How COVID-19 Sparks Digital Banking Rush In Ghana

Digital banking

Accra, Ghana, August 5, 2020//-The devastating coronavirus disease 2019 (COVID-19) is wrecking human and economic havocs across the globe. But it has one positive effect in Ghana. Masahudu Ankiilu Kunateh explains

Many Ghanaians who used to shun digital banking services previously have developed an overnight acceptance and usage for these services following the outbreak of the COVID-19 and its induced three-week lockdown in March.

The latest Economic and Financial Data from Bank of Ghana (BoG) confirmed that scores of Ghanaians comprising customers and individuals are relying on e-payment channels or services to transaction businesses in this critical time.

It indicated that there were 2,139 ATM transactions in the month of March 2020 as compared with 2,110 ATM transactions with the same period last year, depicting an increase of 29 percent.

The Summary of the Economic and Financial Data for July, released by the Bank of Ghana (BoG), also revealed that transactions conducted by ATM users rose by 58 percent between April 2020 and April 2019.

Furthermore, the BoG’s data noted that 2,187 transactions were made through ATMs in May this year as against 2,100 in May 2019.

It was quick to add that transactions made by ATM users increased by 91 percent between the month of June 2020 and June last year.

Similarly, payments made by Point of Sale (POS) terminals and others from March 2020 to June this year also saw an increase, according to the data.

For instance, Ms Ayisha Abdulai, a 42-old-year provisions shop owner based in Accra, used to have nothing to do with e-banking products and services but due to the fear of contracting the infectious virus, she has been using the e-payment channels to transact business.

Ms Abdulai told African Eye Report that she goes to the nearby ATM machine to cash-out and cash-in money for her business activities.

Also I spend less time in the banking hall as required by the COVID-19 protocols to use Automated Clearing House (ACH) Direct Credit always to pay my suppliers”. This is her first time of using that product.

ACH Direct Credit is one of the products of the Ghana Interbank Payment and Settlement Systems Limited (GhIPSS), a wholly owned subsidiary of the Bank of Ghana.

It simply involves a debit to an account in the sender´s bank and a transfer of the amount of money directly into the beneficiary´s account in another bank.

Regional Chief Executive Officer (RCEO) for West Africa of the United Bank for Africa, Mrs Abiola Bawuah

This Credit Push instrument can be used for payment of salaries, pensions, welfare benefits, commissions, supplier payments, dividend and refunds, interest payments, government payments, business-to-business payments, among others, according to GhIPSS.

The ACH Direct Credit is secure and reliable service which enables individuals, large and small organisations to make payments by electronic transfer directly into a bank account.

For Nana Kofi Nketia, a 35-year-old building materials shop owner maintained that he abandoned cash-based transactions for internet banking and other e-payment channels.

“COVID-19 has hit us hard but also presented opportunities to think outside the box and learn our lessons for future interventions.  It is no longer business as usual in the banking industry.

Focus on smart strategies

In addition to the economic contraction, banks are having to contend with reduced transactional activity which is impacting on their fees and other income and therefore there is the need for financial institutions to increase awareness and focus on smart fiscal strategies,” the Regional Chief Executive Officer (RCEO) for West Africa of the United Bank for Africa, Mrs Abiola Bawuah, said.

Investing in digital banking products

Giving the example of UBA, she pointed out that the bank’s strategy of investing more in the digital banking products to compensate the face-to-face traditional banking for bill payment, purchases and deposits, which according to her has gone a long way to address the needs of customers during the lockdown period.

Explaining further, she said: “The recent lockdown has increased awareness and focus on digital banking products to compensate the face-to-face traditional banking for bill payment, purchases and deposits.

On our part in UBA Ghana, we adapted to every possibility technology presents, we upgraded our digital banking platforms and also revamped LEO, our virtual banker, which was painstakingly developed to answer the call of the time where little or no human intervention is required and as Ghana’s first virtual banker”.

Mrs Bawuah added: “LEO is an answer to improved customer service and remains the best thing to happen to Ghana’s financial sector during the pandemic”.

“The banking industry as the backbone of the financial sector has felt the full effects of the economic impact of the pandemic and this pandemic should refocus our operations and help us reposition our product offerings,” she said.

Impact of pandemic on the economy

Speaking on the general effect of the pandemic on the economy, she noted that Ghanaian economy like most other African economies  was greatly affected in the area of reduced demand of global oil, reduced international trade (both imports and exports), inflows of foreign direct investment and decline in demand for tourism, travel and hospitality services. This, she explained, has further resulted in a depreciation of the cedi as well as increase in inflation rate.

“Ghana like many countries is fighting to minimize the effects of the virus on health, economy and its social systems and government’s approach for handling the pandemic reflects the situation that, not only human lives are at risk, but the wellbeing of our markets and industries,” Mrs Bawuah said.

By Masahudu Ankiilu Kunateh, African Eye Report



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