Quality Assurance in Banking Investment

Introduction

Banking Investment or investment banking is part of the financial services industry that offers wide variety of services to corporations and organizations all over the world. The range of products and services is increasing rapidly that has made it difficult to distinguish the most important services because investment banks offer their services in different forms (Turnbull and Moustakatos, 1996) The service is an area that helps companies in funds acquisition, advising for wide range of transactions for future businesses (www.wisegeek.com).As it is clear that the investment banking deals with providing financial assistance to the companies for business matters, it is essential to ensure quality service in the area. Therefore quality assurance is the main pillar of any business including profit and nonprofit organizations, government and nongovernmental organizations as it affects the level of success in the business. The quality assurance further helps in conducting other evaluation processes like standards compliance evaluations, brand assurance evaluations, customer or guest experience evaluations, etc. which makes it essential and important in any business organization to maintain a dominant position in the industry market (www.totalqualityassuranceservices.com). In view of the importance of quality assurance, the present paper is intended to discuss the issues and importance related to banking sector particularly in investment banking.

Investment Banking

Investment banks have multilateral functions to execute in favor of various companies. The service mainly deals with companies like helping private and public corporations in issuing securities in the primary market, guarantee by standby underwriting or best efforts selling and foreign exchange management. (www.economywatch.com). Further it is committed towards providing assistance to capital markets as intermediary. These are the institutions that are regarded as counterparts of banks in the capital market in the function of intermediation in the process of resource allocation (Subramanyam, 2004, p.72)

Need for Quality Assurance in Investment Banking

Williamson (1988, p.55) stated that investment banking has been and will continue to be an increasingly intensively competitive business in order to strive in the market which is mainly dominated by the changes as part of strategy in the capital and  securities industry. The changes in the market include emergence of institutional investors, internationalization, innovative technology enabling investment banks and their customers to organize and distribute information, increasing complexity, and capital market capabilities are replacing institutional intermediating capabilities making the commercial banks increasingly active in investment banking. Quality assurances are essential in order to retain the customers on hand which shall be the top priority for any organization as they are the main source of revenue and to attract more customers with quality assistance in banking services. The assurance of quality in service sector brings the customer back to make use of the services and recommend the same to others which means increased rate of profit. Therefore quality assurance is essential in banking sector and especially in the investment banking sector.

Quality Assurance in Investment Banking

Quality Assurance is a new topic that is been applied in banking industry that has been accorded the responsibility to evaluate the performance of system and practices and also suggested changes in the existing practices to improve quality assurance. The process of evaluation regarding the quality assurance in investing banking is initiated with the identification of suitable methodology with definition of goals and objectives of the organization (www.sbp.org.pk). The process is essential in investment banking as investment banks have unique role to play in bridging the worlds as mainstream investors manly rely on the quality assurance of the investment banks (Rhyne, 2009, p.51). In view of the importance of quality assurance in the investment banks, the process is carried out to strengthen the procedure and standards at corporate level, promoting efficient utilization of available resources so that different functions are carried out in an expeditious and cost effective manner and make recommendations for enhanced customer satisfaction. Initially quality assurance will be started by following three pronged strategy i.e. (i) develop the system, (ii) document the system, and (iii) analyze the feedback and make further recommendations (www.sbp.org.pk). Quality assurance is at its best at the times of negotiation with with single investment banker and stronger when registered in traditional manner instead of shelf registration (Williamson, 1988, p.69). According to Turnbull and Moustakatos (1996) service businesses can grow in various ways by retaining the existing customers and attracting new customers through great quality and eliminating the redundancies by the way of terminating the services of unsatisfactory customers and providing  services to new customers.. Further to clarify the scope of quality assurances to the customers in investment banking, reputation of the bank is important in terms of providing advice, integration, orientation and range of products and services offered that act as the major source of retaining and attracting the customers. Investment bankers seek to cultivate an image of competence and quality which is especially important in a competitive professional service business (Eccles and Crane, 1988, p.69). Neely (1999) states that quality assurance is achieved by managing the quality assurance activities system, quality control diagnosis, innovation, improvement, inspection, quality evaluation and audit, infrastructure, assistance in product usage, recycling,  customer satisfaction, reliability, safety, product liability and environmental protection. In order to provide all the facilities mentioned hitherto, quality assurance should begin at each level purely undertaken and supported by the quality assurance team and its members (Gillman and White, 2001, p. 215).

And of late, Total Quality Management (TQM) principles are in practice in most of the successful organizations which also lays down the principles in providing qualitative services to the customer. The TQM principles designed by various researchers are being adapted by many service industries to provide quality service to its customers or clients. It is important to note that the principles are more effective in service sector organizations than in any other firms necessitating the need to integrate the principles in the investment banking to provide quality services to its customers and achieve greater customer satisfaction (Cowling and Newman, 1995). Managers are required to be sensitive to different demands and needs when developing their operational, human resources and marketing strategies with a view to improving the quality of service they offer to their customers as they are willing to pay for better premium services (Spathis, Petridou and Glaveli, 2004). The increasing expectations among the customers, existing and those coming to the bank in search for better service than others in the industry has created a competitive climate thereby laying the impetus on quality of the relationship between the customer and the institution. There are various methods which can be used to ascertain the determinants of the concept of service quality as well as quality measurement techniques (Joseph et al, 2005). Quality is an important aspect in any industry, offering products or services, to attract new customers and retain the existing ones. And providing assurance about the quality is need of the hour for every business. As investment banking is a service oriented business with most of the profits coming through the investments in businesses and acting as consultant to many businesses, it is necessary that investment banking adopt suitable techniques, theories and principles related to quality assurance for customer satisfaction and retention.

Conclusion

The banking sector is growing day by day with new and complex services offered to the customers by various banks to strive in the competitive market. The whole gamut of business is surrounded with one aspect i.e. customer service. Therefore quality is important while providing service to the customers as any soar experiences will result in loss of customers as well as business. It is mentioned that investment banks must improve and emphasize various service dimensions resulting in better quality service. However it is important to mention here that just offering qualitative service is not sufficient but to assure the same service and much better service in the coming future is necessary for the investment banking which deals in higher segment as compared to commercial banking. As mentioned earlier, apart from acting as banks, the investment banks also engage in consultancy services providing assistance in financial and company matters. Basing on this, most of the companies turn towards the banks for suggestions and providing right advice at the right times demonstrates that the bank is reliable financial adviser and is able to meet the clients expectations. Moreover it is important to provide service far better than expected by the customers during the service process by being responsive, approaching the customer to help inspiring confidence, and adopting an institutionalized approach (Turnbull and Moustakatos, 1996). Service quality is being recognized as one of the key strategic value which aims to provide better service in order to retain the existing customers by providing optimum satisfaction, opportunities for cross selling, development of customer relationships, increased sales and market shares by attracting new customers all of which ultimately enhancing the corporate image and business performance (Joseph and Stone, 2003). In view of the above benefits associated with quality assurance in various organizations and particularly in investment banking, it is an integral part of the management process to achieve the goals and objectives of the investment banks. Thus quality assurance is an important element in attracting customers or client in the investment banking sector.