Question: The banking sector–like the rest of the economy–has come out of a very difficult year caused by the pandemic. How did your bank respond to the challenge to maintain its growth trajectory?
Answer: The main issues that came up centred on our own internal response and then as part of a coordinated or composite response by the industry spearheaded by the regulator.
Our Business Continuity Plan (BCP) as a bank, as part of the general governance structure of any bank, simulates a difficult time as a pandemic. Our BCP is clear and it speaks about our staffing arrangements, physical engagements; for instance if there was a pandemic or any natural disaster, it spells out clearly the salient issues we should be looking out for.
First of all, what we sought to do was to just kick it into motion; take critical decisions and roll out our response. Our response was about our staff because if the staff are not available then we can’t serve the customer. We started with our staffing arrangement, people working from home, working in shifts — giving staff working tools to be able to make sure that all those arrangements were relevant.
When the president announced only essential service workers were to go to the office, what we did was to split staff into two groups. We had one team at home and the other in the office. So, should there be a breakout or infection, we would have had another safe place which can then kick in. This arrangement meant that we initially had to incur some costs, because we needed to buy some PPEs, buy sanitisers etc., to make sure all the protocols were in place.
On the part of our customers, as we all know, the structure of Ghana’s economy is more of import and export trade-related and we quickly realised that because a lot of these customers are into trade and there were a lot of restrictions, so they were unable to travel.
Because these customers have liquidity, we rolled out some products that gave some level of improved earnings on the cash, which typically would have been kept in the current account or any other activity but that is no longer immediately available.
So, we gave a little higher percentages to serve as motivation to customers to bring their money to us, at least till when things are eased out and the economy opens up. This ensured that the customers would have gotten at least some bit of yield that is able to shore up their business.
The business relationship is one that thrives on trust, so we also extended moratorium to some customers. We have some very significant customers in the hotel and hospitality industry and occupancy level was less than 5%, how are they going to service their credit facilities?
Because customers were not visiting these locations, they were not generating enough revenue to service their facilities. Our plan considered all the challenges and depending on the need, moratorium were a minimum six months to a maximum two years to some of these customers just to make sure that even though we will lose out of the liquidity we are needing, in the long term we will see them having more trust in our offering and services.
On the other hand, because of the challenges being faced by our customers, liquidity was one area we needed to be cautious of since customers could not service their facilities. Our plan, therefore, took into consideration investment that are not running into long-term deals, and we could have access to liquidity at any time.
We were also able to survive because the Bank of Ghana did some interventions. What the BoG did was to reduce the primary reserve requirement from 10 to 8 percent. For instance, for every cedi of customer deposit we receive as a bank, we keep 10 percent with the central bank so that should anything happen or the system goes down, BoG can fall on that to bail out any of the member bank who has the issue.
This meant that they left two percent that could be given out as loans to some customers to make sure that there is less stress on the financial system.
Then they also came up with some interventions like reducing the monetary policy rate by 150 basis points. That also meant that if we borrowed previously from the central bank at 15 or 16 percent and they drop the rate to 14.5 percent, we could extend that relaxed terms to some customers.
And then, the last bit of response we took on our own was that we also have some multilateral partners who provide some funds to Access Bank. What happened was that, a lot of our customers in our SMEs space needed to be brought up to speed in terms of their digital readiness, and how they interact with their customers, etc. So, we had series of webinar sessions trying to bring a lot of these SME customers up to speed with new tech trends they can utilise.
- What lessons has your bank learned from the pandemic?
Answer: What comes up strongly is that no condition is permanent. And what we see is that traditional brick and mortar will never be what banking is about because the bank has moved on to digital. After Covid, there’s not going to be any reversal of what we used to do again. There is a new normal, and we are not going to depart from the digital engagement but we are going to deepen them. Lessons from the Covid is that digital is the way and we will not go to what it was before.
- How much and in what ways do you expect banking to change after the pandemic?
Answer: What I see typically is a collaborative new norm. Currently, a lot of the emphasis is on telcos and fintechs because they are the enablers for a lot of the convenience that banks offer to the customers.
Previously, banks’ customers were expected to fill a ledger in order to complete their transactions. This then moved on to network banking where customers had access to the accounts from any their bank’s branches.
Now we have even progressed beyond the network banking to where customers do not necessarily need have bank accounts with a particular bank in order to complete a transaction.
With these changes, we see a lot more emphasis and more role play by Fintechs and the Telcos — unless may be banks decide to collaborate and probably bring their own platform. But I believe telcos and fintechs are here to stay – they are increasingly becoming more important to the banking business and I see lot partnerships between them and the banks.
- What impact do you think the new financial sector clean-up levy will have on the sector?
Answer: From where I sit, I don’t see any adverse impact of the levy on the performance of the banks. Banks live in an ecosystem that have customers from the communities and the environment they operate. We know government taxation is used to equalise opportunities for players in the economic system so I see banks doing better even with the taxes because government need taxes for development and as the economic environment improves then banks can also do well in terms of profit.
- As the economy begins to rebound from the slowdown in 2020, what in your view is the outlook for the banking sector?
Answer: I see the banking sector growing very astronomically. From year 2000 to date, if we were looking for any era that banks are expected to record leaps and bounds performance, we can point to 2020-2022. We are going to see an era of quantum leap in performance, none like any other period from 2000.
From simple Economics, we have had a situation where everything goes down and it’s starting to go up again. Banks are going to go up because the economy went to sleep and it just woke up again. It woke up again because of the ease in restrictions. So, all of a sudden, the economy is going to expand. I see the outlook to be very bright and very bullish. So, if I have to predict, I would say that it would probably be the best we would see in the last 3 or 4 years.
Q: The African Continental Free Trade Area (AfCFTA) is the latest big economic project in Africa. What opportunities does your bank see in the AfCFTA for the growth of its business
Answer: As I have already mentioned, the economic environment is an ecosystem and it’s based on a whole lot of relationships and inter-relationships. Currently, Access Bank is more like a Pan African Project where we are looking forward to expand to a lot of African countries.
Currently, we are in the SADC regions, South and Central Africa. Recently, we open up in Kenya and South Africa and we are already in West Africa scattered all over Gambia, Liberia. Sierra Leone, Ghana and Nigeria.
Trade really is about the having a hub and having the enabling platform where trade interactions between trade parties can happen. Now with the AfCFTA coming on board, what that means is that our customers who were probably incurring a lot of cost in terms of corresponding bank charges to link up with exporters, importers in the various markets, it gives us opportunities since we are there already.
So, for instance, if I have Access Bank in South Africa and Access Bank in Ghana, I am able to tap into a lot of imports coming from South Africa to Ghana or moving from Ghana to South Africa. The good news for the customer is that it reduces the cost of doing business because he may not have to go through a city bank or another corresponding bank because I have footprints in those areas so that’s clearly a collaborative opportunity that benefits both the bank and the customer at the end of the day which I think it’s a step in the right direction.
What I would say is that, as a bank in the post-pandemic era, things will never be back to where they were before. I think that, some things would remain the same, and that is about how the customer feels and what they see as convenient for them — that wouldn’t change. That has nothing to do with technology but rather has to do with the customers’ sentiments. It is about continued commitment to our customers and continued commitment to our own values.
If we say more than banking, then the customer should really feel and live tangibly and that this is really more than banking — that’s going beyond the ordinary to deliver the perceived impossible and that will make the customer feel like they are getting the output they are making out there.