Rural banks roped into Ghana’s electronic payment platform

The Ghana Interbank Payment and Settlement Systems (GhIPSS) is offering switching services to the ARB Apex Bank to afford customers of rural banks access to the convenience enjoyed at universal banks.

Under the platform, the Rural and Community banks will be able to give their customers cards as well as introduce some electronic services and products.

GhIPSS is currently able to provide switching services to individual banks as well as Savings and Loans companies who want to avoid the initial huge capital outlay required to set up their own switches.

The move by GhIPSS is in line with the global trend where financial institutions are cutting back on their cost by sharing infrastructure with others through outsourcing.

Chief Executive Officer of GhIPSS, Archie Hesse, says financial institutions that are held back because of the cost of hosting their own switches can be assisted so that they do not lock up capital unduly.

The e-zwich system has been described as beneficial to the rural economy by the Managing Director of Cocoa Merchants Limited, the first cocoa buying company to use the e-zwich to pay farmers.

Nana Amo Adade Boamah has however advocated an increase in point of sale devices and e-zwich merchants to increase use of the electronic card system.

Head of Business Development at GhIPSS, Mary Dei Sarpong, says there is a window of opportunity for banks to access a financial facility to deploy e-zwich infrastructure.

The 7 million Euro revolving credit fund (RCF) is a loan agreement between KfW and the government of Ghana to provide support in the deployment of e-zwich in rural areas.

The GhIPSS is currently rolling out hybrid point of sale (POS) devices, designed to accept both e-zwich and all the local cards.

The devises are also configured to later accept Master and VISA cards on the gh-link platform.

Mrs. Dei Sarpong says 300 POS would be deployed in key merchant locations before end of year.

Story by Kofi Adu Domfeh

Rural banks need operational paradigm shift not mergers – expert

The network of rural and community banks reaches million of depositors and thousands of borrowers, making it the largest group of licensed financial service providers in rural Ghana.

But the relatively high ratio of nonperforming loans and the continued operation of poorly performing banks remain issues facing the network.

According to banking expert, Nana Otuo Acheampong, the rural banks need to do more to generate profit for shareholders.

He observed that the rural banks are taking good care of depositors’ money but “in terms of profitability, there is still room for improvement; they can work harder and give their shareholders more profit than they are doing now”.

To avoid the risk of liquidating poor performing banks, there have been suggestions for mergers with strong banks to address the challenge of capital inadequacy.

But Nana Otuo believes the rural banks in their present standing are not ready for mergers. He told Luv Biz Report the rural banks can only submit to mergers when they become attractive.

“Before you even go into a merger, you polish yourself before you become attractive…so for you to become a merger target, then it means you’ve got to ready yourself and so they need to have a shift in paradigm, put their house in order and once they become attractive, if they feel the merger route is the way to grow and increase profit then why not; value will be in it and others will buy them”, he emphasized.

Rural and community Banks in Ashanti have been in a training session on best industry practices at the Osei Tutu II Center for Executive Education and Research (OTCEER) in Kumasi.

The training focused on empowering boards of rural banks to help shape the banks for the future, especially is complying with the Bank of Ghana’s rules and regulations.

“Part of the monitoring system that the regulator has in place is the completion of what we call Prudential Returns, where the Central Bank wants to know the assets and liabilities of the banks and how they’re taking care of depositors money”, said Nana Otuo.

The next phase of the training will target internal auditors of the rural banks to enforce compliance and assurance issues.

Story by Kofi Adu Domfeh

Rural banks to be engaged in mobile money transfer business

Rural and community banks in Ghana will by June this year be hooked onto a technology platform to transact money remittance services via mobile telecom networks.

This is part of measures being introduced by the Apex Bank of the Association of Rural Banks (ARB) to assist the rural banks to be efficient in the money transfer business.

Managing Director of the Apex Bank, Kwadwo Aye Kusi, says the technology will enable the banks to be integrated to all the telecommunication networks for susu operations, money transfer, purchase of airtime credit and SMS alert services.

“Therefore the products that we’re going to come up with will not be limited to one telecom company but every customer of ours can do mobile money business”, he told LuvBiz Report.

The ARB Apex Bank has also introduced measure to reduce delays arising out of remotely processing money transfer transactions under the Western Union and Apexlink money transfer services.

Since its inception in 2003, the Apexlink money transfer product has chalked successes, from its manual processing to the current automated ‘itrans’ platform.

“The volume of Apexlink transactions processed through our networks has improved considerable over the years. From 190,917 transactions recorded in 2009, the product has grown to achieve a 589,164 transaction level by the end of 2012”, stated Mr. Kusi at the Apex Bank’s Money Transfer Conference in Kumasi.

Transactions through Western Union on the Apex network also increased over the years, from 96,307 in 2009 to 230,581 transactions recorded in 2012 and a targeted level of 323,000 transactions for 2013.

Mr. Kusi announced the abolishing of the commission sharing arrangements that exist between Apex Bank and the rural banks, stating that the rural banks would be given 100% commission on all Western Union transactions processed.

He told LuvBiz Report the decision to abolish the commission is to encourage all the banks to undertake more of the money transfer business to benefit rural economies.

“Apexlink and Western Union money transfers have supported the economic growth in our rural communities in assisting traders in their daily money transfer operations capitalizing on its large network across the country”, he noted.

“Trade has been tremendously boosted between the north and south of the country where traders find it more secured and convenient to send funds by Apexlink than traveling with such funds with all its attendant risk. This has helped increase the level of economic activities in rural communities”.

The conference was on the theme: “Handling Remittance Business with Care – Risk and Compliance Issues”.

Concerns were raised about the vulnerability of the rural and community banks to fall prey to unscrupulous transactions in money remittances.

The Apex Bank has therefore announced some initiative to eliminate money laundering in the Apex money transfer system.

“Compliance and Anti Money Laundering officers would soon be appointed to monitor and prevent the use of our money transfer system for any kind of money laundering activity… In order to eliminate identity fraud on the network, the Bank will soon be connected to the national ID verification platform to verify all voters ID presented for money transfer transactions” Mr. Kusi stated.

Story by Kofi Adu Domfeh