Asset transformation illustrates the process where a firm transforms liabilities that are small-sized into large scale assets. Applying this to the context of a bank, the asset transformation process of WT bank typically means the process of transforming their liabilities, which are individual small-sized deposits at their banks into large-denomination investments and loans. By doing so, WT bank can diversify the risks adequately as they the risk of the large size asset is spread through many deposits by customers. Before going into the specific benefits and drawbacks, it is essential to ascertain the causes of dissatisfaction and satisfaction of customers about the bank’s asset transformation strategy. It is believed that a financial institution’s asset transformation strategy is primarily concerned with optimising the risk-return trade-offs between its asset transformation strategy, which forms a vital part of their investment strategy. It is believed that the customers that are giving bad comments may be thinking that the firm may be too rigid and strict in their asset transformation strategies, reflected by a more substantial focus on investing in liquid assets and even acquired excessive insurance coverage. As a reflection, the bank may seem to be too conservative in their strategy, undertaking less risk, which subsequently led to a lower return for the deposit holder, which is the primary point of dissatisfaction among customers that gave bad comment. However, certain customers may be favoring such asset transformation strategies, as they would not mind the lower return when they can have more peace of mind on how the bank utilises their funds in a less risky way. Therefore, after knowing how WT’s bank’s asset transformation strategy led to mixed opinions from their customer, it became clear that the current customers that deposit their funds will enjoy the benefits of lower risk on their deposits while having to face the setbacks of lower returns on their deposits.
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