Silver gone, so did gold, now with the diamond, great happiness you unfold- Unknown Author.
The story of Ghana’s Banking industry is an interesting tale to relate and that tale is not over. The story keeps molding itself until the perfect picture emerges.
Financial intermediation has gone through many faces in Ghana. Just after independence, was a banking system modeled in the fashion of the British system. The Bank of England had to give way to Bank of Ghana and so did the Pound give way to the Cedis.
Banking in Ghana has also at one point in time witnessed the eroding of confidence of the public in Banks as a result of the liquidation of certain prominent Banks. Despite these setbacks in the past, one can confidently say today Banking in Ghana is vibrant with a total of 33 Banks competing aggressively for both business and individuals; competing to provide the most cutting edge solutions and product suit to delight customers.
This vibrant Financial services sector has come about as a result of the toils of both individuals and corporations. Banks such as Barclays Bank Ghana, Standard Chartered Bank, GCB Bank, ADB Bank and more recent ones like Ecobank, Zenith Bank and GT Bank have played important role in restoring the public confidence in the financial mediation role of Financial institutions.
Aside the above mentioned intuitions, it is also worth mentioning individuals such as Albert Essien, Jean Arkah of blessed memory, Prince Kofi Amoabeng and Frank Adu Junior who through their hard work as individuals have helped shaped todays Banking sector and have created a competitive Financial services environment.
There has been a lot that has happened in the banking sector in the past sixty years but it is in the past…the only thing we can do now is look forward to the next sixty years.
Despite these apparent vibrant financial intermediation activities among the banks and the dynamic role of these enigmatic individuals there is still more to do. It is therefore appropriate to ask what the next frontier is for Banks in Ghana after sixty years of financial intermediation.
Today, there are a plethora of products to delight individual customers in the Banking sector. The unfortunate reality though is that over 80% of those products are tailored towards helping individuals and organizations within the formal sectors of the economy. Statistically, the Banking sector covers only 40% of the economy. That statistics suggest that a staggering 60% are outside the Banking system.
As gloomy as this data may look, it also offers a new frontier for the Banking sector to focus on improving after sixty years of financial intermediation. There are unique opportunities on the horizon to help achieve this in the medium to long term and these opportunities include:
Increased accessibility to education and training of the population.
As opposed to the past sixty years, there are more students graduating from colleges and universities throughout the country. This increases the number of individuals with formal training who can participate in the financial intermediation process. This demographic change will therefore offer more opportunities to Banks and other players in the economy to have access to an empowered population who will have both ability and basic knowledge to participate in the economy.
Increased technologically induced financial products.
Today, there are various mobile money products that allow individuals on the street to easily perform various transactions. With this development, more and more people are given the opportunity to perform transactions that would have otherwise been performed with cash. The uniqueness of this is that the devices used for the transactions are mobile and thus accessible to individuals anywhere and anytime. Players in the Financial intermediation space can and should therefore design products that will ensure integration to these technologically developed products.
There is also a growing demand towards cashless transactions.
Banks and other financial intermediaries stand to benefit as government policies and schemes enhance the processes and legislations towards the creation of cashless economy.
Ghana’s economy is set to expand in the years to come.
There is growing spirit of individual ventures and self-belief that will propel the economy to higher grounds. This boiling volcano, once it erupts, will serve as good stimulus for banks to grow the desired balance sheet.But this cannot happen on the plate of wishful thinking. The Banks must position themselves to be part of the story.
BOG will require Banks to increase their stated capital.
This in itself will serve as growth incentive for banks and will result in good balance sheets which will allow them to perform big ticket transactions.
There is more on the horizon for financial intermediation to achieve in the next six decades. Ghana is still a country whose potential has not been fully exploited. In the past sixty years or so, the focus has been on government as the largest payer in the economy as opposed to private players. Ghanaians have taken great delight in being called Doctors, Lawyers, Accountants, Soldiers etc. However, the last decade has seen an emergence of a desire to grow private enterprises. This development is a healthy approach and banks and other financial services providers must strategically place themselves to help such private enterprises have the necessary funding that will fuel the necessary growth. Today’s banking sector or financial services sector can boast of more personal products than those that will allow businesses and other economic generating units to grow. The natural consequence of this is an economy that is heavily dependent on foreign goods and also only on consumption without any production. This situation will take more than financial intermediation to correct. Nonetheless, they have a critical role to play in emancipating the private players in the economy.
Small businesses collapse because they are denied a vital financing at a critical stage of their development and are not able to access this funding from Banks and if they do, at a very high cost from other financial intuitions.
The next sixty years is therefore an opportunity for Financial institutions to change the narrative of Financial intermediation in Ghana. Banks must position themselves to nurture and Bank Sixty billionaires in the next six decades with each billionaire having a net worth of twenty billion dollars or more. This is no fantasy. With the fortress of resources that Ghana is endowed with, coupled with the right attitude to realize a dream of prosperous society for the next generation, more billionaires should be produced in the next generation… This we can do and with the right financial intermediation, YES WE CAN have sixty billionaires in the next six decades.
The dream of sixty billionaires in the next sixty years is the new frontier for financial intermediation in Ghana for the next sixty years…as the quotation above aptly captures……Silver gone, so did gold, now with the diamond, great happiness you unfold as Ghana chalks sixty and looks forward to a prosperous future.