M.Com. (Business Management) / The Global Transactions Services (GTS) business unit was established alongside the Rand Merchant Bank (RMB) brand reporting into a Corporate and Investment Banking Board. GTS has been mandated to deliver global cash management, trade and custody services and account services to large corporates in the jurisdictions where FirstRand operates. Technology advances in centralising operating structures, have made it possible for GTS to centralise back office operations to a few locations within the country as witnessed by Global banks like Citigroup. The research problem therefore was to evaluate and identify the strengths as well as shortfalls of the current decentralised operating model versus a proposed approach towards a centralised operating model within the GTS business unit; focusing on investigating whether outsourcing IT operations and technology would create efficiencies, attract skilled employees and technological advancement to the division. Primary objective of the research was to evaluate the current decentralised operating model. Secondary objective was to evaluate the gains associated with implementing a central operating model against the gains currently derived from the decentralised operating model. The findings derived from the study suggest that: (i) There is a misalignment between the business strategy and IT strategy within the current operating model resulting in IT playing a supporting role and not an enabling role in the business strategy formulation and implementation. (ii) The bank does not engage in an on-going activity to evaluate processes, procedures and technology making it difficult to streamline and automate processes resulting in a lot of manual processing. (iii) The bank lacks the internal capabilities required to introduce automated processes which will reduce manual interventions; (iv) Existence of Silos in the business prevent the business from taking advantage of benefits brought about by economies of scale, cross skilling, knowledge sharing, straight through processing and ultimately economies of scope benefits

This dissertation examines two issues in the theory of banking: the role and efficiency of a monopoly bank in a spatial economy and, the design of a deposit insurance contract. Chapters 2 and 3 of the thesis present the development and analysis of a simple production economy with two types of agents. Lenders have an endowment of one unit of a good that may be consumed or invested in a firm. Firms have access to a project but lack the capital necessary to operate it and thus are forced to borrow: firms' projects are identically independently distributed crosssectionally. A simple information asymmetry prevents efficient contracting by lenders and firms and results in deadweight default costs being incurred. One way these deadweight costs could be avoided is to establish a "delegated monitor"—a bank—who collects deposits from the lenders and makes loans to firms. This may result in an efficiency gain since the firms' projects are Ltd. so, as the bank makes more loans, the probability that it defaults will be lower than the probability that an individual firm defaults. This diversification reduces the probability that the bank will fail and the probability that default costs are incurred. However, I assume that these costs are related to distance. This restricts the bank's ability to diversify and may induce costly strategic behavior on the part of the bank. The bank may also lend 'locally' in that it may attract deposits in a region yet not make loans to firms near those depositors. The social welfare implications of this bank are examined in Chapter 3. The results show that the socially optimal outcome is one that restricts the firms' ability to compete with the bank in the debt market and that credit rationing may also be efficient. Chapter 4 examines a model where a deposit insurance scheme is designed by a regulator whose objective is to maximize social welfare. There is a single bank in the economy which can be one of two types: the true type is unknown to the regulator. The results show that the regulator's efficacy is improved when regular insurance premia are combined with a premia that are refunded to solvent banks—akin to a deposit insurance fund. / Business, Sauder School of / Graduate

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