A bank service helps to distribute resources of a nation from a high concentrated area to a low concentrated area, to facilitate national growth and development. But numerous external forces shape the market of bank service (Zeithaml, Bitner, and Gremler, 2009)). The service is affected by economic, technological, demographic, socio-cultural, political and legal factors. The level of prosperity, changing levels of disposal income, inflation rates, stock market performance, the rate of unemployment, shortages of raw material – all these affect the packaging and delivery of a bank service. The combination of interest rates, consumers’ short term and long-term expectations concerning its direction as well as the general level of competition create marketing challenges for the bank service. Education and occupation have a definite relationship with social class and consumer banking behavior and government exerts some amount of influence on bank service in order to protect consumers, the economy and other related entities through different regulatory frameworks. All of these put together affect the bank service. Most of prudential regulation of banking was predominant in United States in the mid – 70s emanating as a result of the single-office banking system and traumatic experience of bank failures, particularly during the great depression of the 1980s. And when addressing the Lombard Association in April 1987 on the Central banking origins of the bank’s supervision, the deputy governor of the Bank of England said he never remembered hearing that word ‘supervision’ used in the bank before 1974. The traumatic experiences of the fringe banking crises and bank failures of 1973/74 in the United Kingdom and the similar crisis and failure in the highly regulated banking system of Europe and America further enhance bank regulation all over the world, thus banks regulation becomes a prominent factor to envisaged and build into banking operations in order to survive. Nigeria is not different, the bank failure of 1990 – 1994 and recapitalization policy of December, 2005 and the toxic loans saga of 2009 have affected the practice of banking. Adding to this is the fact that banks have gradually realized that due to the presence of globalization and changing technology there is dire need to overhaul their payment and service delivery systems and operations so as to prosper in the new millennium. Based on the foregoing, it becomes paramount to advance a conceptual framework that would serve as a guide to position the bank service in this turbulent environment of operations.
INTRODUCTION TO BANKING SYSTEM
A bank is a financial institution and a financial intermediary that accepts deposits and channels those deposits into lending activities, either directly or through capital markets. A bank connects customers that have capital deficits to customers with capital surpluses. Due to their critical status within the financial system and the economy generally, banks are highly regulated in most countries. Most banks operate under a system known as fractional reserve banking where they hold only a small reserve of the funds deposited and lend out the rest for profit. They are generally subject to minimum capital requirements which are based on an international set of capital standards, known as the Basel Accords. A bank is a dealer on debts, and its raw material is money. it is engaged in financial intermediation, i.e they serve as a unit between provider of money and user of money. we therefore refer to banks as financial intermediaries ; thus, they fund consumption, business expansion e.t.c. A bank is a financial institution, and it must be duely lincensed before it can be established. The history of banking is closely related to the history of money but banking transactions probably predate the invention of money. Deposits initially consisted of grain and later other goods including cattle,...
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