THE IMPACT OF UNIVERSAL BANKING CONCEPT IN FINANCIAL SERVICE DELIVERY (A CASE STUDY OF FIRST BANK OF NIGERIA PLC, OKPARA AVENUE, ENUGU)
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THE IMPACT OF
UNIVERSAL BANKING CONCEPT IN FINANCIAL SERVICE DELIVERY
(A CASE STUDY OF
FIRST BANK OF NIGERIA PLC, OKPARA AVENUE, ENUGU)
ABSTRACT
The project addressed itself with the
evaluation of impact of universal banking concept in the financial service
delivery of Nigeria with emphasis of first bank of Nigeria plc. Both primary
and secondary data were collected to solve the research problem. The population
of study comprised of the personnel of first bank of Nigeria, customers of the
bank and officials of the central bank of Nigeria. The research instruments
used for data collection were questionnaires and oral interview. tables,
frequencies and percentages were used in presenting and analyzing the data
collected. from the data analysis, the researcher came up with the following
findings, among others: that universal banking scheme has led to the creation
of level playing field for operators in both what was then the merchant and
banks sub – sector as well as eliminating the dualism that typifies the
industry. That universal banking scheme has engendered significant economies of
scale for the financial industry in general and first bank plc in particular.
The research thereby recommend that thought universal banking has its
bottlenecks, the first bank of Nigeria Plc, should evolve policies to sustain
the improvement recorded so far.
TABLE OF CONTENTS
Chapter 1; INTRODUCTION
Background of the Study
Statement of
Problem
Objectives of the
Study
Scope and Delimitation of
Study
Research
Questions
Significance of the
Study
Definition of
Terms
CHAPTER
2: REVIEW OF RELATED
LITERATURE
CHAPTER
3: METHODOLOGY AND RESEARCH DESIGN
Research
Design
Area of
Study
The Population and Sampling
Technique
Types and Source of
Data
Research
Instrument
Reliability and Validity of
Instrument
Method of data
Collection
Method of Data
Analysis
CHAPTER
4: PRESENTATION, ANALYSIS AND
INTERPRETATION OF
DATA
CHAPTER
5: DISCUSSION, IMPLICATION AND
RECOMMENDATION
Discussion of Result
Conclusion
Implication of the
Result
Recommendation
Suggestion for Further
Study
Limitation of the
study
References
CHAPTER
1: INTRODUCTION
Background of the
Study
From 1891, when the first banking
institution was established in Nigeria to 1986 when the Structural Adjustment
Programme (SAP) was introduced, banking practice was essentially regulated with
clearly defined functions both commercial and merchant banks. With SAP,
improved policy environment triggered off an unusual increase in the number of
banks registered in the country.
The genesis of universal banking in
Nigeria can be linked to the distress syndrome that has characterized the
banking industry due largely to deregulation which led to the expansion and
stiff competition among the existing banks and new entrants. The ensuring
struggle by individual banks for survivals and growth, also contributed in no
small measure. Like a drowsing person catching any straw many banks had
agitated for widening of their scope, the belief that the wider the scope, the
larger the room to maneuver ability to generate activity and opportunity to
maximize profit or minimize loses.
Successive policy aimed at relaxing the
regulatory framework further, saw to the removal of hither to rigidly
entrenched dichotomy between the operations of commercial and merchant banks.
Apparently, in a bid to fine – tune the financial environment the playing field
became more roughed or event more unrealistic when merchant banks were required
to maintain a minimum of 20% of their total credit in medium to long term
category in an environment characterized by short term deposits. These
categories of the banks were also not allowed access to the clearing house
because of their lack of checking facilities. Merchant banks also lacked access
to CBN over draft facilities due to their non participation on the clearing
house activities. They were also not allowed to mobilize small savings.
In making a case for merchant
banks, it has been alleged and loudly orcheritrated by some that the better
performance of commercial banks derive from their direct access to cheque
clearing facilities and large idle funds of customers who maintain their
interest free or low earning balances with commercial banks. On the other hand,
commercial banks, acting in reprisal, challenged the exclusiveness of the right
of merchant banks to capital market of activities, which visibly provide
risk-free fee income. Valid as these argument are proper consideration should
be given to the pre-requisition for effective take off of universal banking,
that is, an analysis of the existing and additional resources that are
requisite for effective delivery of omnibus services, especially if practice of
universal banking should become a reality in Nigeria. These resources include
financial, infrastructural and human capability, suitability and adequacy.
Essentially, the failure of macro
economic management policies that have heated up the financial system. Lent
credence to calls for over haul of the financial system through total
liberation of institutions and functions. The totality of the hostile
operational environment and the growing trend towards globalization and
financial liberation led to calls for the introduction of universal banking in
the country.
Universal banking, traditionally
believed to have started in Germany in the 1850’s had spread to most of
continental Europe where banks now pose as supermarkets for financial service
in leading financial centers of the world.
A
Brief History Of First Bank Of Nigeria Plc
First bank of Nigeria Plc for over a
century has distinguished itself as a leading financial institution and a major
contributor to the economic advancement and development of Nigeria.
The bank was incorporated as a limited
liability company on March 31, 1894, with head office in Liverpool by Sir
Alfred Jones, shipping magnate, it started business in the office of elder
Dempster & company in Lagos under the corporate name of the bank for
British west Africa (BBWA) with a paid up capital of 12,000 pounds sterling,
after absorbing its predecessor, the African banking corporation, which was
established earlier in 1892. in its early years of operations the bank recorded
an impressive growth and worked closely with the colonial government in performing
the traditional functions of a central bank, such as issue of specie in the
west Africa sub-region.
To justify its west African coverage, a
branch was opened in Accra, Ghana in 1896 and another in Freetown, Sierra Leone
in 1898. These marked the genesis of the banks international banking
operations. The second branch of the bank of Nigeria was in the old Calabar in
1900 and two years later, service was extended to Northern Nigeria.
To reposition and take advantage of
opportunities in the changing environment, the bank had at various times
embarked on restructuring initiatives. In 1957, it changed its and from bank of
British West Africa. In 1969, the bank was incorporated locally as the standard
bank of Nigeria limited in the with the companies decree of 1968. Changes in
the name of the bank also occurred in 1979 and 1991, to first bank of Nigeria
limited and first bank of Nigeria Plc, respectively. In 1985, the bank
introduced a decentralized structure with five regional administrations.
Statement of Problem
The agitation for universal banking
began when some merchant banks sought permission from the central bank of
Nigeria to convert to commercial banks in response to what they perceived as
skewed structure of the banking industry, which in most cases favoured
commercial banks. This and other factors led to the demand for a level playing
field and a clamour for universal banking in Nigeria.
Merchant banks formed a lobby group for
years to press for this system so that they can compete favourably with the
commercial banks that they see as having undue advantage over them. The CBN for
so claiming that some requirement like sustained macro – economic stability,
effective regulation of the distress in the banking system and beefing up the
capital base of banks have to be met and fully put in place for the concept of
succeed.
However, the CBN in its 2000 monetary
credit, foreign trade and exchange guidelines stated that it has reviewed the
operational environment for universal banking and has therefore approved the
system in principle.
Since then, a lot of activities have
take place in the financial system in Nigeria that an in-depth study is
required to bring to the fore, the impact of universal banking in the financial
service delivery in Nigeria. This is the statement of the problem.
Objective of the
Study
The
study has the following objective among other achieve: to highlight the
·
Relevance of universal banking system in Nigeria
·
Impact of universal banking on the financial service delivery in Nigeria
·
Regulatory challenges of the adoption of universal banking on monetary
authorities.
·
Emerging trends on universal banking system in Nigeria.
Research Questions
The following research question will be
administered for the purpose of the study.
·
What are the benefits underlying principles of universal banking
·
What are the benefits derivable from the adoption of universal banking system
·
What are the operational modalities of the UB system
·
What are the likely regulatory challenges imposed by the adoption of UB system.
·
What are the likely impact of UB system in the financial service delivery in
Nigeria.
Significance of the
Study
The
study will be relevant to
·
Monetary authorities in repositioning themselves strategically for the
challenges of universal banking system
·
Operators in the Nigerian financial system to avail themselves of the full and
symmetric benefit of the universal banking system
·
Academic community as a good base for further study on the universal banking
system.
Definition of Terms
The following terms are defined in
context of the research study.
·
Universal banking: This is a system or an arrangement where financial
institution can offer, either directly or through a subsidiary the entire range
of financial services.
·
Universal banks: These are financial institution that can act as a supermarket
for the delivery of the whole range of financial services.
·
Deregulation: This implies the removal or dismantling of regulation or
minimization of control and the enlargement of free enterprise.
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