GMRCEOs Breakfast Series VI
For banks to maintain delivering on their core mandate of financial intermediation, particularly in the pandemic economy, they must engage in strategic partnerships with financial technology firms.
This is the consensus of a panel of seasoned speakers from the banking and technology industries, who argue that the synergy from such collaborations will provide the framework required for banks to be more sustainable and adaptable moving forward.
Speaking at the sixth edition of the Ghana’s Most Respected CEOs Breakfast Series meeting organised by the B&FT, Chief Executive at Edel Technologies, Ethel Cofie, said it is unlikely that the innovation required for the evolution of banking will emanate from the industry; as such, banks must look outside themselves to the wide range of solutions being offered by fintechs.
According to her, with increased competition, banks must consider going beyond the occasional partnerships – which include the organisation of hackathons, aimed at unearthing viable startups – to strategies such as aggressive acquisition.
“There are a number of amazing young people who are building amazing payment platforms, rethinking payment processes, front-end and ways of ensuring that you can keep your core. If you are a bank, I like the idea of having the hubs and hackathons; but as a step further, have an in-house M&A department that is always actively looking to acquire fintechs in your country, or outside, as part of your strategy,” she said.
These sentiments were also shared by the CEO of Intelligent Capital Group, Leticia Browne, who urged banks not to look at fintechs as competitors – arguing that while banks have the resources to pick up an idea and implement it, fintechs have the agility and their ‘fingers on the pulse’. Stating that it could breed inefficiencies, she said: “It should be more collaboration than looking at what they are doing and trying to replicate it”.
Offering a different perspective, Chief Executive at CBG, Daniel Addo, said it would be economically imprudent for banks to own every unit it uses for its production – adding that outsourcing is oftentimes the better path to tread.
“As banks, we need to look at our business models and ask ourselves, ‘are we the ones to innovate payment systems or do we work with the fintechs? Do we see fintechs as competitors or collaborators?’ It is about perspective and the fintech is my collaborator, so I am happy to help that fintech to grow because it grows my business too,” he explained.
He added that despite some seemingly overlapping functions, there remain distinctions between the spheres of operation for banks and fintechs. “That is the beauty of the system; as it evolves, we learn to collaborate. From my point of view, we need to be able to manage complex systems and relationships across other industries,” he said.
On his part, CEO of FNB Ghana, Dominic Adu, stated his outfit is consistently looking to partnerships; saying that most banks must appreciate that they lack the agility to innovate rapidly.
For the CEO of UMB, Nana Dwemoh Benneh, the ‘healthy tension’ that accompanies collaborations must not be overlooked – especially as banks and fintechs have significantly different governance structures and requirements. While admitting that acquisitions are a viable option, he argued that joint ventures might be more ideal.
“Sometimes we might have to say, ‘bring the product to market, I will help with the marketing and when the revenue comes in, we split it’. This can be done as a proof of viability for the concept… we cannot overlook that there are differences in our DNA which we have to work through.”
On his part, Country Managing Partner at Deloitte Ghana, Daniel Kwadwo Owusu, said the fiduciary responsibility banks owe their clients and shareholders in creating value must guide whatever partnerships they engage in.
The first edition of the GMRCEO Breakfast series meeting for 2021 was held under the theme ‘Business Adaptability and Sustainability in 2021: The Role and Impact of Finance and Technology’.