Dr. Moyi Harry Ruben
Banking concept has been evolved since the rapid development of information technology.
Nowadays almost all over the world, retail banking concept is well-orchestrated name which has indeed added a new feather to the games of banking lexicon. The introduction of retail banking in globally has led the banking industry to the doorstep of embryonic prospects and potentials. Consequently, several local and foreign banks came in this or that country to get abundant benefit for their financial betterment.
In recent years, the banks are aggressively pursuing their marketing strategy to take hold of new segments with purpose to discover new opportunities because of the tremendous market competition that makes the companies feel constantly improving their business profiles. Thus, innovative products and services in the market are remarkably increasing. Consumer loan, credit card, online banking, mobile banking, ATM card, Internet facility Banking etc. are some of the outcomes of this continuous innovation and improvement.
The technological innovations make the consumer more knowledgeable and to persuade them to put more thinking in their buying decision. With the involvement of foreign and local banks, the competition is on its peak. So, only improving the product is not enough to be competitive in the industry. Enhancing the service quality is also becoming very important.
There are abundant opportunities present in the monetary industry, but it needs only continuous upgrading and customer orientation to be able to avail those opportunities to a broad degree.
In the recent years, Banking Industry has seen a considerable growth. Significant numbers of investors are becoming interested to invest their money in this sector. Besides, the local banks, foreign banks are continuously competing for the opportunities established in this industry. The profit-making driver stimulated by the ampleness of opportunities has determined that the banking industry is in an unstable state. The industry’s profits have declined over the last few years mainly as a result of bad debt resulting from the loan advances issued under highly inflationary economy, i.e. that loan interest rate is 24% and the inflation rate is 105% in this scenario the Bank has a loss of 105-24= 81%. Also, the other issues as well as the recent global economic downturn. With many competitors, competition has increased in recent years to attract younger customers who historically have less loyalty towards banks as a result, customers tend to keep their money in the houses instead of banking them. This contributes to Banking cash crisis in the country, this does not mean these institutions do not have money but what is currently is temporary cash crisis not insolvency of these financial institutions.
The issue of dollarization (meaning any country that uses other country’s money other than its own) is making it difficult to solve some of these simple problems. For example, the difference in wages structure in the country provoke high prices in the market, ie. Those earning simple $ 100 = 600,000 SSP and those earning at least SSP 300,000 = $ 50 Dollars. In Sudan, the wages were re-aligned so that one part of the economy do provoke the rise in prices, (the question we need to answer is why we are using dollars. Other than our local Currency?), it is only a foreigner who need foreign currency when he or she wants to go home, so we need to love ourselves and you cannot love yourself when you do not love your currency, because the country cannot be without currency of its own, representing the pride (self-importance) of you and your country.
The current situation may lead to Bank Run, where there are no more deposits but withdrawals, causing more liquid cash shortages, then may lead to the closing of some of the Banks if solution is not immediately resolved.
The provision of cash to the Banks is the responsibility of the Central Bank, because all notes and coins, is a liability for the Central Bank that can be redeemable on demand by the Central Bank.