Understanding The Financial Marriage – The Agency Role

December 19, 2016
Source: Alberta Quarcoopome |thebftonline |Ghana
Understanding The Financial Marriage – The Agency Role

"Quality is remembered long after the price is forgotten."…Gucci Family Slogan

Dear readers, we will continue some more of the basic banking refresher about the banker-customer relationship, or what I call, the financial marriage. This week, we will look at how the banks play the agency role on behalf of their customers.

Principal/Agent Relationship

According to wikipedia, it is the arrangement that exists when one person or entity (called the agent) acts on behalf of another (called the principal). For example, shareholders of a company (principals) elect management (agents) to act on their behalf, and investors (principals) choose fund managers (agents) to manage their assets. The special relationship between the customer and the banker is that of principal and agent.”

The customer (principal) deposits cheques, drafts, dividends for collection with the bank. He also gives written instructions to the bank to purchase securities, pay insurance premium, installments of loans, etc on his behalf. When the bank performs such agency services, he becomes an agent of his customer.

When you take a taxi, who is the Principal and who is the Agent? Of course it is the passenger who becomes the Principal. That is why many people who “charter” taxis prefer to sit at the back and relax while giving instructions. After all, they know that they are going to pay…even though sometimes, through their noses!

Next time you enter a banking hall, remember that the bank was built with you the customer, in mind. Enter with confidence and know that the bank staff are there waiting for your instructions. Your wish is their command! If the banking halls get empty, where are the banks going to make their margins and pay their staff and all the huge expenses that go with using deposits to work and repay with interest?

Paying Cheques of customers

Dear customer, let us examine a few cases that indicate that you are the masters or principals in the banker-customer relationship, or the financial marriage:

  • Write a cheque to withdraw money,(so long as you have sufficient funds or have made arrangements for a loan!) Let the banker say no………Trouble. The money is yours. However any delays caused by the Teller may be due to time spent in re-checking your signature, picture, completion or regularity of the cheque issued, etc, etc. Customers, don’t blame the Tellers, they need to follow due diligence. Don’t forget that there are risks involved in performing the agency function for you.


Paying salaries for Customers

  • Chief Accountant, send a request to the bank to deduct funds from your company’s account to pay salaries of your employees whose accounts are in different banks across Ghana. If the banks are not there, you cannot walk across the length and breadth of Ghana to do that, can you? Can you even pay cash over the counter to all your workers? Impossible! The days of the Almighty “Paymaster” is gone. Instruct the banks and they will do it within the stipulated benchmarks. In these days of electronic banking, it is done through the Automated Clearing House system.  If it delays, report, complain, it is your right… HOWEVER, please send it early to enable the bank process it fast. Some companies have over thousands of workers but thanks to technology, transmission of funds has become easy.  Meanwhile dear bankers, BEWARE of these source documents sent by the companies, ensuring the relevant transmission indemnities are in place and originate from genuine sources and well authenticated. There have been cases of alteration of some employees’ salaries causing legal suits between the companies and the banks. Paymasters, check your data, for confirmation.  Bankers, check for any unusual changes and confirm from Chief Accountant, making sure there no bloated figures,……no unwanted zeros added to employees’ salaries. Even though you are the agents and follow instructions, ensure unusually large differences within a particular month are queried.


  • Kofi Ansah gives his mechanic, Mr Jones, a cheque of GHC1,500 being payment for repairs on his car. Sometimes he prefers that Mr. Jones does not cash the cheque at the counter, but rather pay into his own account. Mr Jone’s account is at another bank, different from Mr. Ansah’s bank. Let us see what happens next:
  • Jones, the mechanic goes to his bank and lodges the cheque with the Receiving Teller.
  • He chats briefly with the Teller, a beautiful lady, says good bye to her and goes through his normal routines at work, still day dreaming about the voluptuous body of Adwoa the Teller. “She has a gap in her front –teeth, so rare to find these days”. He mused. Enough of that he is married….ha. ha..
  • Two days later, he returns with confidence to the bank and issues a cash cheque to another Paying Teller, to withdraw money, but still stealing some glances at Adwoa. He wondered “How was the money made available to my account? Did Adwoa walk to cash the cheque in Mr Kofi Ansah’s account at another bank and lodge it into my account?”
  • .no… The banks use the “Cheque Clearing” system…..It is a complex system using the banking software and GHIPPs to integrate the banking clearing system and offer fast service to clear customer’s cheques. Millions of customers’ cheques are processed daily by banks in Ghana, within a specified time frame or cycle. 

Can you imagine that this simple process of giving your mechanic a cheque for some small cash ends up as part of a large complex process, with Bank staff sitting in big offices performing millions of data entry transactions on computers, suffering from back aches, swollen feet, headaches, indigestion and stress from the long hours, to meet the regulatory cycle? The two banks are the Agents in the cheque collection and paying process, while Mr. Kofi Ansah and Mr. Jones are definitely the Principals. Now you know the power of banking aided by the huge investments in technology which made it so easy.

Remittances/Transfers for customers

  • Joyce Otchere is a retired diplomat whose daughters are still living in New York, although she has returned to live in Kumasi. She still sends remittances abroad for her daughters’ upkeep. She enters the banking hall and approaches the Customer Service lady for a form to transfer $800 to them. She is able to do this because her pension funds are regularly transferred into her savings account in the bank. She approaches the front desk with confidence. The Customer Service Officer guides her to complete the form and sends it to the Foreign remittances section for her instruction to be obeyed. That is the power of being a Principal. The bank cannot say no, so long as she also produces the required information according to Bank of Ghana regulations…….Banking made easy! Gone are the days when you have to wait for a traveler to send cash to relatives abroad. We all know the sob stories that go with it.

All the above examples can only work well when the Bank as an Agent is an expert at making the necessary decisions. Bankers therefore need to ensure that they are abreast with all the latest trends in banking, the basic banking principles, and also equip their systems accordingly to meet the growing sophistication of customers.

Payback Time

Dear readers, we know that these banking transactions, orders and sometimes SOS messages are not free. Finally, it is the banker’s turn for his payday. Have you wondered about the likely cost of computerization? The cost of automation of systems which used to be manual is colossal.  Did you ever dream that you can do transfers, pay bills, and perform numerous cashless transactions just by lying on your bed with a computer? This is the power of computers and the internet banking platform that has made banking so easy. After all the “Yes, sir/madam” that they say, they have to have their pay-back time.  As agents, they are entitled to a fee for the numerous services rendered to customers. Processing fees, commission on turnover or COT, interest charges on loans, fees on foreign exchange withdrawals, guarantee fees, etc, etc. it is in the mutual interest of both customers and bankers that charges should be within “reasonable amounts” for all the services rendered. This should be barely enough to cover the overhead costs and occupational hazards faced by bank staff in executing these agency functions.

Customers, bankers are at your service, so pay your bank charges. If there are doubts about the charges, you have every right to demand clarification. Do not forget that modern banking is mostly about clicks on the computer. Many electronic banking transactions can now be done within a few minutes on your laptop at home without you stepping into the banking hall, but remember, technology is expensive. Bankers, make sure your charges are also “reasonable” and where required, explained to the customers, to eliminate any mistrust.

Long live the financial marriage.

When you read my second book-“MY FRONT DESK EXPERIENCE, A YOUNG BANKER’S STORY”, it depicts various habits and mannerisms of customers in our part of the world that front desk persons need to know and appreciate. Many of the banker-customer experiences depicted are real. The risk management and service delivery tips in the book enhance the “feelings business” that is much needed in the face to face banking appreciated by certain groups of customers. Contact the National Banking College and the Chartered Institute of Bankers’ offices or call 0244333051 for your copy.



Alberta Quarcoopome is a Chartered Banker, and CEO of ALKAN Business Consult Ltd. She uses her several years’ experience and practical case studies, training bankers in operational risk management, sales, customer service, banking operations and fraud. 


Website www.alkanbiz.com

Email:alberta@alkanbiz.com  or albique@yahoo.com

Tel: +233-0244333051/+233-0244611343