Merchant Banks

Unlike commercial banks who caters to the needs of the common man whereas merchant banks cater to the needs of corporate firms.

Merchant Banking is typically the provision of guidance and service to corporate for a fee, which can help an entrepreneur start a new venture, raise capital, expand and modernize the existing business, restructuring a business or help companies register, buy and sell assets (shares) at a stock exchange.

What are Merchant Banking Services?

Project Management: Merchant bankers prepare project reports to analyse the financing patterns to evaluate the cost of a project and appraising the same with financial institutions.

Management of Debt and Equity offers: One of the major functions of a merchant banker in India is assisting companies in raising funds from the investors. The main services offered are,

• Product designing
• Pricing
• Registration of documents
• Guaranteeing support
• Allocation and refund
• Manage Stock exchange listing

Management of Issues: These bankers play an important role in the management of issue that involves the marketing of corporate securities like equity shares, preference shares and bonds offerings to the public.

Merchant banks act as a middle man in aiding transfer of capital from investors to their client. Per the SEBI guidelines in India, a merchant banker in India, organizes meetings between the company representatives and agents to settle arrangements related registration of prospectus, launching advertising campaign and fix board meetings to pass necessary resolutions. These bankers also consult companies in the Pricing of issues. The merchant bankers also provide Underwriting of Public Issue (not exceeding 15{e93d613b5bfbcacd9240b0477fe4b44605044616d0c32a29e53ab795ee8ca82f}).

Client Portfolio Management: Managing a diverse array of securities such as shares, bonds issued by different companies to ensure maximum return with minimum risk.

Placement and distribution: These bankers assist in the allocation and distribution of securities through the merchant banks institutional and retail network.

Corporate Restructuring: These bankers act as the middle agents in negotiations between the two companies and assisting the management of its client for various to restructure activities such as mergers and acquisitions, divestitures, management buyouts, joint venture and more.

Off Shore Funding: The merchant bankers help their clients manage joint ventures, foreign currency investment and foreign collaboration arrangements.

Loan Syndication: Merchant bankers assist clients in getting term loans for projects, obtainable from a single development finance institution, a syndicate or a consortium.

Corporate Counselling and Advisory Services: Corporate counselling is a comprehensive package of all merchant banking services, such as project counselling, restructuring, issue management, loan syndication, etc. Merchant bankers also offer their corporate customer’s customized solutions to financial difficulties along with attempts to refinancing alternatives, evaluating cheaper sources of funds.

Financial Technology

Better payment systems – this type of technology can make a business more accurate and efficient at issuing invoices and collecting payment. Also, the more professional service will help to improve customer relations which can increase the likelihood of them returning as a repeat buyer.

Rate of approval – many small business ventures are starting to use the alternative lenders like those involved in financial technology because it has the potential to increase accessibility and speed up the rate of approval for finance. In many situations the application process and time to receive the capital can be completed within a period of 24 hours.

Greater convenience – the companies involved in financial technology make full use of mobile connectivity. This can significantly increase the number of people who can access this type of service and also increase the efficiency and convenience of transactions. With consumers given the option to use smartphones and tablets to manage their finances, it is possible for a business to streamline its service and provide a better all-round customer experience.

Efficient advice – many of the latest systems rely on robo-advice to give people guidance on their finances. This can be a very quick and low-cost option to get useful information on investments, as well as to limit a person’s exposure to risk. However, this type of service won’t be able to give the most in-depth advice that would come from a professional adviser.

Future of Financial Services

Traditional Wire Transfers

Let us begin by first taking a look at how things have been going on for these past 150 years since wire transfers were first introduced. Transferring funds using a wire transfer method via a bank is not a single step process but a multi-step process. It is like this:

The sender approaches his or her bank and orders the transfer of funds to an account. Unique codes like BIC and IBAN codes are provided to the bank by the sender so that the bank knows exactly where the funds need to be transferred.

The sender’s bank contacts the receiver’s bank by sending a message through a security system, such as Fedwire or SWIFT, signalling it that a transfer needs to be made. The receiver’s bank receives this message, which includes settlement instructions as well, and then asks the sender’s bank to transfer the amount specified in the message.

The sender’s bank now transfers the amount. This is not done in one go but bit by bit, so it can take anywhere from a few hours to a couple of days for the entire sum to be transferred.

To make the transfer, the two banks must have a reciprocal account with one another. If that is not the case, the transfer is made through a correspondent bank that holds such an account.

As one can see, this form of transfer relies overly on a mediator, takes more time than it should, and can prove to be costly as the banks charge some fee for their service. Distributed currencies like Bitcoin provide a viable alternative to this process.

Decentralized Currencies

What sets services like Bitcoin apart from traditional services is that they do not rely on a central mediator but rather operate using cryptographic protocols. The process is therefore faster, simpler, and much more efficient. The system is quite transparent to both end users as well while traditional systems are susceptible to fraud due to the complex process involved.

However, there is a downside to this too. With services like Bitcoin, it is simple to trace a transaction back to each unit value’s creation.

Solution? A Common Ground

More and more people are opting for services like Bitcoin and peer-to-peer mobile transfers, where a network operator could help users transfer funds by simply sending an SMS. Although these are indeed more efficient, they are a long way from global acceptance because there are many who still do not have bank accounts, plus there is the issue of limited user identification in such services.

What would be ideal for everyone is if banks could tap into the potential of decentralized currencies and overlap the source code of services like Ripple on their existing system to form a hybrid of the two. It would kill two birds with one stone as:

Decentralized currency systems provide more efficient transfers

Bank systems ensure only registered users access the service, taking away the possibility of foul play.

Qualify Leads And Prospects

You should invest your money and time only after qualifying someone. Only then you should start selling the service or product to the prospect.

If you are not quite experienced you will jump at the given opportunity without properly studying the prospect. What happens here is you are trying to selling something on an assumption without the proper background check. It may or may not culminate in sales. Only mindless salespeople will do this kind of marketing and they will end up losing their energy and time chasing wrong leads.

Instead of talking all the time, try to listen to your prospect. Then you will understand whether he/she is a qualified prospect. If you listen to them your chances of selling will be much higher.

Spend time on qualified prospects, and you’ll achieve significantly more costly deals.

Even if you get a qualified lead you must put in a lot of effort to make him/her your customer. You must know all about your valuable prospect or else you will miss an opportunity to sell your product or service to them.

If you end up selling a product to a wrong customer or to people who should not have bought your product, it is not just bad for the customer but bad for you and your company.

To find a quality lead you must know how to evaluate a prospect. For instance, you must know what their drawbacks are. How have they evaluated your solution? What type of an organisation they belong to? These details are essential to personalise your pitch for your prospects.

Know their pain points and also about their organization and personality. If a salesman is not able to close a deal it shows that he did not know all the important details about his prospect and hence he did not properly qualify as lead.

Ask as many questions as possible to your customer and gather the correct information. There are certain qualifying questions which every salesman should be aware of. We list out the most important ones.

Customer profile

A prospect should match your ideal customer profile. How big is the company? What industry are they in? Where are they located?

Needs

You must know your customer’s needs to qualify the prospect. And you should know how to fulfil their requirements and requests. You should have an idea what result they are aspiring for, and how the result is going to impact their company or team.

Decision making process

You should also know how they make decisions and how many people are involved in the decision-making process. Are they impulsive buyers or do they take time to buy products?

For instance, some companies take almost a year to purchase products. But if you have a sales target to achieve in the next four months then they are not your qualified prospects.