It’s old news that Ghanaian banks are operating with fewer avenues for growth than in years past, and it’s no surprise that bankers are scrambling for new ways to make up for this lost growth. In doing so, however, bankers need a smart and focused strategy to make the most out of the opportunities available.
Financial inclusion is a major component of the process of social inclusion. One of the main goals of development banks in Ghana is to promote and facilitate financial inclusion and decentralization, posing a permanent challenge for innovation. What innovative programs have been promoted to support financial inclusion?
Below I suggest some actions that may be developed by these Ghanaian banks in achieving these goals. In the first place, these actions start with the review, updating and modernization of the technological and communication platforms to be able to be inclusive and financially democratic. If they are not able to modernize themselves, there is little they can do on behalf of third parties in the new knowledge-based economy. The adequate management of the technological change is key for the financial institutions in Ghana to have a competitive edge and therefore survive in the long run.
Foster innovation and technology
It is convenient to plan the short- and medium-term investment policy of development financial institutions to direct new resources towards innovation and technology which is one of the critical factors that affect the productivity of economies and an important tool to generate social and financial inclusion programs towards low resources sectors, specially urban and rural micro and small enterprises. The investment to be made may be burdensome depending on the technology to be used. It is important to mention that a good option for self-investment is leasing, which may be most advisable in the technological field because of the speed in which platforms change and that sometimes became obsolete only months after they were purchased. Renting offers the opportunity to substitute old technologies and have updated and modern platforms.
Technological, computing and communication management.
The banking sector, the commercial as well as development banking, show a fast moving environment, in which customers demand more and better services delivered fast, safely, efficiently and with the minimal degree of interaction with the business. In order to meet customer needs and continue participating actively and largely in the market, bank products and services need constant improvements closely related to the development of technological interfaces and services in order to establish an efficient link with the final customer. This leads bank innovation initiatives to align with the services currently offered with the market technological trends.
Process and Procedure Refinement
Banks need to transform technologically starting with the following steps.
Review their operative practices to eliminate, through industrial reengineering, manual and repetitive bureaucratic processes and procedures that raise their operative costs, and decrease their efficiency and profitability.
Automation of operative systems and transaction systems. Once reviewed make the decision to move these processes and/or change them for quick, fast moving, efficient computing processes working in real time to improve times of response for internal customers (the personnel and the administration in general improve their productivity) and the external customers (users of services benefit from the improved efficiency).
Assess software obsolescence, the disorganized growth of solutions, the high cost of maintenance and suppliers, heterogeneous infrastructure based on a variety of platforms and programming languages and data bases as a response to home-made banking programs to solve occasional problems but stay within the bank computing platforms for ever.
Integrate the different customer data bases in one platform in order to create the concept of “the bank universal customer”, only one source of information with all the customer’s businesses, products and services in all the country’s departments and geographic areas.
Adoption of a “Core Banking System”.
Once the processes and procedures are updated, the convenience of migrating to a new computing solution need to be assessed. Core banking means a technological platform combining communication technology and information technology to meet the bank needs as a response to different factors such as the obsolescence of hardware and software, changes in business requirements, misalignment of the integrity and availability of the information that increase the operational risks, among other factors that hinder the bank performance and efficient response of their services to the customers. This core must essentially have:
• Asset applications specially related to credit management (applications, credit scoring, formalization, disbursements, guarantees, default control, risk control.
• Liability applications (savings capture, current accounts, loans special donations for specific programs);
• Sales management and relationships with customers;
• Global risk management and linking the information with the different regulators; and
• Related operative processes.
• Migrate to internet electronic banking.
The relation between internet banking and electronica banking is inseparable because virtual transactions are performed based on web pages located in the internet. Therefore, development banks must adopt both platforms, which currently constitute the most important tools to achieve financial inclusion because some of their advantages they offer customers are the following:
Comfort. Have access to the bank 24 hours a day, without having to travel far or uncomfortably.
Versatility. Offering multiple services in one channel in real time.
Accessibility. The infrastructure guarantees a local service especially in unattended areas.
Interaction. It contains customer service platforms that allow a quicker and personalized interaction, taking into account their specific needs, enhancing the scope and improving the relationship.
Incorporate electronic payment networks. Customers use banking payment network (integrated in one sole network) acting these ATMs in small bank branches.
Electronic banking appeared as an answer to the demand of increasingly demanding customers and is becoming an essential instrument in financial distribution. Technological innovation will continue providing improvement opportunities for electronic banking as to each technological study will correspond a new process technology with the emergence of new products and distribution channels and therefore development banking need to participate in this revolutionary process.
Development banks must take advantage of the unstoppable rate of advance of telecommunication and information technologies to make a quantum leap in the net to find new distribution channels to reach their customers with new, improved and tailor-made banking services. According to recent statistics, for each person with access to banking services, there are three or four with a cellular telephone, and pre-payment systems used by telephone companies have made mobile phones available to all segments of the population. This circumstance has to be taken advantage of to open and spread bank accesses in the telephone network with products and services such as balance and personal current account inquiries through interactive screens, money transfers through text messages (SMS) enquiries about credit facilities and access to the customer credit information, etc. as some banks in Ghana are currently doing. These bank services make it possible for the number of people with a bank account to increase several fold, mainly in areas with a limited offer of financial services.
Facilitate payment methods.
Help their customers to have access to payment technologies through credit or debit cards, current accounts and electronic transfers, among other mechanisms. When people or merchants transport of hide cash they become easy targets for criminals, they are unprotected in case of natural disasters and other setbacks, which is one barrier to development. Even banks in strategic alliances with public transportation companies and the state could issue prepayment cards for paying bus fates which would be widely used by the poor segments of the population.
Author: Gabriel Ofori Yeboah
Fund Manager, Investor, Broker, FX Trader, Consultant–(Investment, Financial Analyst, Banking)