Massive restructuring of banking operations as digitization takes leads
Adnan Adams Mohammed
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.
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