Just understand this; Not all banks will be useful to you and your business!
A few decades ago a large number of Ghanaians and especially self-employed people in the informal sector didn’t want anything to do with a bank. Cocoa farmers would just go to the bank because that is where they were paid. Farmers could spend days before having access to their money. They will just withdraw all their monies, just turn around and walk away, till the following year. “Choosing a bank” was not part of the conversation then
Some formal sector employees used to collect their salaries and wages over the counter or table top.
There were many reasons people did not patronize the services of banks;
- There were few banks
- The banks didn’t really do much to attract customers because there was very little competition
- If you are self-employed the banks gave you very little attention and when making withdrawals it was very frustrating because of long waiting times (which is still the case though).
- People preferred handling cash as opposed to recent financial education on the need to go cashless and still be able to transact business.
- Prohibitive bank charges
- Laborious account opening procedures (even without anti-money laundering requirements)
In effect, it appeared banks just excluded individuals who were in retail businesses. The informal sector and rural Ghana were not traditionally part of their target. Their corporate accounts were just enough.
Small business owners (informal sector) mainly didn’t show much interest in dealing with the financial institutions. People preferred keeping their monies in their safes, lockers, under pillows, with a trusted partner and any other place apart from the financial institutions.
Ghana had a change of government in 2000 and in came President Kuffour. His liberalization of the banking sector opened up the banking industry. Treasury rates dropped from the 40s to the 20s.
Foreign banks rushed in, lower-tiered banks emerged, the Savings and Loans as well as the Microfinance sector blossomed. All of a sudden, the informal sector and rural Ghana had what they can call their ‘bank’. They began taking up some of the valued customers of the then existing banks.
The traditional ‘elephant’ banks were caught napping. They all realized that they have to evolve to begin doing banking outside of their plush and crowded halls.
They went on customer hunting, scrambling for new accounts from the markets, picking customers’ cash in specie operations and credit giveaways (which was also a blunder).
In addition to the industry trends, changes in the way we do business and modern advancements in technology also fueled the need for businesses to maintain a bank account.
This is the time customers should now choose their banks. In the past decades, banks in Ghana chose their customers. But now the tables have turned.
Now customers have the option to choose their banks. Though the recent bank failures have dented the opportunities, there are still credible options. Suffice to say that financial institutions do share some similar characteristics, they can be different in certain specifics. The specifics are what you go for. Do not just allow some bank’s sales executive to sell you any misfit service.
There are many banks in existence now and businesses have a choice as to which institution to bank with. Banks have now been categorized into different bands serving different needs.
- Universal banks
- Savings and loans institutions
- Rural banks
- Microfinance institutions
- Cooperatives associations
To have a fruitful relationship with your bank, look for a bank that best serves your needs and do business with them. Not every bank would be ideal in providing a service that will be the best for you. Banks in themselves have interests, specialities and sectors or industries they see as profitable. They, therefore, target such businesses and clients. For every client segment they serve, they choose which of their services or products that best suit them.
In all of these, it is the duty of the business owner or manager to decide, looking at what the business has set out to do, to figure out which financial institution will best serve their needs.
In choosing a bank what do you look for?
- Look at your business needs, e.g. do I have payments by cash, cheques, mobile money,
- How do you also pay people? Do they have the facilities to do seamless and safe transactions? It may shock you to know that as of 2021, some banks do not have reliable mobile money integration. Sometimes you have to walk to the bank to effect simple transactions. This is the stone age!
- If you collect cash, are you safe with it? There are savings and loans companies that visit businesses for cash collection purposes. This saves time and money journeying to their office to make those same deposits.
- If you travel out do you have to carry plenty of cash? You might want to consider a financial institution with good nationwide coverage to leverage on transactions when travelling for business. This reduces incidences of carrying of cash and eases the risks of cash lost in transit.
- How often do you need financial support to meet your obligations? You should not do business with a financial institution that always refuses you financial assistance, when in need of support for supplies and meeting operational expenses. You can do a simple background check and ask around about the financial standing of the particular institution you want to do business with. The smaller banks and Savings and Loans have generally proven more responsive in that regard.
- How much am I prepared to pay for banking services? Some banks charge for every transaction you make. As a small business, it could cost you a fortune. Get the full details and seek advice from someone who can help you to understand and interpret the charges.
- Do I even have time to visit the bank? You will be better off doing business with a bank that provides mobile banking services. It saves you time and money.
- Do you usually get spare cash that can sit? You may need a bank that has an investment arm that could advise you to do some investments apart from the old uninspiring Fixed Deposit.
- Test their responsiveness. Send any request to any of their customer channels and see how long it takes for them to come back. It took a bank 3 days to respond to our Whatsapp message. You know that the bank will give you a run for your money when you need attention.
All the institutions talk of good customer service but you can bet, some do not know where customer service was born. From such FLEE!
One warning, however; if you are start-up a business, don’t approach any of them for financing. They won’t and can’t help you. Banks are not for startups. Venture capital or Equity finance can help better.
We have not mentioned, the overcrowded banking halls while only one cashier sits in the cage. That is more for particular branches than an entire bank’s attribute. Therefore be conscious of which branch you will choose to physically do your transactions.
Choosing a Bank – Final Hints
Once some of these questions are answered you know that you have something to hold on to even before you venture to work with a bank. It may even be necessary to work with more than one bank but don’t do more than three. That is diversification but it can be costly in terms of account maintenance fees. Some business owners mistakenly open multiple accounts because perhaps they couldn’t resist the good customer service by the sales and marketing reps of a particular bank so they rush to open accounts.
Don’t let a bad experience let you begin to put your money in pillows or safes in your room. You know if you placed GHc10 million in a safe in 2010 and open the safe in 2021, you would have lost over 50% of purchasing power, which is the real value of your money.
Apart from the bank giving you some interest to preserve purchasing power, it would also be safe for you. So you obviously need a bank, and you deserve to have a fruitful relationship with your bank. You need to choose your bank, don’t let your bank choose you.