New Products Developed in the Nigerian Banking Industry – Problems and Prospects
New products are the products that are introduced newly into the banking industry to enhance or facilitate bank services to both customers and bankers. It is reviewed that the development of new products in the banking industry will facilitate the attraction of deposit and increase the pooling together document capital in the economy.
According to Ukemenam (2001). Banking operation is the business of receiving funds from outside sources as deposit irrespective of money loans and acceptance of credits or the purchase of bills and cheques, or the purchase of sales of obligation to acquire claims in respect of loans prior to their maturity.
According to Chukwuemeka (1996). Banking operation is the acceptance of deposit and collection of cheques and other instruments on behalf of customers.
According to Orjih (2001) stated that the performance of banking system and the new product is measured not only by the number of variety of services produced but more importantly by the speed, efficiency and safety with which those services are provided. Bank ability to respond quickly to the demands of the financial system, the competition, the sophistication of customers demand, and the complexity of operations have included a number of technological developments in the Nigerian banking industry.
The ability of these new product, produced in the banking industry to meet customers needs and facilitate their satisfaction determine their efficiency.
THE NATURE OF THE NEW PRODUCTS IN THE BANKING INDUSTRY.
SMART CARD SYSTEM
Smart cards are small piece of plastic devices (measuring about 86.6mm x 53.98mm x 0.76mm) with embedded integrated circuit and used as payment instrument for numerous financial schemes. The power of smart card lies in their ability to store and manipulate data, to handle multiple applications on one card to perform secure transactions. Smart card are now part of the emerging world of net work based computing with the ability the authorize access, by either, to encrypt all the messages going over a network from an internet terminal with the cryptography chip being placed on the card. The “smart card system allows people to pay for goods and services without physical exchange of cash. These cards are accepted for payment in major supermarket, restaurant, petrol stations and can be used to collect immediate cash in the bank.
In Nigeria, smart cards were first introduced by all states, Trust bank but of recent, a group of banks have come together an formed a company with the objective of establishing a smart card services delivery system or the financial industry.
INTERNATIONAL MONEY TRANSFER
This is a global network system of transferring money from one country to another. This product bears different names in different banks but the main idea is to produce succor to relating and friends in Nigeria and other national as the service offers trusted solution to receiving money from oversees in minutes. The uniqueness in this product lies in the fact that it is not necessary for customers to enjoy the service.
EDUCATION SCHEME
This is a product primarily designed to motivate repository by ways of award of scholarship to their children or wards. The way they are operated differs from one bank to the other. The general idea is to enable parents and guardians save towards meeting the educational needs of their children and wards.
INTEGRATED BANKING
This is another product designed for customers in carrying out business transaction in different locations in the country. This products techniques allows account holders to transfer, withdraw or deposit funds in any of a bank branches, irrespective of the branch. Where the account is domiciled. This on-line, real-time system relieves customers of the cost associated with traditional money transfer method and eliminates the inconveniences and insecurity associated with carrying large sum of money.
The above serve as the summary of the numerous products although, the exist in banks and their name differs from one bank to another but this new products is essentially to at least meet some particular needs of customers source NDIC quarterly (2001).
INFORMATION TECHNOLOGY
According to Okafor (2000) the technological innovations being introduce in the industry have entirely changed the banking landscape and now constitute a strong marketing tool that assist banking to retain and attract new customers. As the Central bank of Nigeria had set June 1999 deadline for all banks to comply with the year 2000, millennium bug, banks have to acquire new computing tools that are 2000 (ysk) compliant and up grade their existing computerization facilities to make its entire operation comply with the millennium. There are many information technology in the market today, among the flexible and globus are prominent. Flexicube software has to do with full compact application including retail banking off and on the internet banking globus is a new integrated on-line real time banking, application software, it is internationally used banking package that caters for both retail and wholesale banking. It has features and functionalities that meet the requirements in diverse areas of banking. The system (globus) runs on universe, a post relational data base management system which is acclaimed to be very flexible and robust. Some of the major features of globus are ability to give service to customers in a very short time, high degree of accuracy which this eliminate customers complaints or interest calculation and its also incorporate imaging technology thus ensuring instant identification of account holder with the intended drastic reduction of waiting time.
Basically, information technology (IT) is the corner store of bank’s operation in the modern day time and that is why establishment of an department is indispensable for a bank that really want to withstand the competition in the industry nowadays. The primary responsibility of such a department is to provide information processing capacity in a timely, cost effective and accurate manner for sound financial judgements by banks personnel. Information technology had in the past been the prerogative of computer professionals in our banks back office but because modern day business needs, require information technology in the front office an at the finger tips of the banks’ personnel to enable them provide and information technology to their front office.
The importance of computerization visa viz information technology to modern banking cannot be over emphasized, with the aid of information technology, customers can access their balances and review their accounts online and on real-time basis through the banks client link facility. Also customers can deposit or with draw from any of a bank’s branch irrespective of where the account is domiciled, messages can be transmitted to any branch or individual within a bank through a banks wide area network within a second.
GLOBALIZATION OF BANKING INDUSTRY
Unlike past years, banking is no longer localized. This is because the whole would have become a global village due to many factors. With the development of information technology bank customers become more informed and very sophisticated in their demand for banking services.
A definition of globalization as provided by the International Monetary Fund (I.M.T) is that, it connotes the rapid integration of economic worldwide though trade financial flows, technology spill over, information networks, across cultural current. The services sector to which the banking industry belongs ha always been global by its very nature.
According to Ezeuduyi (2000), globalization has contributed to the popularity of universal banking even in economy that do not use the term universal banking, but practices it though partial or complete removal of the difference among the various banks which Hilherto specialized in a narrow range of banking services. Globalization has contributed to the development by motivating the use of information and computer technology, which has integrated the world economy to initiate the best practices else where. The reality today in that any service that can be successfully digested and transmitted can be produced and offered almost anywhere particularly with the advancement information technology within developed country of the North where economic and political integration has removed substantially, territorial boundaries. The question for many banks is no longer whether to enter the global but has to compete in it most effectively.
THE CONCEPT OF UNIVERSAL BANKING
It will be grossly inadequate to research on effective counter service in the bank without discussing the concept of universal banking and globalization and their effects of banking industry.
According to Boniface (2002), under universal banking, authority is given to a bank to decide on its own portfolio of business, select appropriate delivery channels and infrastructure with an applicable regulatory from work. The distinction between money, capital market and insurance business is removed from a broader perspective, universal banking permits financial and commercial. Linkage such that commercial concerns can own banks (down stream linkage) or banks own commercial enterprises (up stream linkage) Saunders and Walter (1999) define universal banking as the conduct of a range of financial instruments ad foreign exchange an other derivatives, under writing new debt and equity issues, brokerage service, investment management and insurance.
According to Akingbola (2000) universal banking simply connotes collapsing the various regulatory director that separate commercial and merchant banking activities. In other words, it is all about creating a level playing field for both commercial and merchant banks.
Conventionally, merchant banks are to carry out wholesale banking while commercial banks are to carry out retail banking but with the later development in Nigeria banking sector, both commercial and merchant banks are to decide which service to render. Before, now, many banks had prepared for universal banking by putting in place necessary conceptual frame work. For its operation. With the approval now said to have been given by the government to the operation of universal banking in the country, the banking field is now level for all banks and this will no time make many banks to want to distinguish themselves from other through introduction of these special products.
PROSPECTS AND PROBLEMS OF THE NEW PRODUCTS IN THE NIGERIAN BANKING INDUSTRY.
In the present day banking in Nigeria, a lot of techniques are used by banks to facilitate customers services and customers satisfaction, this had led to introduction of new products in the banking industry. These innovation are mainly due to diversifying business environment, advancement in science and technology, the coming on stream of new generation banks, competition and the ever increasing customers demands. Customer needs always increase on daily basis therefore the banks have to adjust to meet up with this growth in demand. The effect of all these in the banking industry is that Nigerian banking have seed-off their conservative out look and they have put in place techniques essential for fill service delivery.
According to the information gathered from the manager of First Bank Plc, Enugu main branch at Okpala Avenue, stated that the prospects and problems of new developed or development in the Nigerian banking industry are as follows.
PROSPECTS
- All the New products in the banking industry today revolve around electronic banking and information technology, many of Nigerian banks have acquired electronic devices which are the hall mark of money markets in developed world.
- The advantages of electronic banking to customer are enormous and they include retrieval of account balances from the customers’ choosen location, account transaction history, fund transfer and ordering of bank statement of accounts.
- With greatly improved technological breakthrough, electronic banking has been further enhanced with the introduction of internet banking internet banking has increasingly become a major distribution channel of bank services and products in these our millennium.
- It has helped comfortably with electronic payment system as well as holds the promise substantially reduce he cost of banking transactions.
- It has increased customer patronage and generated increase in profitability of the banks.
- It reduces the rate of carrying cash around.
- The products has been able to satisfy customer to a very high level, that is, it is convient for customers.
- Internet banking and other new products which are being propelled by information technology have the potentials of revolutionizing old patterns of conducting business in the banking industry commonly.
- It has helped in fastening daily banking operation.
THE FACTORS PROBLEMS THAT IMPEDE THE EFFICIENT DELIVERY OF THIS PRODUCT ARE AS FOLLOWS
- Inadequate infrastructural level and the cost of installing them is a ban that impede the efficient delivery of the products.
- Poor telecommunication network and elastic supply of electricity is another problem that inhibit the efficient delivery of the New product. The delivering of this new product depends to a great extent of NEPA and NITEL because the transaction which involves the new product rely on transfer of messages. The transfer of information depends on NITEL and NEPA therefore, the inefficiency of these two body has effected the efficiency of the products.
- Most people are not aware and those who are aware, do not have proper understanding of some of the product in the market. This is particular common to smart card transaction. People don’t have proper understanding of the product ad this is caused by the level of our economy.
THE REVIEW OF OTHER RELATED COMPLETED RESEARCH WORK
There have been several works carried out which are related to the nature, problem and prospects of the new products developed in the banking industry. These works had appeared either as studies or in literature.
Adeyemi, (1998) in his research write on the new products developed in the banking industry” he selected some of the new product developed in the banking industry which he used in formulating both object and research questions. He also highlighted that the introduction of the new product has improved the profitability of the banks and the level of satisfaction derived by the customer without emphasizing more on the prospects.
Orjih, (1998) in his text wrote on “the new techniques and products for effective banking operation” stressing the banks ability to respond the complexity of operations have induced a number of technological development in the Nigerian banking industry.
Edith, (2000) designed her research to find out the reasons for the development of the new products in the banking industry. She listed some of the reasons that induced new products in the banking industry, increased customers. Demand, operation expansion etc. she used these in formulating her objectives and research questions while the researcher in her study combined both the nature, problem and prospects.
SUMMARY AND JUSTIFICATION
Although, many have written some topic related to this study, through which the researcher has made great efforts to deduce her topic, “The Nature problems and prospects of the New products developed in the banking industry”. The researcher finds her work still justified because inspire of the fact that some highlighted, some of the importance of the new products in the banking industry, they did not go into details in discussing these prospects. Also the researcher includes the Nature and the problem of these new products in the study.
In other words, the researcher in achieving this prepares questionnaire, conduct interviews, formulate hypotheses using X2 in testing it in order to have some findings, suggestion and conclusions.
—-This article is not complete———–This article is not complete————
This article was extracted from a Project Research Work Topic
“AN EVALUATION INTO THE NATURE PROBLEMS AND PROSPECTS OF THE NEW PRODUCTS DEVELOPED IN THE BANKING INDUSTRY 1990 – 2003.
(A CASE STUDY OF FIRST BANK PLC, ENUGU)”
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New Products Developed in the Nigerian Banking Industry – Problems and Prospects
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the topic is good, but why we cannot copy the literature review