Rural banks told to leverage customer-driven digitisation of financial products post- DDEP

Rural and Community Banks (RCBs) must leverage customer-driven digitisation of financial products and services in their quest to expand the rural banking concept in post Domestic Debt Exchange Programme (DDEP).

Dr Richmond Akwasi Atuahene, Corporate Governance and Banking Consultant, said this in an interview with the Ghana News Agency on the sidelines of the recent  22nd Annual Conference of Chief Executive Officers (CEOs) of Rural and Community Banks (RCBs) in Ho.

He said there was need to create a data-centric culture and build teams that could rationalize legacy technology to strategise for sustainability in post DDEP. 

He said: “As well as ‘Customer Centricity’ the RCBs CEOs need to understand how to drive technological change, leverage data to understand their customers need better.”

He said technology was revolutionizing the competitive landscape in financial system and with the entry of Telecommunications firms and innovative Fintech players into the traditional domain of banks had already changed the way the financial transactions are carried out.

“Unbundling of banking services is a reality and will change the way banks operate and this will test the adaptive capacity of the banks and other traditional financial firms,” the Banking Consultant added.

He said unless the traditional firms adapt to the new ways of doing business, they might be marginalized sooner or later.

He, however, said even while individual rural and community banks adapted to the new competitive landscape at the system level, it was imperative to ensure that heterogeneity was preserved.

He added a homogeneous financial system would be less resilient and prone to systemic crisis if the underlying economic conditions change, “hence, it is important that the financial system consists of entities which follow different business models even while adapting to the newer ways of doing business.”

Dr Atuahene urged CEOs to be conversant with enterprise-wide risk management as well as robust risk governance to ensure resilient and sustainability of the rural and community banking.

For rural and community banks to position for the future, the Banking Consultant said the intangible aspects of effective leadership were as important as the technical skills and industry expertise.

“While the tangible proficiency may be more obvious and identifiable on the surface, it is often the attributes, competencies and qualitative elements of leadership that make the difference in the success of truly great CEOs.” 

He said CEOs ought to inspire and influence, disrupt and challenge, lead innovation, and adapt in order to successfully navigate the next phase of a rural and community banking sector fraught with uncertainty.

He said CEOs in post DDEP era must ensure all the Executive Management processes are functioning to coherence, adherence and compliance with the Banking Laws and Regulation.

Dr Atuahene said to expand the frontiers of business for Rural and Community Banks, the CEOs must combine speed and smartness to ensure growth and stability.

He added: “CEOs “Agility” is one of most widely used and misunderstood management buzzwords of the past decade. For many CEOs, agility evokes speed in decision making and execution, as opposed to the deliberate pace dictated by the stable, standardized routines of large organizations.”

He challenged the Board of Directors and CEOs of RCBs to do more to expand the frontiers of rural banking business with the view of creating value for shareholders as making these banks more resilient and sustainable.

Mr Alex Kwasi Awuah, Managing Director, ARB Apex Bank expected the government to offer concessions during the introduction of major austerity programmes such as tax hikes and the recently concluded DDEP.

He lamented the many presentations to government for a reduction in the applicable corporate income tax rate for the RCBs, which is now increased to 25 per cent from the eight per cent, remained unheeded.

Mr Awuah called for the reduction of the corporate income tax rate from the current 25 per cent to 10 per cent, to facilitate speeding up of capital accumulation that would quickly restore the strong solvency position of the affected banks.

He said ARB Apex Bank and the RCBs, which held a total of GHC1.10 billion in government bonds under the DDEP after the restructuring had wiped up projected incomes leading to significant losses due to impairment charges.

He said it was critical for RCBs to engraft Environmental, Social and Governance (ESG) risk principles into its operations and financial reporting has therefore engaged a team of consultants from Deloitte and Touche Ghana Country office to begin the processes of guiding them to integrate ESGs.

The Conference, which is being attended by more than 200 delegates was under the theme, “Expanding the Frontiers of Business for Rural and Community Banks Post DDEP – Role of CEOs.”

Source: GNA

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