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ISSUES THAT AFFECT THE GLOBAL BANKING INDUSTRY
Ty, Shane Lawrence Angeles, Raymond  Dizon, Angelito Dy, Herwin Palanca, KeithS13 gelo1989@yahoo.com
ABSTRACT
Recession describes the reduction of a country's grossdomestic product for at least 2 quarters. Bankruptcies,credit crunches, deflation, foreclosures and unemploymentare effects of recession. In fact it widely affects most of thetop banks here in the world.As we all know the banking industry is a highlyregulated industry with detailed and focused regulators.Each regulatory agency has their own set of rules andregulations to which banks and thrifts must adhere. Thechanging economic environment has a significant impacton banks and thrifts as they struggle to effectively managetheir interest rate spread in the face of low rates on loans,rate competition for deposits and the general marketchanges, industry trends and economic fluctuations. It has been a challenge for banks to effectively set their growthstrategies with the recent economic market.So how can we manage our banks’ challenges?There are several reasons for this which is why we havemajor and minor issues that will be tackled in our research paper.
1. INTRODUCTION
The banking industry is far one of the most difficult type of  business to manage. It is simply the business where stocksare hard to analyze, unstable and most of all, clients aredemanding [2]. We have to realize that in the currentsituation of recession, the banking industry is being hithard. This is mainly because money circles around banks.Companies would not be able to move if it wasn’t for them.However, there are also many major and as well as minor issues that are going to be discussed further.One of the major problems of banks is moneylaundering. It is simply the practice of engaging infinancial transactions to conceal the identity, source, or destination of illegally gained money [3].Money laundering happens in almost every country in theglobe. A single scheme typically involves transferringmoney through several different countries so that the originwould not be tracked. In this research paper, we'll learnexactly what money laundering is and why it is a problemin the banking industry, it will also discuss who laundersmoney and how they do it.In our current situation, it is expected that bankswill fail due to recession. Statistics say that over 200 bankswill fail in United States alone [3]. The banks that aresmaller are the ones that will most likely be hit by thisrecession since they can’t cope up with the declination of the economy. Problems will mainly be mortgage problemsdue to the lack of people paying for their loans. While their mortgages are not being paid, the small banks will not beable to make the money circle around.
2. MAJOR ISSUES
Global Banking plays a big role in our economy. Today, banks are being used in different ways. Others store their money to the banks and eventually it will increase becauseof the interest, some customers use banks for businesstransactions and other individuals borrow money from the bank for emergency or business purposes.Banks are against from anti-money laundering.The most common types of criminals who need to launder money are drug traffickers, embezzlers, corrupt politiciansand public officials, mobsters, terrorists and con artists.Drug traffickers are in serious need of good launderingsystems because they deal almost exclusively in cash, whichcauses all sorts of logistics problems [4]. Most of the time,casino is the place where gangsters or mafias clean their money and afterwards, deposited the million amount of money they framed up as the prize claimed from the casino.Furthermore, Citibank really helped a lot from catching thesmall banks that are prone to bankruptcy in order to savecustomers account. If a bank will be planning for a closureand there are customers who have one million or higher credit from the bank, it will be responsible to return only250,000PHP in Philippines. Usually, small banks give a bigamount of interest to attract people do their banking withthem and use the money for loaning in order to increase theamount of money they have. Businesses and other government establishments went to borrow money from banks and that is how the business works. Another reason
 
why banks like Citibank really need to exist is to preventthe Domino Effect. It is where big banks fall and as theworst result of this, small banks fall as well. According toour Speaker, Mr. Jankitmil Quintans, there should always be a big bank that could support small banks and eventually become big in the near future. Way back in 1929, unitedStates, together with the countries around the world werehit hard by The Great Depression. Big banks fall, samegoes with the small banks and businesses. Economy fallsworldwide that causes suffering in different ways.We simply define recession as a crisis wherein economyfalls and in effect of this, number of unemployed individualincreases. One of the major causes of recession is calledinflation. It refers to the unpredictable increase of price of different products in a short period of time. As price goesup, we also adjust our budget in order to buy a certain good.It also increases the production cost of different productsthat chains the effect to one another. Furthermore, peoplewho do buy and sell tend to increase their price as well.Same goes with the affected retailers of differentcompanies. Most of the consumers save money for emergency use instead of using it for leisure. Probably, asthis scenario takes place, companies reduce the numbers of their employees to lessen their costs.Maybe some of us does not see the importance of  banks but if we do business, we can consider them as thewall of economy. Citibank as of now is carrying a big loadof responsibility and at the same time they satisfy their customers from their quality services. Spreading each of their branches in 200 countries makes them well-known asone of the prominent establishment in banking field.
3. MINOR ISSUES
The minor issues experienced by our speaker are the problems with employees who fail to follow some of therules, large amount of money from outside that areconsidered suspicious and the problems with ATM.Trapped ATM cards are the common problems in ATMmachines nowadays. But thanks to Citibank, because theydeveloped a technology that prevents trapped ATM card.Minor issues such as problems of the bank can be preventedin some other way. Awareness is the key for the bestdecision.Earning trust from the people and quality of service is a must for all banks. For the side of big banks,they should maintain their good customer relationship andthe name that was build for many years. One mistake maydiminish the number of people who transacts with the bank and the worst part; investors will be affected as well. For the small banks, building a good impression from the public is the most difficult thing to do and we cannot denythat this is one of the necessary factors in order to succeed.By putting ourselves into the shoe of the customer, we mayhave a doubt to trust a small bank due to its freshness in the banking industry.Minor problems that occur in a bank usually landed to thenewborn banks. Capital issues are one of those that can bethe source of disasters. As a customer, we prefer to dotransactions with big banks rather than small bank. Havinghigh interest rates per annum compared to the big banks isa part of their strategy that will surely attract people. Inreturn, they use it as a capital for loaning to increase their funds. But this is not an easy thing to do; small banks havea hard time to attract people especially in the urban places.We all know that geographical area is one of the factors toconsider. Small banks spread in rural areas whichincreases the competency level of banks in a small place.This situation may lead to bankruptcy of other banks whodid not meet the expected number of people to dotransactions with them. Technologies and services that arenot available from other banks may be an advantage thathelps them to grow. They should maintain their progress because people will expect a lot from them. Good strategyfrom managers is a must, and improvement in the outputshould be seen regularly. We cannot tell what will happentomorrow and in this case, managers should forecast inorder to come up with a plan to do when disaster strikes.Poor management may lead to business closure and somenewborn banks did not notice if they were on the right track or not.
4. NEW TECHNOLOGIES IN THE BANKINGINDUSTRY
In the past, banks are seen as individual and solo brancheswith no integration in them. Unlike before, banks todayallow clients to conduct transactions either manually andautomatic. That is, for example a client can withdraw anddeposit by going to the bank. He can also deposit andwithdraw through ATM’s or the internet.We are in the new age and as we all know,technology plays a big part in every aspect of businessesaround the world. Especially in this recession, bankingshould really be involved on how to respond to it, in a wayto sort of counteract this. New technologies are always being introduced that is why banks should also focus onfinding these technologies to help them cope up.According to Network Magazine, there are threeconcerns that affect the banks dramatically. These arecustomer retention, cost pressure and increasedcompetition. Technology makes it easier for any companywith the right channel infrastructure and money reserves toget into banking. This has been one of the major reasons behind this kind of competition from players who do nothave a banking background [1].With these factors and concerns, global banking isnow focusing on customer-centric services, cost reductionand product differentiation. We all understand howimportant reducing costs are, it many be one of the mostimportant factors affecting decision making. These can
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