FUTURE OF BANKING:  Lockdown – No lip service; practicalize relationship banking

“Most of the time, consumers don’t think about banking at all. They just expect it to work. The only times they really think about banking is when there is a financial need or when they’re facing a crisis.  “Delivering solutions, tailored to each individual customer, is what builds trust and brand loyalty in these moments.” —- Alex Johnson, Director of Portfolio Marketing for FICO.

“So, effective 1am on Monday, 30th March, some forty-eight hours from now, I have imposed, pursuant to the powers granted the President of the Republic, under the Imposition of Restrictions Act, 2020 (Act 1012), restrictions on movement of persons in the Greater Accra Metropolitan Area (GAMA, which includes Awutu Senya East), and the Greater Kumasi Metropolitan Area and contiguous districts, for a period of two (2) weeks, subject to review. It will give us the opportunity to try to halt the spread of the virus, and scale-up effectively contact tracing of persons who have come into contact with infected persons, test them for the virus, and, if necessary, quarantine and isolate them for treatment, should they prove to have the virus.”

These were the words of President Nana Addo Dankwa Akufo-Addo, president of the Republic of Ghana late night on Friday March 27, 2020.

According to him, these are intended to achieve five (5) key objectives – limit and stop the importation of the virus; contain its spread; provide adequate care for the sick; limit the impact of the virus on social and economic life; and inspire the expansion of our domestic capability and deepen our self-reliance.

It was surely a welcoming news for groups like the GMA and a host of Ghanaians who consistently called for a ‘lockdown’ in the face of the deadly pandemic in order to curb the spread and eventually annihilate the virus in order to get the nation to normalcy.

Surely all are aware of the economic repercussions for the nation as businesses and related activities slow down during the period. However just like the turnaround of the 2008 banking crisis, this phase too shall pass ceteris paribus. One of the essential services to operate during the lockdown, is banking as customers will need transactions for various reasons.

As the COVID-19 pandemic shuts down the world’s economy, the financial consequences for consumers become more serious. People will expect their banks to know them, to look out for them, and protect them from financial catastrophe. Are financial institutions ready to meet these unprecedented challenges without paying lip service? It is time for banks to prove to customers that they will stand with them in challenging times.

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 “At its core, banking is not simply about profit, but about personal relationships.” – Felix George Rohatyn, Fmr. American Investment Banker & Diplomat

To show leadership, the Bank of Ghana (BoG) through its Monetary Policy Committee has lowered the policy rate by 150 basis points from 16 to 14.5 percent. Banks are also to reduce interest rates by 2% effective April 1, 2020 as part of a collective measure to help in diverse ways in mitigating challenges the pandemic will bring to the institutions & households and the economy as a whole.

These are extraordinary times and banks can do much better for consumers at all levels. Extraordinary thinking and actions are required at this moment to help reduce consumer and business stress. Banks can do all or most of the following:

  1. The ability to defer mortgage and other loan repayments for extended periods of time.

This surely can be carried out on a case-by-case basis per customer. It enables clients to apply for such opportunities if they require that. COVID -19 could have negative effects on cash flows for businesses and households and therefore measures such as this by banks, can partly relieve them of such. Additionally, banks should provide waivers on possible penalties for late repayments and those on excesses.

 

  1. Increase in withdrawal limits

As strong adherence to social distancing is being observed, banks should ensure that daily limit via ATMs and other digital platforms are increased beyond the existing amounts within the period. This will help limit the numbers that will plan to enter banking halls to transact and eventually also help curtail the spread of the virus. Additionally, banks should create avenues for clients to earn rewards in cash into a savings pocket as more transactions are carried out with digital devices.

 

  1. Provide easy access to cash from fixed-term savings accounts without early termination fees
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Many fixed-term savings such as fixed deposit may come with early termination penalty charges by banks. This is because it breaches the original contract which empowers the banks to use fixed monies for short, medium or possibly long-term trading in order to make certain ‘calculated’ interests. Banks therefore insulate themselves with penalty charges for such early terminations. Extraordinary times like now, should push banks to waive that and enable customers withdraw to cater for precautionary measures in the COVID-19 era.

 

  1. Improve and expand digital services for customers

Banks can do a lot of good service for their customers by helping them leverage on their digital platforms to carry out their respective financial activities during the period. Digital platforms such as ATMs should be well disinfected and faulty ones be immediately repaired for usage. Banks should provide extra POSs, improve online banking, intelligent ATMs and improve on all fronts of their cashless systems to help customers in that regard.

 

  1. Provide short-term credit lines for businesses and households

Periods like now, can greatly affect businesses and corporate organizations in raising funds to pay salaries and carry out other basic activities. As a way of deepening relationships, banks should come to the aid of such by making available short-term offers to help reduce the stress accompanied with it. Without that, organizations may lay off staff especially as their cash flow can be greatly affected negatively. If digital platforms are improved, such can be quickly done digitally to avoid face-to-face contacts with clients.

 

In addition to the above, banks should ensure that all customers who come to the banking halls:

  1. Avoid physical contact as much as possible
  2. Wash hands with soap under running water
  3. Apply alcohol-based sanitizer frequently
  4. Advised to stay home & safe and leverage on digital platforms.

 

Notes:

https://en.wikipedia.org/wiki/Felix_Rohatyn

https://www.ghanaweb.com/GhanaHomePage/NewsArchive/Full-text-Akufo-Addo-s-speech-on-partial-lockdown-906619

 

About the Writer:

Ebenezer ASUMANG (CGIA) gained extensive experience working in mainstream Banking, Savings & Loans, and the Microfinance institutions. He is a member of the CGIA Institute, USA and an Author.

Contact him via:

eben_asumang@yahoo.com / +233 (0) 242 339 145

LinkedIn – Ebenezer Asumang

Facebook – Ebenezer Asare Asumang

Twitter –   @kwabenasumang

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