Traditional banking, How does it work and it's challenge

source

I still remember in those days when you will ask my mother to go and open account in the bank to keep her money, she will tell you that she does not have money to give another person to keep. And she does not have time to waste. Many people still feel that way till today.

Since the introduction of bank. Things has really changed. From the old way of saving money to another better way of saving money. Let's go into it in a deeper way . Although bank has its challenges, it also has benefited us. Yes I wonder how people will be carrying money around this time that security is less in so many countries especially my country.

What is traditional banking

Each time bank is mentioned, we quickly remember our individual banks. A financial institution where people take their money to. They accept money from people to use it for different purposes. They don't just operate without license. They are govern by government Their work is to receive money from people. What we call deposit When you have cash, you take it to the bank to deposit it. And go home with hope that your money is save. Anytime you need your money, you still go back and get but this time with some charges.

The bank also give out loan so as to monitize it. For you to keep your money in the bank, you have to open an account where you will pay in your money. Bank also provide you with some of their products so that you can use them to withdraw your money each time you need it.

Some bank products

Debit card Is one of their product. Here we call it ATM card. You can use it in different ways. You can use it for payment You can use it to buy things from shopping mall. You can use it to transfer money to another account. You can also use it to withdraw cash from ATM machine.

ATM card has expiration date from the date it was issued to you . It is always 3years and you will go back to the bank to renew it. For your ATM card to serve you well. It must have ATM pin which is 4 digts number which you input in the ATM machine the day it was issued to you.

If you miss it or forget the pin you will not be able to use it again unless you take it back to the bank. This time customer care service will change the pin for you. With the help of your ATM card, you don't need to go to bank each time you need some cash If you have ATM card.

Bank app

Another bank product is the App. Each bank has their own bank app. When you download this app in your mobile phone. You will set it with the same ATM pin you have so that you can use it to transfer money. App helps you to see your account statement That is your transaction. You can link your email to your bank app so that you receive alert not just on your phone number but also in your mailbox.

As you set up your app, bank may give you daily limit on an amount you can transfer in a day. As a business person, you can upgrade you App to any amount you want in a day. With that, you can receive and transfer out without going to the Bank to fill some form for transfer which can take you hours in the bank.

Commercial bank

Bank is responsible in creating Commercial bank. Commercial banks are those who is in charge of reserved money and they give out for loan In my country, you may find it difficult to get loan from Big bank but you can get money from different microfinance bank.

As you know Bank answer to CBN while this commercial banks answer to Bank. For example, if you want to get loan from any microfinance bank in Nigeria. After processing the loan, they will require your BVN number and they will take you to the Bank that will pay you or give a check of that bank. As you present the check, the Bank will credit you. This showed that Bank use them to run loan business.

We have seen different ways that bank works. The benefit of bank and the services they render to humanity. How they are governed and how they run their business using commercial banks. It time we look into some challenges they have

Bank challenges

• Before now, putting money in the bank was pleasurable and people will prefer their money to be in their account than in the house. This was because, it help them to spend less. But things has changed. Your money in your bank keep reducing each day. The bank charges keep increasing every day. For example, now, you pay ATM card maintenance.

  you pay levy, you pay electronic transaction charge. You also pay transfer charge. Every last day of the month, you pay monthly charges. It is so painful that the charges increased during the cashless policy in Nigeria and they maintain it till today.

  This is the challenge we are facing in the banking system now. What of the money in your bank. The truth is that, you don't have power over it again like before. Your transfer may maybe successful or not. Bank decide when they will return money debited in your account or not. If you are not strong, your money is gone.

  When it comes to the commercial banks which they use to give out loans. Another big challenge. The loan interest has increased from 5% to 20% . If you are not careful, the loan you collected will lead you into bankruptcy. It is no longer news that bank has shifted from what they use to be to something else.

  For now people are tired of banking their money. But they have no choice than to do so. Only few people know how to keep their money in good crypto. Who knows how to invest in other businesses than to keep their money in the bank.

  Conclusion

  Note: I am not giving financial advice on whether to bank your money or not. I only point out challenges we have in banking system. How traditional banking works and what bank is.