Universal banks in the country ought to see financial technology firms (Fintech) as partners rather than competitors in the fast-changing banking landscape, John Awuah, Chief Executive Officer of UMB has said.
The banking scene is changing rapidly, with Fintechs playing a key role in the financial space by enabling mobile and online financial transactions with minimal or little fuss.
With a population of about 27million, Ghana has 36.6 million mobile subscriptions, representing 129% penetration, up from 127.63% in 2015-201.
This is much higher that the mobile phone penetration rate of 80% on the African continent. Internet penetration also stands at about 20 percent of the population.
Given Ghana’s mobile and internet penetration rates, Mr. Awuah believes banks must work close with Fintechs to make banking services available to everyone irrespective of their location.
“It has been an ongoing debate but we see that more as a complimentary service not a competitor relationship per say. We are partners in delivering value to the customers.
Banking has moved on from armchair kind of banking, where you sit in your office and customers will walk to you, to you walking to the customer, and now customers wanting to do their own banking. So it is a transition, you cannot be glued to the statusquo of how banking used to be practised ten or fifteen years ago because it is very different from how it is practised now,” Mr. Awuah said.
Indeed, banks have started investing in various electronic platforms so as to be able to leverage financial technology platforms.
UMB, Mr. Awuah noted, “Saw that coming in, and we started channelling our investments into an area where we can have better partnership with the Fintechs, mobile companies, post offices, supermarkets, and the rests who have become more like financial institutions.
The regulation of this fast-growing form of financial services must be streamlined to ensure clear delineation of duties between banks and Fintechs to ensure that consumers are able to easily access and seamlessly transact their business on various electronic platforms, Mr. Awuah said.
“The strategy should be how you can allow customers to be part of that without hurting the relationship you have with your customers.
If a customer is doing mobile banking and mobile banking is not working and the technology is not driven by [a bank] and there are some distractions, where do you lay the blame in terms of whom to contact? Those are some of the fine discussions that I thought of, instead of debating whether it is a competitor or it is an enabler.”
He added that: “That is where the discussion should be going where regulations should be such that the relationship is seamless and banks know the boundaries where they can operate up to, the Fintechs also know where they can operate up to, and everybody understands what role they play in this global phenomenon that we cannot do without.”
With the growth in electronic baking, the central bank has urged banks to invest more in electronic platforms or go extinct in the next decade.
Central Bank data shows that while banks have a branch total of 1,346 from over 100 years of banking in the country, the number of mobile money agents over a period of less than 10 years has now reached 107,000 nationwide.
While the number of bank account holders stand at about 11.4million, the number of mobile money account holders has shot up to over 20 million in such a short space.