Joseph Akossey’s thoughts ….Emerging trends in rural banking  to attract the prospective investor

Joseph Akossey is the Head of Proven Trusted Solutions, an employee training and marketing research firm.

Rural and community banking begun in the country in 1976 with the objective of helping fill a void created by lack of effective financial intermediation in the rural areas.

From the first bank to be established in Agona Nyakrom in the Central Region, the number has grown to a total of 144.

The sector remains the largest bank branch network with over 800 branches spread throughout the 16 regions of the country.

This has made it possible for people in hard to reach areas of the country to have access to basic banking services which hitherto was impossible. It is important to emphasize that the rural banking concept introduced four decades ago has impacted on the lives of Ghanaians especially those in the rural communities.  The achievements of rural banks are evident in job creation, credit to rural folks, support for rural development, creation of cottage industries, women economic empowerment, and deposit mobilization among others.

It is also significant to stress that the rural banking sector has undergone massive changes since its inception in 1976.

This article will therefore consider the emerging trends in the rural banking space as well as some recommendations for the players in the sector.

  1. Good quality staff (Human capital)

In the early stages, when rural banking was introduced in the country, the vast majority of Rural Banks had difficulties of attracting and retaining very well qualified and experienced personnel. This was due to various reasons, including the fact that Rural Banks were located in the rural areas which were underdeveloped and had little amenities.

It was common back then to see scores of rural bank staff with qualifications such as R.S.A. stage II, Middle School Leaving Certificate (MSLC), GCE O level among others.

In recent years, however, the trend has changed and first degree or an analogous professional qualification has become a basic qualification to get employment with most RCBs. The RCBs can now boast of Lawyers, Chartered Accountants, Masters of Business Administration and PhD Holders, heading the banks.

It should also be pointed out that the required training being offered by the ARB Apex Bank Limited and the Association of Rural Banks has contributed to the capacity building of staff of RCBs.

It is of no exaggeration to say that the RCBs have qualified and experience staff as seen in the Universal Banks. The banking public should therefore appreciate the fact that RCBs are well endowed to offer high service quality to maximize their experience.

  1. Merger and Acquisition

In 2013, three Rural Banks in the Central Region namely Gomoa Rural Bank, Gomoa Ajumako Rural Bank and Eastern Gomoa Assin Rural Bank merged into a single entity called Gomoa Community Bank. This is the first ever consolidation to be witnessed in the rural banking sector.

In 2018, Fiaseman Rural Bank in the Western Region acquired 60% equity stake in Twifo Rural Bank in the Central Region.

According to the General Manager, Mr. Kaedabi Donkor, “the deal affords his bank the opportunity to expand its business presence to the Central Region as market development strategy”. He further said that, “the move has made it possible to resuscitate Twifo Rural Bank which will create employment and shareholder value”.

Going forward, it is expected that other stronger and bigger RCBs will make similar move by investing in weaker RCBs which have the potential to become cash cow or star.

It should be noted that, merger has its own challenges and therefore there is a need to engage key stakeholders such as shareholders, directors and staff in detailed discussion with a view to addressing issues that might arise over loss of jobs, position and brand identity.

According to Mr. Isaac Sasah, the General Manager of Gomoa Rural Bank, “for a successful merger, the shareholders should not only accept the merger in principle but should also be committed to the merger as a whole”.

Empirical data has revealed that, merged institutions tend to face some challenges at the initial stage. Therefore, newly merged RCBs need the support and attention of the Bank of Ghana and the ARB Apex Bank Limited in order to remain resilient and robust.

  1. Changes in customer composition

In the past decades, the target market of the RCBs was predominantly rural folks, people of the bottom of the pyramid and salary workers who worked in the rural areas, among others. This was as a result of the rural banking concept which initially compelled the RCBs to operate in rural areas. However, in recent years there is a paradigm shift and rural banks target market is no longer limited to rural folks and the bottom of the pyramid (BOPs) as perceived by society.

Currently, the RCBs serve customers from all socio-economic levels of society, including institutions such as hospitals, educational institutions, hotels, private businesses, district assemblies, and all other private and public sectors of the economy. . For example, Paradise Hotel and Linder Dor Hospitality Group in the Eastern Region are customers of Mumuadu Rural Bank (Source: The Rural Banker). Amenfiman Rural Bank has executive loan product which is targeted at high net worth individuals, executives and management staff of companies, among others who do not operate account with the bank. According to Mr. Evans Aikins, the Head of Finance and Operations, “the Amenfiman brand has the capacity to offer more loans due to its high net worth and huge deposits base”.

What is the lesson? The banking populace, being it individual or institution should not underestimate the capacity of rural banks to offer them the best of services. Today, the RCBs have a suite of all the banking products offered in the universal banks and have many happy customers too.

  1. Adoption of digital banking channels

The banking industry in Ghana has undergone a paradigm shift evolving from manual banking to meeting the digital and personalized banking needs of their customers.

According to some Marketing and Banking Experts, bank customers generally are looking for convenience and it is believed that convenience can be delivered through digital channels. No wonder the 23 Universal Banks in Ghana have introduced digital channels such as ATMs, mobile banking, and internet banking among others.

It is heartwarming to mention that some RCBs have begun deploying modern and value added technology tools such as ATMs, Mobile Banking, among others to give customers real convenience and comfort. According to data from the ARB Apex Bank Limited, 39 RCBs have deployed ATMs. Additionally, 54 RCBs that do not have the ATMs have issued EMV cards, enhanced ATM cards to their customers. This means that customers of these RCBs can access their deposit when they move out of their banks’ catchment areas. In fact, the ARB Apex bank limited is intensifying its effort to ensure that Rural and Community Banks accelerate their adoption of digital technology. Therefore, the banking public should have confidence in the RCBs to offer them seamless and real time banking services. Individual RCBs should do their best to improve on their digitization adoption process because it has become the new normal.

It is also imperative that, the RCBs market the ATM Cards because they are products. They   should therefore intensify their marketing efforts by ensuring that existing and potential customers have access to ATM cards, as this will go a long way to boost their commission income streams.

Again, customers who seem to lack the ability to use the ATM platform should be educated about the usage and benefits. Some bank customers are reluctant to use the ATM platform because of fear of falling prey to ATM fraud and to alleviate this fear, they should be educated about the security and the protection that the ATM cards offer.

Before deploying new technological innovation and alternative channels, the RCBs should understand customers readiness and wiliness to accept them.

  1. Recapitalization

In order for the RCBs to remain strong and resilient to undertake effective financial intermediation, the Bank of Ghana has been exercising its supervisory role over the years with regard to minimum capital requirement.  In 1976, when the first Rural Bank was established, the required minimum capital was ₵50,000.00 (old cedis). This was later raised to ₵100,000 (old cedis).

In 1987, the minimum paid–up capital was increased to ₵ 1,500,000 (old cedis)

(Source: Rural Banking in Ghana by Mr. Emmanuel Asiedu-Mante, former Deputy Governor of the Bank of Ghana).

In 2014, the minimum paid–up capital for RCBs was revised upwards from ₵150, 000.00 to ₵ 300,000 (old cedis) and the RCBs were required to comply within a year. However, in 2015, the Bank of Ghana directed RCBs to increase their minimum stated capital to GHS1, 000,000.00 (One million Ghana Cedis). The RCBs were given flexible time frame (December 2017, extended to December 2018) to achieve the new paid–up capital. The minimum paid-up capital of the RCBs still stands at GHS1, 000,000.00 and it is refreshing to state that a number of Rural Banks across the country have in excess of this minimum stated capital requirement. For example, Amenfiman Rural Bank in the Western Region, currently has stated capital of GH₵ 6.3 million. Adansi Rural Bank also has a little over GH₵ 3.7 million while Ahantaman Rural Bank has a little over GH₵ 5.6 million stated capital.

It is also worth mentioning that some RCBs are proactively growing their capital in order to stay ahead of any possible future upward adjustment of the minimum stated capital requirement by the regulator. Another trend prevailing in the industry is transfer of funds from the reserve (income surplus) to boost the stated capital. This is understandable because it is sometimes difficult to get people to subscribe to shares in the catchment areas of most RCBs.

However, the RCBs are urged to do their utmost to focus aggressively on share mobilization to ensure fresh capital injection in order to boost their networth and the Capital Adequacy Ratio (CAR).

Most RCBs pay good dividends and the public is encouraged to invest in shares of RCBs as they stand to benefit from attractive return on investment (ROI).


Thus far, the article has highlighted on emerging trends in the rural banking sector in Ghana. It is believed that the sector will continue to adapt to the changing needs of customers in order to meet customer expectations and also remain competitive.

Daniel Ohene Kwaku Owusu ( DOK), National President, Association of Rural Banks, Ghana

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