THE EFFECT OF GLOBALIZATION ON BANK PROFITABILITY
During the 1980’s to early 90’s delimits the profitability of the bank due to many reasons and banking system which is manually acquiring business and solutions to individual customers. There are different barriers to banking during those times that creditors and lenders may need to visit the banks from far away areas just to apply for loans and other services because of lack of communication process especially from newly industrialized countries. Deregulatory rules and non concrete implementation of law and changes have also occurred from minor banks. Some forms of graft and corruption due to inadequate accounting records, competition are also a reason among others. These factors have been delimiting the bank profitability and stability.
To compete on this new market the banking industry has found a different and more sophisticated ways to enhance the banking profitability in the form of globalization and technology innovation to widen and spread out their marketing engagement and to reach more customers almost instantly. Upon accepting the Globalization and technology, banking have re define itself a new trend, reaching more and more people from all walks of life and expansion of branches has taken place due to increase in profitability. The effect of deregulation claims to withstand expansion and competition thus enhancing the products and services in full use. Deregulation in a single country and across borders, beyond boundaries including international market has taken place due to globalization in other forms of monetary currencies and dollar exchange. This Globalization and technology innovation brought additional transaction from personal to inter connected banking took place. The use of Automated Teller Machine (ATM) allows their customers to instantly transact business in a more specialized and easier manner they can even transact business through markets, shopping malls and buildings using this card even weekends and holidays. Almost all banks are interrelated through BancNet and Megalink and other network system.
The online system is also possible not just by banking system but almost all general service businesses and individual sales people are now joining online transaction and international payment and withdrawal system using PayPal, Alertpay, Clickbank and other banking intermediaries. This allowed customers to strengthen their banking power to identify and compare other services not just in their countries but in the entire world. And bank has been taking advantage of this expansion. Verifying accounts is virtually easy, including the tracing back of history of customers and developing a database of new business partners with the bank and other financial institution has become relatively easy to associate. The use of Credit Cards allow customers to purchase products and services without using cash on hand, the Digital Cash can also be used like a coin bank.
Bank transfer from around the world is just as easy as going to the bank, even online credits. Although sometimes it may take time because of the personal banking cluster, generally the process has been very easy. The transaction and network of small and medium businesses represents a high demand and totally broken down barriers and increases competitive forces to be involved in banking since the qualification and application can be generalized and commercialized.
Virtual Banking and Retail Services is easy with the advent of electronic delivery any person can use the bank to channel and use the deregulation measures to transfer there transaction without complicated details and personal meetings but virtually above board. Although this system may be sometimes annoying and dangerous that there are hackers who may record transaction virtually taking the cash on their hand, for there may be isolated cases but generally the virtual system has been efficient and highly adopted by business and individual. There are many software’s and computer system that help protects the records and databases to secure customers financial transaction and trust. Soon the banking system will be virtualized and technologically advanced.
The import and export industry is now promoted using bank agreement and protection to easily maintain and establish the cultural and international trade relations among nations and the security to enhance such system of payment and collection has been very easy and highly accessible from bank to bank transfer in most currency exchange. Products including agricultural and industrial can be easily accepted, connected and modified through banks and online transaction through electronic links.
Government securities and protection is now being controlled, since bank may have declared bankruptcy but the customers have an equal opportunity to secure their investments. Banks and other financial agencies like International Monetary funds, Metrobank, HSBC, Bank of America, World Bank and other leading banks have been practicing and promoting such law to uplift banks all over the world. All this Globalization and Technology Innovation has largely contributed to the profitability and expansion in the banking industry.
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