“A dream doesn’t become reality through magic; it takes sweat, determination and hard work.” – Colin Powell
Today, I wish to dedicate my column to Bank Executives in Ghana, especially the CEOs. Why am I doing that? Someone would ask? Are they not the ones who are earning six digit bonuses and ride in fine luxury cars? Hold it. Not all that glitters is gold. Most young bankers dream of being CEOs of the business or of other financial houses in the not too distant future. Today I will explore the serious side of banking which keeps many bank executives awake at night. It is a yeoman’s job. I feel some of them have been going through turbulent times these days, which sometimes make them grey very fast (smile). Grey hairs are also elegant. (Another smile). This column is to encourage them in these turbulent times in the Ghanaian banking scene.
Dreams of a Young Banker
As a young banker I always admired the investment bankers of Wall Street in New York. This admiration heightened in the mid-1990s when I had the priviledge of joining a group of African bankers on a two month program on corporate finance at a bank in New York. Aside from the tough period of crunching figures from the Wall Street Journal, the climax was a tour of the New York Stock Exchange to watch the money makers at work. Bank Managers were thought to be rich! In the past few decades of my banking career, I regard the banking of the last two decades as revolutionary. Gone were the days when banking was a sellers’ market. Customers had no option than to go into the banking halls to join long queues to withdraw or deposit cash. Front line staff were made up mostly of Tellers barricaded in glass or wooden cages. Customers sometimes felt they were at the mercy of these staff and had to tolerate any form of lackadaisical service. Banking was a dream job for most graduates but reserved mainly for those who did Business Administration or Economics. Jobs were available for graduates to choose from.
Banking as a Service industry
The last two decades have seen automation and computerization, breakdown of barriers and easy access to staff and managers without much fuss. It is now recognized that banking is a service industry first, and therefore the concentration has now changed to satisfying the needs of customers who have many products and services, aside from numerous banks to choose from. Graduates from Archeology to Zoology are now recruited in the banks. The emphasis is now on attitude. Now it is a buyers’ market and bankers now comb every nook and cranny of the town looking for customers. The dreams of the young banker these days is gradually turning into a nightmare! Targets, targets, targets.
The Financial Meltdown
Bankers’ nightmare started with the “Financial meltdown” or crisis in 2008 which caused the previously “halo effect” of the big banks in America and Europe to melt as they crumbled and topple down from grace to grass. In the USA and Britain, some of these banks were taken over by the Federal Reserve Bank or Bank of England, bailing them out with the tax payers’ funds. There were big financial scandals causing close downs, losses of share values, mergers and acquisitions. Many bank executives were brought to their knees as they were fired, sanctioned and even prosecuted for causing financial loss to customers as well as the state.
The Ghanaian Bank Executive
Coming nearer home, we can see that gone are days when banks put more of their funds in Treasury Bills to make a margin. The Ghanaian banking scene has also got its fair share of hiccups. The Bank of Ghana and the Government has always resorted to enacting several Directives and Acts to bring more sanity into the financial sector. Despite the seeming glamour around the bank Execs and CEOs, the past few years have witnessed several difficult hurdles to be crossed and they are also facing very difficult times in meeting the BOG directives.
The Pain of Regulatory Burdens
The central bank has always been the Regulator of banks. Banks can only operate with their license. Banking is one of the most regulated industries in Ghana. The approval of the universal banking concept in 2003 has opened the way for banks to veer into unchartered waters, whether they have the capacity or not. Coupled with the statutory reports that needed to be submitted on their due dates, there are a lot of responsibilities placed on all bank executives of CEOs to ensure compliance to avoid fines or sanctions. The recent takeover of Capital and UT banks in August 2017, plus the placement of Unibank under the charge of KPMG has created a lot of fear and panic among both bankers as well as their customers. A lot has been said about the almighty GHC400m minimum capital expected to be mobilized by all banks by 31st December, 2018! I am sure that this is the most lingering headache for the local banks who have no foreign parent companies to bail them out.
The Bank of Ghana, whom many people relied on a the father of all banks, the lender of last resort, or the bail-out Father Christmas, has now bared its teeth. It has recently woken up from its “lack of family planning” in licensing many new banks without the needed control monitoring mechanisms. Unfortunately it is said that some of its numerous children became a bit unruly and needed to be brought back to sanity to prevent total wipeout. Why? Why did some of the truants reach the extent of rebelliousness associated with the rebellious adolescent?
The Dwindling Margins
Another headache is the dwindling margins or margin compression. Many customers are financially savvy and would not want to leave their funds idle. More customers prefer term deposits rather than leave their funds idle and not earning any interest. The so-called cheap deposits or “CASA” are becoming more difficult to mobilize. The competeion fron microfinance and non-bank financial institutions offering fantastic interest rates have influenced customers to transfer their funds there, expecting huge profits on these investments. Banks who have high rates of term deposits are unable to make the needed margins on these deposits and end up incurring high operational costs…..more wahala for the bank executives.
The Threat from Fin-Techs
The competition from the fin-techs companies offering alternative banking at cheaper cost as a result of branchless banking is another monster staring at bank executives. Day in and day out, new software are launched with banks being forced to integrate them in their banking software systems. With less emphasis on infrastructural expansion, banking halls are becoming less busy. After all, many young customers (the Generation X) as well as sophisticated customers have deserted the physical structures and prefer digital banking, self-service, ATMs and social media for their banking enquiries. If they can easily communicate with their Account Manager on whatsup and get my questions, telephone calls are even getting archaic. So, what should management do with the physical space? Lay off some tellers and some branch staff? That is another expensive exercise.
Pressure from the Board of Directors…Targets! Targets!
Is it the CEOs who give themselves those outrageous to impress the Directors, or they were forced on him/her? Most bank staff now have individual targets to meet as part of the mobilization drive. While the younger ones are stressful when they don’t meet the targets, the Bank Executives also have their own stress levels. Sometimes there is a need to review the budget during the year to make the expectations more S-M-A-R-T and achievable. Board meetings become dreaded and all levels of staff get stressful. The bank executives keep awake at night trying to solve the jig-saw puzzle of filling the empty spaces.
The GHC400m Capitalization Monster
Ever since the announcement by the Governor of the Bank of Ghana directing all banks to meet a new minimum capital of GHC400m by December 2018, many local bank CEOs have been having sleepless nights. It is almost the middle of 2018. The recommendation for local banks to merge is not as simple as it looks. There is a growing fear among executives of the fear of the unknown…..possible integration problems, clash of cultures, possible loss of jobs to avoid duplication of functions.
This is very real…but dear Executives, it happens all the time.
My Final Words
Dear bank executives, whatever happens in the next half year, yours is to leave a good legacy wherever you work. These are trying times but please don’t lose focus otherwise the internal and external fraudsters will embarrass you. I hope you don’t get too desperate to accept funds from any Tom, Dick and Harry just for the sake of capitalization. There are a number of false investors with hidden agenda, lobbying local banks to accept their money laundered funds! Don’t fall into their trap. Ghana does not need those people.
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.