Gone are the days at university when we used to form long and winding queues as early as we could in front of banking halls of selected banks in the country to pay the popular AFUFs (Academic Facility User Fees). Friends and other students who were then residing outside Accra were compelled by the situation to travel to the regional capitals where these banks have branches to pay the fees. It was a very stressful experience we had at the time, but the narrative has since changed with improvement in the operations of banks.
In recent times, you will notice that banks’ businesses are undergoing a significant transformation with technological innovations redefining alternate channels to reach all segments of customers wherever they are (with the availability of Internet connectivity). These trending channels have been tagged ‘digital banking’ to include all the enabled platforms used alongside the traditional branches. The digital platforms include mobile smartphone (iOS, Android) Applications on the Google Playstore, tablets, computers, Debits/Credit Cards and other online mediums of access to banking transactions and a related bouquet of products and services.
They are intended to facilitate convenient relationships between the banks and their customers, especially the savvy ones who can use the channels without any feeling of their sophistication. Indeed, the efforts of banks to realise the full benefits of the digital agenda come at the backdrop of high cost of investments in IT infrastructure. So, the benefits must outweigh the cost of capital outlay into these assets.
Therefore, banks must adopt many financial management strategies to help them keep a tight rein on expenditure in relation to their expected incomes. The banks envision a reduction in the cost of operations through efficiency across all their units, especially at the branches, while closing some of them. This also results in fewer number of employees needed to work for them. Even though the banks still maintain some of their branches at convenient locations to facilitate business, these branches are envisaged to be smaller in size with technological interfaces for self-service to the savvy customers.
Regarding customers, they want the digital channels to serve as a ‘one-stop-shop’ to satisfy multiple needs with the high expectation that product offerings and services should improve; including the opportunity to perform and monitor their transactions each day (24/7 hours) with convenience, quickly and at minimum charges. Again, customers naturally need assurance from the banks that their transactions are always secure, without them being compromised by system (security) hackers.
By considering the cost-benefit to the banks at one side and the delightful experiences to customers at the other side, we can say the banks need a big cluster of the retail customers to patronise the digital channels – from whom they can earn high returns on their investments. Would the banks make the gains when the (mass) retail market is not roped into the digital arena? On the other hand, would this customer segment feel the delightful experience they desire when many of them do not have the level of literacy (skills) required to use the channels with ease?
Interestingly, when you hear from afar or near – and even by a cursory look at marketing campaigns on digital banking in the country – the verdict is clear: the channels are friendlier to the (minority) urban elite who use technological applications with ease. More often in our banking fraternity, there is a mindset and strong tendency to assume that banking services through the digital channels are meant for the privileged few in society due to their high-income status.
This should not be the case; our strategic focus should be on the mass retail customers who inundate the branches with long queues – to the extent that cashiers (tellers) sometimes sacrifice their lunch-hour attending to them. We should foresee a dramatic reduction in the long queues in the banking halls when more of them join the digital drive. In fact, the September 2017 Country Diagnostic Report with respect to Digital Payments Ecosystem, which was put together by the UN-based Better Than Cash Alliance, revealed that though the government of Ghana is leading efforts to digitise payments, much of the payments by volume (98.72%) are still being made in cash.
It further stated that “the strong preference for cash in Ghana is also a result of the high costs of digital payments that are often passed on to users (i.e., charging customers a fee to use credit cards), and a lack of trust in, or familiarity with, digital payments”. This, to my mind, means that the digital space is currently underutilized, and therefore requires deliberate strategies to change the status quo. This cannot happen overnight.
Indeed, the present approach of most banks to increase patronage of digital channels is the focus on existing customers and others who can read and write. This is understandable and worth pursuing with vigour. Nonetheless, not all these people have the skills to use the channels; even if they have the skills and the resources to afford the digital devices, some of them are conservative. The issue is that it is difficult, if not impossible, to get people to try new ways of doing things; especially when they have been doing some things in a particular way for a long time and achieve the desired results.
In view of this, we must direct our energies toward the adoption of pragmatic strategies which result in increasing the number of users on the digital platforms, thereby harnessing fully our investments at lower service charges (to the customers). This requires a thoughtful corporate citizenship programme for building a burgeoning retail market of digitally savvy customers. Education! We must educate the millennials – people who were born or are yet to be born in the era of increasing use and familiarity with digital technologies. We must catch them young – but not like the embattled headmaster who was reported for doing his own thing on a kitchen stool with a schoolgirl. That is the just by the way.
Corporate Citizenship Strategy
Apart from complying with regulatory issues and reporting to shareholders on financial performance, banks (financial institutions) as corporate citizens relate with and touch the lives of others through social responsibility projects which take many forms – environmental, educational, health, cultural and projects in the communities where they operate.
The positive impacts of these projects on the people’s lives invariably help the banks to develop a sustainable reputation for themselves, which in turn gives them a competitive advantage. Thus, the brand recognition projects help them to build customer loyalty and increase sales (of products and services), leading to a better financial performance at the end of each period or business year.
Since retail customers are supposed to use the digital channels but many of them are unable to do so, due to the low level of IT skills and financial literacy or feeling of apprehension, it should be a clarion call for the banks to begin channeling or increasing the percentage of their Corporate Social Responsibility (CSR) budgets for educational projects.
These should be projects or activities which would help liberate and empower them. Empowerment means we are building the mass market of tomorrow’s entrepreneurs and individuals with the knowledge and the skills required to earn income, use the digital channels with ease, and then increase the wallets of our accounts.
The time has also come for banks to leverage on the fibre-optic backbone infrastructure in the country, and establish ICT hubs in schools or communities. They should use the opportunity to institute or expand scholarship schemes for the needy ones. It is very important to recognise that the more people are enlightened through education, the better it will be for banks to have more potential customers using digital channels at optimum levels, hence reducing the high operational costs associated with branch banking.
As part of corporate strategy, Corporate Social Responsibility(CSR) budgets and advertising budgets generally fall under the broad marketing budget. In this regard, the total marketing budget should be used with concerted efforts to give the bank mileage on all fronts – educational effect of nurturing digital-savvy customers, brand awareness and value (product) propositions. In this technological world, where else can we direct our plans and strategies toward recording many active and digital savvy account holders? Let us ‘catch’ the digital-millennial young in the communities and schools now.
I am once again grateful to you for your valuable time. God Bless You!
