In our environment many things happen around us, some of which we have no immediate control over. But those that we have in our grip we can leverage on – such as our resources – to appreciate them with a deeper understanding in order to make the situation better. That is why with an assortment of issues on our minds which have presented themselves as mixed bag, we should rack our brains to arrange them in a fine order to produce a beautiful collection.
As we know, banks have a process through which they verify and identify their customers in the banking relationship. This due diligence (Know Your Customer) involves, among other things, establishing their residential status or business places. Usually, for loan applicants, the practice requires that the bank officers visit these places and return with the Residence/Business location Report. Since banks are profit-oriented entities with their eyes on costs, they factor all the inherent risks in these activities into their tariffs for loans.
The launch of the GhanaPostGPS, the official digital addressing system, was envisaged to address some of these bottlenecks in our environment; but the platform has not holistically resolved the problem so that by the click of a button in the life of the banking relationship, I would be able to track customers’ residential status – either as landlords (property owners) or tenants – even when they move house thereafter to another place without them informing me directly.
The disconnection in setting up a seamless and well-coordinated property ownership/residential status with tracking options on the GhanaPostGPS application means that bankers will still spend some hours outside the office to verify and confirm customers’ KYC status.
It should be possible to deal with the issue by soliciting support from the Ghana Statistical Service (which conducts the national population and housing census) and overhauling, as well as empowering, the Rent Control Department to come out with an integrated digital housing register that will help upgrade the structure and application of a one-stop digital gallery for the addressing system.
A Click of a button
About two decades ago, we had few banks in the country which opened their banking halls to the public within the hours of 8:30 am to 2:00 pm on week-ends. This was characterised by long queues during peak periods such as public holidays and end of month paydays. Since the Nigerian banks entered the industry with the general increase in number of banks operating in the country, keen competition has compelled all banks to extend their banking hours in addition to Saturdays with the intention of enabling customers to have more hours for their transactions.
What is more, in this epoch of technology the banks have made huge investments in IT infrastructure to facilitate convenient and delightful customer-experience relationships. Customers in the retail segment who ordinarily form long queues in the banking halls for basic transactions and services are expected to perform their banking activities in the comfort of their homes or wherever they are by the click of a button. This expectation is premised on the fact that benefits of the alternate digital channels to both banks and their customers will outweigh the high cost involved in the physical face-to-face branch banking relationship.
Surprisingly, some banks still experience long queues in their banking halls on some occasions. Public and civil servants are not the exception on paydays. What this means is that many of our account-holders who can easily use the digital platforms have still not been roped-in. We should offer more of our value propositions and cross-sell many innovative products and services on the digital space to this category of customers.
It would make business sense to consider more giveaway charges for certain services on the platforms, including salary withdrawals at ATMs in relation to a few additional charges on similar transactions in the banking halls. Can we also work on our systems’ downtime to avoid the alternates’ inconveniences? This will justify the reasons for discouraging customers from coming into banking halls for basic services which could otherwise be provided without necessarily relying on face-to-face interactions with officers.
Different Account Status (SMEs)
Again, in our environment, banks do not have a uniform industry understanding of what businesses should constitute Small & Medium-Scale Enterprises (SMEs) for the banking relationship. While some financial institutions basically rely on business-types such as limited liability, sole proprietorship and partnership as the basis for their segmentation, others use the businesses’ accounts turnover or both. For instance, a business entity with limited liability status and operating its account in Bank A could be considered as an SME in that bank; but in another bank, the same customer with similar transaction records would probably be placed under the bank’s corporate customers’ desk.
Though the various segmentations do not violate any regulation to the best of my knowledge and fit into the banks’ in-house business models and strategies, it should however be possible to agree on common parameters for classifying and recognising these businesses. This will help harmonise their challenges, develop a common matrix for assessing risks facing them, and identify related business solutions (services). In that respect, the banks in collaboration with the National Board for Small-Scale Industries(NBSSI) and other interest groups should come together and formulate a comprehensive and standardised policy document on SMEs.
Future Leaps – Stated Capitals
Indeed, minimum capitals for financial institutions are increased regularly to place them in a better position to absorb shocks and undertake relatively bigger transactions in the economy – but since there is no blueprint defining the year-intervals for upward review in relation to future amounts, the issue has become topical in our environment in recent times. Before the current hike in minimum capital to GH¢400m, we have all along held the strongest impression that the BoG had engagements with the other stakeholders (players) through painstaking consultative meetings and reached consensus on the new amount for stated capital.
But the sentiments of local bank managers in respect of the GH¢400m conveyed otherwise. Though it is understandable in all respects that the central bank maintains its operational independence in the performance of its duties, its successes however partly depend on the sector’s overall performance.
These, therefore, necessitate it reaching common ground with players in the industry when the need arises. Hence, as the regulator, it would be worthwhile for the Bank to collaborate with other stakeholders – the Ghana Association of Bankers – and establish a common mechanism for determining future minimum paid-up capital.
The framework should have formulae which consider percentage ranges on the existing stated capitals and some fixed-year intervals in between – notwithstanding the provisions of section 28(1) on Minimum Paid-up Capital and section 34(1), Reserve Fund as stipulated in the Banks and Specialised Deposit-taking Institutions (Act 930) 2016.
In the same vein, the National Insurance Commission (NIC) and Securities and Exchange Commission (SEC) should adopt such models for players in the insurance and capital markets respectively. This will invariably help the financial institutions in developing their future recapitalisation plans and strategies with certainty.
Today’s discussion would be incomplete without looking at a sample English pangram –amazingly, few discotheques provide jukeboxes (this sentence contains every letter of the English alphabet) which we used in kindergarten for sentence formation and improving our handwriting. Though this is for childhood learning, we can utilise its usefulness even in our adult lives. The moral reminder that should guide is ‘no matter the depth of our knowledge and the plethora of words at our disposal, we have our limitations in using them’.
On this note, we bring the curtain down with the words of the ancient Egyptian, Ptah-Hotep: “Be a craftsman in speech that thou mayest be strong, for the strength of one is the tongue, and speech is mightier than all fighting”. The wisdom in his nugget tends to promote peaceful interrelationships in our environment.
We live to prepare better for another day. God bless You.