bank activities are most likely to be disturbed and the efficiency of workers decreases. So, to operate daily activities of the bank smoothly, there must be sufficient arrangement for the needed space and logistic.
  5. Trade union: The concept to trade union grew basically to preserve the interest of the employees and workers. But practically, it is often seen that trade union creates obstacles to the activities of the bank without any reason. For overt unionism, the movement of success of the bank is getting slow. But helpful and constructive union activities are favorable for smooth operation of banks.
  6. Promotion and transfer on the basis of efficiency: Nepotism creates dissatisfaction among the employees if there is no tradition for promotion and transfer on the basis of efficiency. This ultimately decreases employees morale and work efficiency.
  7. Efficient deposit and credit operations: The success of banking business is vastly dependent on efficient management of deposit and credit. An efficient loan manager can fulfill the demand of a large number of borrowers with his experiences with even when funds are not adequate.
  8. Efficient management: If the management of any bank is efficient and experienced, it can reach the bank at the peak of success by making and implementing proper rules for the bank. On the other hand, inefficient management, defective rules, and regulations can invite many other problems for the bank.
  9. Financial solvency: Financial solvency creates confidence of clients on their banks on which the success of bank is mostly dependable. On the other hand, financial insolvency spoils the faith of the clients that invites a tragedy for the banking business.
  10. Financial discipline: Financial discipline is one of the most important factors for a bank. For the lack of financial discipline, bank cannot absorb its true financial picture that creates different problems for the bank. On the other hand, if financial discipline is strictly adhered to, a bank can take the right decisions on the basis of the true picture of the financial situation.
  11. Services rendered: A bank can provide different types of service to its clients. By achieving popularity in providing service, a bank can succeed in its business.
  12. 13)Method of work: A bank can complete its tasks within a short time at a lower labor costs if its method of doing work is constructive and done with modern technology. For these, clients remain benefited and satisfied.
  13. Use of modern technology: If a bank operates its business with modern technology such as tele-system, computer, fax etc, then the employees’ efficiency will increase and the clients will be more attracted.
  14. Relation of bank with customers: If the employee of the bank keeps a good relation with the clients of the bank and behaves well with them, then that bank or the banking business as a whole can achieve the success by raising goodwill.
  15. Bureaucratic complexity: The bureaucratic complexity always hampers the organizational activities and leads to the unexpected delay. For this style of issue management, no decision can be taken at the right time.

Factors Relating to Bank Employees:

Among the internal factors, some are closely connected either directly or indirectly to the employees of the ban. These are discussed below:

  • Number of employee: A huge number of employees create chaos in the activities of the bank, a shortage of the same also hampers the performance of the bank. So, there should be an optimum number employees.
  • Efficient employee: A small number of skidded and efficient employees can do its task efficiently than a large number of unskilled and inefficient employees. So, banks need expert personnel to create favorable environment in its business organization. And to develop efficiency, bank should arrange proper training program.
  • Service oriented attitude: Basically, bank is a service-selling industry. So, employees of the bank must have service-oriented attitude. By providing good service, an employee can create profitable clients for the organization.
  • Loyalty to the bank: The loyal employees are always prepared to sacrifice own interest in order to upheld the interest of the bank. Such loyal employees also service-oriented attitude to their clients. So, they are the valuable assets for the bank. Most importantly, loyal employees make the internal environment favorable.


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