In recent years, universal banking has been growing its acceptance in Indonesia. Mandiri Bank, as an example, has taken technique to become Indonesia's common bank; this bank has also started to produce an integrated economic chance process in terms of sounding economic efficiency and increasing shareholder value. In Germany, and most developed nations in Europe, common banks have initiated their procedures because nineteen century. There is rising evidence that in these places, universal banks have got an important part in the progress of actual areas and the financial system. In these nations, the rising variety of general banking practices are actually supported by the regulation of central of bank.
Despite, in The United States, they are strict to regulate common banks by preventing commercial banks from doing securities and stock markets practices. They argued that the training of general banking may be hazardous for the financial system. ((Boyd et.al, 1998) cited in Cheang, 2004) The "risk" might be the main element reason why the central bank of The U.S is concerned about the general banking system. Since, if the key of bank permitted banks to modify their operation to be common banks, the relationship among, banks, economic and stock areas could be closer. Therefore, this would provide an uncertainty to the banks issue and performance. As an example, if there were a catastrophe in stock industry, banks would get issues in their economic positions. Thus, they would are generally insolvent.In improvement general banks could also threaten the marketplace share of other particular institutions, since more consumers would select general banks offering more alternative with their investment. Hence, mo re particular institutions are apt to be destroyed in the U.S financial industry.
One majoring factor, which can be causing a bank to be universal bank, is to improve the income by enlarging their market share. In accordance with João A. C. Santos (1998) general bank itself may be defined since the economic institution, which enlarges its company selection in terms of offering a number of financial products and services and services in one site. Therefore, by running common banking, banks could easily get a better possibility to increase to some other economic place, such as for instance : financial securities, insurance, hedge resources and etc.
Even though the development of banks has helped to universal banks, it is undoubtedly correct that universal banks could also experience further risks because a wide selection of financial solutions is firmly related to increasing dangers and escalating tracking costs. They are the key considerations why banks need to implement more advance technology with regards to financial chance management. Moreover, the practices of general banks could cause significant dangers to economy's cost system. Since, the operation of general banks joins closely to the financial and stock markets which are very alter in a brief term.
To win in the small competition among financial institutions, banks have to change their control to lead in the market. General bank can function as the intelligent choice for the bank manager, since they could entice more customers with a wide selection of services. Additionally, by changing their function to the general banking process, banks could get benefits from the effectiveness and economies of scale.In obtain to understand in regards to the general banking methods, this report might study the exclusive matters, which linked to the risks and benefits in a general bank. Moreover, this paper would also focus the whole affect with this institution to the financial process and the economy as a whole.