“Think like a wise man but communicate in the language of the people” – W B Yeats
Hello Readers, I have been going through my archives and discovered this article I wrote in February 2014. Its already more than four and a half years old, nut still very relevant to today’s circumstances!
Appreciation to Silver Star Service Center, Graphic Road
Once a while, I like to appreciate certain positive developments in the services sector that we have been taking for granted over the past years. The Service station of Silver Star Auto, Graphic Road was my most recent encounter of good customer service delivery. After receiving a call to come for free check up from a visiting auto specialist from Germany, I drove there to a very professional group of front desk personnel. Of course Mr Korsah was in his elements and made use of his loyalty customer database. The first lady who greeted me by my name was Hannah. She explained that she knew me from the Tema Service center. She even noticed my wardrobe disfunction and politely ushered me into the washroom, and had a needle and thread to save me from my back zip which was opened. She had a nice way of making me feel comfortable in the ten minutes we spent in the washroom. Simon was the main service functionary and I noticed he was able to multi-task all over to ensure irritating customers were made at ease and quickly attended to. Who doesn’t like freebies? We all do and yet did not have much patience even when the German technician needed a short break for lunch. Mr Korsah and team, well done.
“The Writing on the Wall”
Today’s article has links to the history of banking. These days, banks are filled with professionals of all sorts and with many rich in academics. Due to the diversification of banking, graduates from A-Z (from Archeology to Zoology) are found in financial institutions. Gone were the days banking was just collecting deposits and lending money. The financial world has gone “crazy” with product development, competing or rather, collaborating with all sectors of the economy……telecommunications, sports, insurance, education, industry etc.
Having revealed some skeletons in the cupboards of the financial world, one may ask a question? Didn’t the staff and management of failed financial institutions see the “Handwriting on the wall”? Let me answer. Yes some of them did. What did they do about it? Some simply abandoned ship seeking solace in other companies. What do we mean by the “Handwriting on the wall”? Let us go to the references:
From Wikipedia, “The writing on the wall”, or “the hand writing on the wall”, or “the writing is on the wall”or “Mene Mene”, is an idiom implying that a (usually) negative event is easily predictable based on the current situation. Often, the event is seen as hard to avert. A direness similar to an “impending doom” can be implied.
The expression originates from the Book of Daniel (Old Testament), Chapter 5, from the hand writing on the wall that was witnessed at a banquet hosted by King Belshazzar. As those at the feast profaned the sacred vessels pillaged from the Jerusalem Temple, a disembodied hand appeared and wrote on the palace wall the words, “Mene, Mene, Tekel, Upharsin”. The visionary Daniel was summoned and interpreted this message as the imminent end for the Babylonian kingdom. That night, Belshazzar was killed and the Persians sacked the capital city.
Dear Readers, you can see that the writings on the wall is still relevant even in present day banking. With all the top level degrees acquired, one has to see the signs on the wall practically and work to prevent any danger to the institution. There are definitely certain things that are not taught in Business Schools. Why am I saying this? Obviously, the teachings in the Business schools are communicated in a unique and refined professional language. When we bring it down to our office levels, can we see the writings on the wall? Let us look at some danger signals in banks generally, that we must take note off and find solutions to and not necessarily abandon ship. These danger signals are from generic and global cases and not necessarily restricted to Ghanaian banks.
THE LENDING PROCESS
Let us start with the lending process. It is the most critical process in banking and contributes to most banking failures. Funds belonging to excess sources are sent to deficit sources for a return. It makes it the major source of profit but ironically, also a major source of risk. The credit policy of a bank should be the most critical, and it should be professionally prepared, but flexible enough to meet the demands of the various target markets for lending. It should not be based on a “one size fits all” concept.
Do you recognize some signals in the lending process in your bank?
Lending is a two way process that occurs between two parties, that is, the bank and the customer. Since to err is human, the danger signals or handwritings on the wall can originate from each side. This week, the emphasis will be on the bank side.
The Bank signals
I will attempt a list of signals or perceived writings on the wall in respect of the lending cycle. Most of these are not in the books. The dangers can originate from any level of staff. Right from the processing staff, through the appraisal team, approval team, monitoring and recoveries, legal, the committee members and the top management.
If it happens in your financial institution, then re-open your eyes and do something about it at whatever level you find yourself.
- Is your shareholding structure skewed towards a particular shareholder who has absolute powers and influences most credit decisions?
- Do you see signs that the CEO is being coerced to grant loans to cronies and unqualified persons?
- Is your CEO over-empowered, with a management team who have been cowed into submission?
- Has your bank leadership faced constant leadership changes linked to changes in the government?
- Has your bank been flocked into recently, by PEPs (Politically Exposed Persons)?
- Are there political appointees in your management personnel who have to bow to the ruling government’s demand to grant loans to cronies?
- Is your bank facing political interference in the granting of loans?
- Is your bank lending too much to one single borrower and not adhering to the “single obligor limit” imposed by BOG?
- Has the CEO taken the business as a trade because he or she thinks it is the latest profitable business?
- Do the owners not pay attention to the analysis and consequences of the credit decisions they take.
- Do the business owners not listen to the credit advice from finance professionals they have employed?
- Do the professionals allow owners to have their way in order to keep their jobs?
- Are credit approvals received from the bosses verbally without proper documentation?
- Has the Credit Department become a rubber stamp?
- Do you see credit analysts getting too cozy with customers and not allowing the monitoring staff into their customer’s “space”?
- Do you see loan officers getting compromised with so many gifts that customers’ loan particulars are manipulated and figures “massaged” to fit the application?
- Do the appraisal staff feel that some loans are linked to top management and therefore afraid to decline the proposal?
- Do some declined proposals face the wrath of some top management personnel?
- Do branch managers take advantage of the system and grant additional unauthorized loans to cronies of the top management team simply because he or she know there will be no sanctions?
- Does the Audit team feel frustrated about lack of sanctions for frauds reported, and therefore resorting to kickbacks in order not to report identified fraud?
- Do you come across some top management “wining and dining” with the most recalcitrant customers in town?
- Are the conditions of service so terrible that staff are always tempted to find other sources of income by “joint trading” with the customer? Are there signs that some staff are in business relationship with the customers leading to diversion of customers’ funds elsewhere?
Dear Readers, I do not claim to have all the answers to the above questions, most of which may not be in textbooks. My duty is just to share some practical things on the ground for you to find better ways to prevent a run on your bank, or collapse. Please don’t add up to the numbers. The future is bright.
Next week, we shall look at more writings on the wall with regards to the side of the defaulting customers, which are not taught in business schools.
To be continued
ABOUT THE AUTHOR
Alberta Quarcoopome is a Fellow of the Institute of Bankers, and CEO of ALKAN Business Consult Ltd. She is the Author of two books: “The 21st Century Bank Teller: A Strategic Partner” and “My Front Desk Experience: A Young Banker’s Story”. She uses her experience and practical case studies, training young bankers in operational risk management, sales, customer service, banking operations and fraud.