Business Analyst - June 7

Tuesday, June 7, 2022
FEATURE
How to choose a Bank
that will be useful to you
By Toma Imirhe
Just understand this; Not all
banks will be useful to you and
your business!
A few decades ago a large
number of Ghanaians and
especially self-employed
people in the informal
sector didn’t want
anything to do with a
bank. Cocoa farmers
would just go to the bank
because that is where they
were paid. Farmers could
spend days before having
access to their money.
They will just withdraw
all their monies, just turn
around and walk away,
till the following year.
“Choosing a bank” was
not part of the
conversation then.
SOME formal sector employees used to
collect their salaries and wages over
the counter or table top. There were
many reasons people did not
patronize the services of banks;
• There were few banks
• The banks didn’t really do much to attract
customers because there was very little
competition
• If you are self-employed the banks gave
you very little attention and when making
withdrawals it was very frustrating because of
long waiting times (which is still the case
though).
• People preferred handling cash as
opposed to recent financial education on the
need to go cashless and still be able to transact
business.
• Prohibitive bank charges
• Laborious account opening procedures
(even without anti-money laundering
requirements)
In effect, it appeared banks just excluded
individuals who were in retail businesses. The
informal sector and rural Ghana were not
traditionally part of their target. Their
corporate accounts were just enough.
Small business owners (informal sector)
mainly didn’t show much interest in dealing
with the financial institutions. People
preferred keeping their monies in their safes,
lockers, under pillows, with a trusted partner
and any other place apart from the financial
institutions.
WHAT CHANGED?
Ghana had a change of government in 2000
and in came President Kuffour. His
liberalization of the banking sector opened up
the banking industry. Treasury rates dropped
from the 40s to the 20s.
Foreign banks rushed in, lower-tiered
banks emerged, the Savings and Loans as well
as the Microfinance sector blossomed. All of a
sudden, the informal sector and rural Ghana
had what they can call their ‘bank’. They began
taking up some of the valued customers of the
then existing banks.
The traditional ‘elephant’ banks were
caught napping. They all realized that they
have to evolve to begin doing banking outside
of their plush and crowded halls.
They went on customer hunting,
scrambling for new accounts from the markets,
picking customers’ cash in specie operations
and credit giveaways (which was also a
blunder).
In addition to the industry trends, changes
in the way we do business and modern
advancements in technology also fueled the
need for businesses to maintain a bank
account.
This is the time customers should now
choose their banks. In the past decades, banks
in Ghana chose their customers. But now the
tables have turned.
Now customers have the option to choose
their banks. Though the recent bank failures
have dented the opportunities, there are still
credible options. Suffice to say that financial
institutions do share some similar
characteristics, they can be different in certain
specifics. The specifics are what you go for. Do
not just allow some bank’s sales executive to
sell you any misfit service.
There are many banks in existence now
and businesses have a choice as to which
institution to bank with. Banks have now been
categorized into different bands serving
different needs.
There are;
• Universal banks
• Savings and loans institutions
• Rural banks
• Microfinance institutions
• Cooperatives associations
• Others
To have a fruitful relationship with your
bank, look for a bank that best serves your
needs and do business with them. Not every
bank would be ideal in providing a service that
will be the best for you. Banks in themselves
have interests, specialities and sectors or
industries they see as profitable. They,
therefore, target such businesses and clients.
For every client segment they serve, they
choose which of their services or products that
best suit them.
In all of these, it is the duty of the business
owner or manager to decide, looking at what
the business has set out to do, to figure out
which financial institution will best serve their
needs.
In choosing a bank what do you look for?
• Look at your business needs, e.g. do I have
payments by cash, cheques, mobile money,
• How do you also pay people? Do they have
the facilities to do seamless and safe
transactions? It may shock you to know that as
of 2021, some banks do not have reliable mobile
money integration. Sometimes you have to
walk to the bank to effect simple transactions.
This is the stone age!
• If you collect cash, are you safe with it?
There are savings and loans companies that
visit businesses for cash collection purposes.
This saves time and money journeying to their
office to make those same deposits.
• If you travel out do you have to carry
plenty of cash? You might want to consider a
financial institution with good nationwide
coverage to leverage on transactions when
travelling for business. This reduces incidences
of carrying of cash and eases the risks of cash
lost in transit.
• How often do you need financial support
to meet your obligations? You should not do
business with a financial institution that
always refuses you financial assistance, when
in need of support for supplies and meeting
operational expenses. You can do a simple
background check and ask around about the
financial standing of the particular institution
you want to do business with. The smaller
banks and Savings and Loans have generally
proven more responsive in that regard.
• How much am I prepared to pay for
banking services? Some banks charge for every
transaction you make. As a small business, it
could cost you a fortune. Get the full details and
seek advice from someone who can help you to
understand and interpret the charges.
• Do I even have time to visit the bank?
You will be better off doing business with a
bank that provides mobile banking services. It
saves you time and money.
• Do you usually get spare cash that
can sit? You may need a bank that has an
investment arm that could advise you to do
some investments apart from the old
uninspiring Fixed Deposit.
• Test their responsiveness. Send any
request to any of their customer channels and
see how long it takes for them to come back. It
took a bank 3 days to respond to our Whatsapp
message. You know that the bank will give you
a run for your money when you need attention.
All the institutions talk of good customer
service but you can bet, some do not know
where customer service was born. From such
FLEE!
One warning, however; if you are start-up a
business, don’t approach any of them for
financing. They won’t and can’t help you.
Banks are not for startups. venture capital or
Equity finance can help better.
We have not mentioned, the overcrowded
banking halls while only one cashier sits in the
cage. That is more for particular branches than
an entire bank’s attribute. Therefore be
conscious of which branch you will choose to
physically do your transactions.
Choosing a Bank – Final Hints
Once some of these questions are answered
you know that you have something to hold on
to even before you venture to work with a bank.
It may even be necessary to work with more
than one bank but don’t do more than three.
That is diversification but it can be costly in
terms of account maintenance fees.
Some business owners mistakenly open
multiple accounts because perhaps they
couldn’t resist the good customer service
by the sales and marketing reps of a
particular bank so they rush to open
accounts.
Don’t let a bad experience let you
begin to put your money in pillows or
safes in your room. You know if you
placed GHc10 million in a safe in 2010
and open the safe in 2021, you would
have lost over 50 percent of purchasing
power, which is the real value of your
money.
Apart from the bank giving you
some interest to preserve purchasing
power, it would also be safe for you. So
you obviously need a bank, and you
deserve to have a fruitful relationship
with your bank. You need to choose your
bank, don’t let your bank choose you.
SOURCE: Ghana Talks Business