Digitization leads Restructuring of Banking Operations in Ghana

Ghana’s banking sector, for the few years, have been experiencing operational restructuring as the sector is strategically and aggressively catching up with peers in developed economies with technological innovations to improve on their services while cutting down labor cost.

This is evident in the President of the Chartered Institute of Bankers (CIB) Ghana, Patricia Sappor’s recent comment which suggested that, banks in Ghana aggressively driving their digital products and service to help government move the economy from a cash-based system into one that is near cashless or at least, cash-lite.

In recent times, we have witnessed many launching ceremonies by banks collaborating with Financial Technology (Fintech) companies and other technological entities to develop more convenient and user friendly digital platforms to enhance their operations as well as the numerous adverts from the banks encouraging customers to jump onto the digital train with the use of the digital channels such as mobile apps, USSDs, internet banking, ATMs to facilitate banking transactions among others.

“One of the key impacts of the current pandemic is the emphasis on social/physical distancing and contactless payment options. The situation presents financial institutions with the opportunity for digital transformation both at the front and back office levels,” Patricia Sappor said during a webinar organised by Krif Media Limited, publishers of Integrity Magazine last week, adding that, “if banks would undertake this initiative effectively, it could result in efficient service delivery, quicker turn-around time and improvement in the overall service experience for bank customers.”

In this regard, staff of banks and financial institutions have been urged to adapt to the rapid developments in digitisation in order to stay relevant in the industry.

The Head of Channels at UMB Bank, Myles Hagan in his interaction on the subject cautioned that, any banker who wants to remain employed would need to enhance their education and skills in digital banking operations.

“Presently, certain institutions have adopted working from home, which means you do not necessarily have to come to the office but can use digital tools to execute your functions. Moving forward, in terms of workforce and digital adoption, staff who can equip themselves with knowledge to use technology are in a better position to remain in their jobs, as against those that may find challenges in adopting digital tools,” he said.

Making the technological advancement in the banking sector and other sectors of the economy is the onset of COVID-19 which has spurred growth in digital adoption, with most entities in the ecosystem (banks, Fintechs and allied services like telcos) reengineering their existing portfolio have affected processes.

Several major technological trends are converging and transforming digital banking services for businesses. The result is that banks across the country and beyond are waking up to growing competition and the changing demands of their clients.

Companies of all sizes across the globe are embarking on their own digital transformations. Businesses want faster and more convenient methods to transfer funds and analyse their financial data. This means shifting away from manual paper-based processes and adopting electronic, increasingly automated payment processes that also allow more sophisticated, data-driven decisions.

“For example, if there was patronage initially of a mobile app, customers now want a little bit more than what used to be on the app. Most banks will be recording about 90 percent uptake in digital services—and that is very good. It helps us drive more uptake by advising customers and putting up educative materials so most customers will move towards digital rather than analogue”, Mr Hagan emphasized.

He added that, banks need to provide a better, more relevant service, and invest in products that meet the changing customer needs of real-time, mobile, frictionless and simple banking. For Instance, UMB presently has pushed digital uptake to 90 percent, and for the future they plan to ensure that all banking services are done digitally, Mr. Hagan indicated.

On how well banks are prepared to meet the dynamics of customer expectations, he stated: “Most banks are enhancing their levels of investments in the adoption of predictive analysis, artificial intelligence and business analytical tools, which can help us preempt customer expectations. So what is going to happen is most banks can forecast that this customer per his strength may need this.”

Also, Deputy CEO of Ghana Association of Bankers, John Awuah, noted that credit expansion to productive sectors such as the manufacturing and SME financing, banks investing heavily to enhance fintechs capabilities, government introducing policy initiatives to redirect trajectory of credit expansion and the banking regulator proactively balancing the need for regulatory prudence and inertia post COVID-19 would revive the economy faster.

“We will be seeing the beginning of the end of the palace-style bank branches in the glamour we currently have them, as most banking services, in our estimation, will transition onto self-service platforms in the near-term.

This is certain to happen because the overwhelming convenience that is afforded by the alternate channels for delivering banking services far outweighs the trappings of flashy banking premises.”

A central bank-initiated clean-up has seen the total number of banks reduced from 30 in 2018 to 23 presently. This has also led to a shrinking of the number of physical bank branches.

A recent study by Deloitte on the potential implications of COVID-19 on banking and capital markets revealed that the number of physical bank branches in Ghana has reduced from 1,342 in 2016, when there were 33 banks in operation, to 1,145 branches as at end-2019.

This, Mr. Awuah believes, is a foretaste of what is to come where technology will not just be an enabler but will become the business of banking.

“What was missing that COVID-19 has helped propel forward is the acceptance and adoption of digital banking channels. For instance, customers who once resisted digital banking are fast realising that they are treading on lonely grounds in this period.

Our projections from the association’s perspective are that, as they experience more and more of the digital channels made available by banks, the less likely it is that they will want to go back to visiting brick-and-mortar bank facilities in the future.”

Mr. Awuah noted that likely areas of banking operations to be affected include: customer on-boarding activities, product and service origination, bank performance assessment, and work environment design.

Other critical areas are staffing requirement in banks and the fluid opportunity for customers to compare and contrast banking services.

Consequently, on improving banking services to customers and stakeholders in this COVID-19 era, former Deputy Managing Director of Prudential Bank, Mary Brown, has suggested that, banks must set up a Special Credit Coordinating Room that will be responsible for selling and operationalizing the bank’s credit strategy in response to the crisis. This is to ensure a consistent and coherent response across all aspects of the bank’s lending operating model.

He stressed that banks have a duty to anchor the economy by cautiously continuing with credit expansion to productive sectors among others.

By Adnan Adams Mohammed