S&Ls lagging behind in digitalisation – BoG

The Savings and Loans
  • …urges sizeable investment in technology

 The Savings and Loans (S&L) segment of the financial sector is in danger of losing the share of the market that has traditionally been its preserve if urgent steps are not taken to comprehensively digitise its operations and offerings, Second Deputy Governor of the Bank of Ghana (BoG), Elsie Addo Awadzi, has cautioned.

This comes as their nimbler neighbours – banks and fintechs – continue to diversify their offerings, making further inroads to reach the financially excluded.

In remarks at the 12th Annual General Meeting (AGM) of the Ghana Association of Savings and Loans Companies (GHALSAC), she cited the example of S&Ls being conspicuously missing from the BoG’s Online Regulatory Analytical Supervisory System (ORASS) – a platform through which the regulator can detect inconsistencies in data – as an example of an area in which they lag behind their peers.

“There is an urgent need for the S&L industry to take rapid steps to reposition itself through emerging technologies in order to modernise their business models and operations and to improve their risk management systems as well as meet the fast-changing needs of the customers and remain relevant to the section of the economy that was traditionally theirs,” Mrs. Awadzi explained.

Whilst conceding that the transition is capital intensive, she suggested that the alternative would be costlier, as it would mean further loss of business and ultimately, extinction.

Citing the appropriateness of the theme – Driving Financial Inclusion Through Digitalisation: The Role of Savings and Loans Companies – the regulator called on the Association and shareholders of individual institutions to ramp up investment in technology.

“We hope that we are not only talking about this today but that we will begin to see strenuous effort on the part of the S&L sector and shareholders are committed to making the necessary capital investments to improve systems, acquire the necessary technology, enter into appropriate partnerships and invest into the risk management protocols and systems that would be required to make the best out of technology,” she elaborated.

Code of Conduct

The event also witnessed the launch of the Code of Ethics and Conduct for GHALSAC, a development which was described as crucial, following the ethical missteps that led to the revocation of the licenses of 15 S&L companies and eight Finance Houses.

The second Deputy Governor said it is a step in the right direction as it would engender public trust and confidence in the activities of the sector, in light of widespread and highly-publicised incidents of fraud, mismanagement, non-compliance and poor ethics in the sector.

Whilst giving the BoG’s overwhelming endorsement, she cautioned that the letter of the document would prove inadequate in achieving its intended purpose without dedicated effort by all stakeholders.

“Let me however stress that the Code of Ethics on its own cannot work any magic without the conscious observance of its provisions and strict enforcement by the authorities. It would require a strong commitment to the values enshrined by the code by all members, shareholders, boards and staff. It would mean peer-to-peer vigilance as well as a lot of training and reorientation,” she remarked.

Year in review

Executive Secretary of GHALSAC, Tweneboah Kodua Boakye, disclosed that at the end of the financial period under review, the Association grew its timer base to 7.3 million, up 21.7 percent from December 2019. Additionally, total assets appreciated by 25.48 percent to GH¢5.6 billion, with deposits and the industry’s loan book up 33.4 percent and 64 percent respectively.





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