Banks in Nigeria
Thinking of a bank, the first thing that comes to our mind is probably a place where we have an account – current or savings account. But there are several functions of a bank resulting in different types of banks that serves different types of needs. The scope of the write-up will look at different types of Banks in Nigeria and services provided by the banks.
Many may be surprise on the different types of banks we have in Nigeria, but each of these institution places a significant role in our day-to-day life. In fact, different bank specialises in different area to serve different customers. Although, some of these institution may in more that one area of interest.
Many of the Financial Institutions in Nigeria licensed to operate in the country do so under different categories of license. In other word, we have different categories of banks in Nigeria. Banks are licensed by the Central Bank of Nigeria (CBN), the financial regulatory institution in Nigeria.
Some of the Nigeria Bank type listed below operate in different areas according to their business model. These model may be to provide services to the general public or businesses (for example, a bank may offer her customers personal current account as well as a business account).
Types of banks in Nigeria
Retail Banks –
They are probably the types of banks that majority of us are familiar with in Nigeria. Most of the public saving and current accounts are held at a retail bank. Retail banks focuses more on the general public as its main customers. Services offer by a retail bank includes – Current account, Savings account, Credit Card, Debit Cards, Prepaid Cards, offer loans.
Functions of Retail banks in Nigeria:
Provides savings and current account for individual customers
They make available services like fixed deposits for customer
Provide loans – secure and unsecured
Personal credit cards made available to individuals
Mortgages and car loans can be obtain from retail banks in Nigeria
Online banks –
They are the type of bank that operates mainly online, they are banks set up to provide services to the consumers entirely on the internet. In Nigeria, Sun Trust Bank is the only Banking Institution in the country that is presented as an Online Bank. Other types of banks (with physical locations) in the country will offer their customers online banking (Internet banking, e-banking, electronic banking, virtual banking) as a services.
Commercial banks –
They are types of banks in Nigeria that focus on business customers. The main objective of this type of financial institution is to provide financial services to other businesses. Such services provided may include providing line of credit to businesses in other to manage cash flow, and sometimes provide overdraft for viable businesses
Functions of commercial banks in Nigeria:
Deposit-taking financial institution
Financial intermediary, they act as an intermediary by raising funds from depositors and lend to borrowers
Use part of depositors fund to invest in profitable ventures
Issue credit, debit, prepaid and cash cards to their various customers
Provide secured and unsecured loans to customers.
Investment banks –
Do we really investment banks again in Nigeria? Most of such banks are now converted either retail bank or commercial bank.
Other types of banks in Nigeria
Microfinance banks –
A financial institution license by CBN to provide microfinancial services to the public. They also provide such services as savings, loans, funds transfers and many more.
Central Bank of Nigeria –
This is the financial regulatory body in Nigeria. Responsible for licensing all the banks in Nigeria and also all financial sectors in Nigeria. The Central bank of Nigeria was established by the CBN Act of 1958 and commenced operations on July 1, 1959.