Part E Reading

The Bank and the Customer

A bank is a company engaged in banking business.As contemporary banking business includes a wide area of financial services which go beyond traditional banking business, a banker nowadays carries a broader responsibility.

A client or a bank’s customer would be a person or a company who has business dealings with a bank.Although banks provide a wide range of business, so long as the business dealing involves the opening of an account with the bank and any other financial services required by the client, the relationship between a bank and a client is established.

The relationship between a banker and his client is a contractual agreement under which, once an account is established, the agreement begins to operate.One may also view the banker-client relationship as a debitor-creditor relationship.The“creditor” refers to the depositor who deposits money with the bank.The “debitor”refers to the borrower who borrows funds from the bank.

Another broader concept of bank activity refers to the principal-agent relationship.The term “agent” refers to the services that the bank provides to the customer, i.e.,the bank acts as an agent to collect and process customer’s checks and accepts customer’s instructions in providing other services including foreign exchange services, investment advice, financial management and bonds purchasing and selling etc..

The relationship between the banker and the client can be terminated by either party so long as the party which wishes to end the business relation.The closing of an account would be sufficient to provide ground for the termination of the business relationship between a banker and his client.

In the contemporary world, the banking industry is developing significantly in the wake of rapid economic development in all countries and regions.This is particularly true in China.

Commercial banks of different ownerships are fiercely competing for market shares and customers.After China’s banking sector has been fully opened to foreign investors and financial institutions, Chinese and foreign banks compete on an equal footing.In addition to conventional business lines, they have turned out varieties of service products, for example, wealth management service, in order to compete with another for more customers.