Ghana: Competition brings out the best

A new dynamism seems to have gripped Ghana’s once-staid banking industry. Instead of waiting for customers to come to them as in the past, they are now innovating and offering attractive packages to draw ever-increasing numbers of customers. Ghana’s banks, writes Eric Kwame Amesimeku, are thriving in the new competitive environment.

In the fiercely competitive banking industry in today’s Ghana, banks that fail to innovate or offer new products to their customers are finding themselves rapidly falling behind. From a handful of operators back in the late ’90s, the banking industry in Ghana has grown to its current level where there are 28 commercial banks.

The liberalisation of Ghana’s financial system, which, among other things, led to the relaxation of interest rate controls, credit ceilings, partial privatisation of the government’s own banks, restructuring of public sector banks, capital markets development and deregulation of the prudential system, has largely engendered healthy growth and competition among operators in the financial sector. The performance of the financial sector has been substantial since these reforms.

Competition among various mainstream banks aside, the Non-Bank Financial Institutions (NBFI), or what have come to be known as Savings and Loan companies, are giving the commercial banks a run for their money.

These Savings and Loans companies, licensed by the Bank of Ghana and operating at the micro level, are filling the huge gap that had been created by the reluctance of commercial banks to extend their services to the lower- to middle-income earners in Ghanaian society.

This segment of the populace had been neglected for far too long despite the fact that 70% of Ghana’s economy depends on small to medium-scale enterprises.

Against this backdrop, the nature of the game has changed from serving a niche market to serving the general population; bank managers can no longer afford to sit in their cosy offices inAccra and expect to grow or make profits, they have to expand.

Those who really mean business are ditching their three-piece suits and donning Lacoste T-shirts that resonate and speak the common language of the ordinary Ghanaian.  

“Over the years, we have been operating as a traditional investment bank religiously adhering to our mission as a development bank and thus serving a niche market, but we have lately realised that we have to innovate and engage or blend our services with commercial banking services if we are to survive this competition” says Ernest Mawuli Agbesi, the new managing director of Ghana’s National Investment Bank (NIB). The bank which was created back in 1953 solely as a development bank.

Agbesi’s views on growth, albeit peculiar to his bank, represent the general picture in the banking industry in Ghana. Banks in Ghana are moving from their laid-back approach to banking where they had to wait for customers to approach them for their services, to a more aggressive banking, which has seen banks literally chasing people for products such as loans.

One critical tool almost every commercial bank in Ghana has adopted to spur this new drive is technology. Banks in Ghana have rolled out such tech-driven products as internet banking to drive their virtual banking programmes.

Initially, internet banking was being championed by a handful of banks like Ecobank, GT Bank, Stanbic, Cal Bank, UBA and Zenith Bank. But now, the more traditional banks like GCB and ADB have all rolled out such services to be enjoyed by their customers.

Ecobank, taking the game a notch higher, recently opened its Ecobank Direct digital centre. The centre, the first in West Africa and equipped with state-of-the-art machines, serves as a cashless banking hub for the tech-savvy segment of Ecobank’s customers.Here, customers can enjoy all the services of a traditional banking hall but with little or no interface with banking staff.

Samuel Ashitey Adjei, MD of Ecobank Ghana, says “Ecobank Digital centre puts banking in the hands of the customer.”  He adds that “Innovation has always been key to being able to provide great services.”