Which one of the following characteristics of a bank with wide retail operations is INCORRECT?

Gamma Bank has a significant number of retail customers and finds its balance sheet shape and structure difficult to manage.

Which one of the following characteristics of a bank with wide retail operations is INCORRECT?
A . Banks with a wide retail base are typically driven by contractual obligations and not simply relationship considerations.
B . Attracting and retaining customers often involves offering retail products whose features are different from wholesale market products.
C . Pricing of retail products often has more to do with marketing considerations rather than prevailing market price.
D . The way retail customers behave in relation to the retail banking products they hold often results in the apparent contractual obligation of the parties providing a poor description of the actual nature of the obligations.

View Answer

Answer: A

Explanation:

Banks with a large number of retail customers often face complex balance sheet management issues due to the varied behaviors and preferences of retail customers. While attracting and retaining these customers often involves offering products with unique features, it is also true that the pricing of retail products is influenced more by marketing considerations rather than prevailing market prices. Additionally, retail customer behavior often deviates from the contractual terms, making the management of such operations challenging. Therefore, option A is incorrect because retail banks must balance both contractual obligations and relationship considerations.