When, in 2014, Ghana’s headline GDP growth slumped to four percent, down from 7.3 the year previous, the World Bank remarked that the figure was likely to fall further in 2015. Impeded by an irregular gas supply, a sharp fall in local currency, rising inflation, declining oil revenues and low prices for gold and cocoa, the country’s export growth has been heavily weighed upon. Nonetheless, Ghana’s prospects remain broadly positive, and the coming years should see the numbers rebound, as policymakers keep to the solutions set out by the IMF.

Of the many factors at play here, banking has proven to be of great importance to the economy. World Finance spoke to Daniel Asiedu, Managing Director and Chief Executive Officer of Zenith Bank Ghana, about the major ways in which the industry has shaped the economy, and how Zenith factors into the country’s future.

What impact has the banking industry had on Ghana’s economy?
The banking industry continues to play a critical role in financing various sectors of the economy, with the services sector being the largest beneficiary. Loans and advances to customers grew by 90 percent between 2013 and 2014. These went to finance the various aspects of productivity across different sectors of the economy, contributing to the GDP growth experienced in 2014.

All over the world, countries are moving to a cash-lite economy, owing to the benefits associated
with it

In addition, the banking industry contributed GHS 837m ($204m) in taxes and levies in 2014 to boost government revenue (see Fig. 1), and the introduction of VAT on financial services lends credence to the contribution of the banking sector to economic growth.

How is Zenith redefining banking in Ghana?
Since its inception, Zenith Bank has always operated with the objective of making banking easier and better than anything customers have ever experienced. Currently in its 10th year of operation, Zenith has improved upon its operating capacity, size, market share and industry ranking in all parameters. It has built financial, structural and technological muscle, established its presence in the country and has created a beacon of innovation and service excellence in the Ghanaian banking industry.

The bank has played a major role in the transformation of the banking industry into an intensely competitive, customer-oriented, more efficient and technologically inclined industry. Before Zenith commenced operations, relationship banking was novel, e-banking was almost restricted to ATMs, banking was limited to a few hours in the day and weekend banking was almost non-existent.

What are the advantages of having a cash-lite economy?
All over the world, countries are moving to a cash-lite economy, owing to the benefits associated with it. For households and firms, increased transparency means that payments can be easily and accurately tracked. The risks associated with loss of funds are considerably reduced and the exchange or usage of funds can be concealed from parties with no legitimate right to the information. Likewise, payments can be made at a speed proportionate to the underlying need for which the payment is made, with the knowledge that they will be delivered in a dependable manner. Ultimately, it facilitates better financial management, or, the ability to implement additional financial practices that enable better financial record keeping and control of finances.

In terms of the economy, a shift to electronic payment can increase the range of services available and may decrease costs over time, although this outcome will depend in part on the functionality of the bank account in use. For an unbanked person, receiving a payment into an account creates a point of entry into the financial system. New payment methods also open opportunities for new businesses to start up. One such opportunity is for local merchants to serve as agents of financial providers, receiving a fee for offering a cash-in or cash-out service.

Various studies have acknowledged the link between financial development and economic growth and concluded that greater financial depth leads to faster economic growth. Countries with greater financial depth also have lower levels of inequality. While greater depth is not the same thing as more electronic payments, the two are related: electronic payments depend on the payer having electronic value to transfer; a higher proportion of electronic payments in an economy would imply a higher proportion of deposits in the formal financial system, which would be measured as greater financial depth.

How can Zenith help create a cash-lite economy in Ghana?
The bank can play a major role in the payments council that the Bank of Ghana (BoG) seeks to set up in the near future. Zenith Bank prides itself on being a leader in the provision of e-banking products and services and will make a significant contribution to the activities of the council. The council’s mandate primarily is to ensure that the economy moves from cash-heavy to cash-lite as well as ensure greater financial inclusion. Zenith Bank Ghana has been at the forefront of implementing electronic platforms for the purpose of driving banking products and services. The bank is also noted for its safe and reliable internet banking platform, which enables its customers to access funds and transact business wherever they may be. It is the bank’s objective to increase its reach to all corners of the country, not only through its physical branch network but also through electronic banking products and services such as mobile money, thus reaching more people who are unbanked.

What products and services are on offer for customers in Ghana?
The bank offers its customers a comprehensive range of products and services using leading technologies. We believe that development and deployment of e-business products and platforms are key competitive tools in the banking industry.

Our target is to dominate the market by continuously developing innovative products on the back of our robust IT infrastructure as we win new customers and gain market share. The bank’s products and services are usually birthed out of the needs of its customers.
With our diversified customer base, mobile banking is becoming an indispensable channel for our retail as well as corporate customers. We are therefore developing new products to tap into the business opportunities this channel presents.

Why has compliance become a top priority for Zenith’s operations?
Compliance has not ‘become’ a top priority; it has always been a top priority in Zenith Bank’s operations. There has, however, been a need for greater emphasis in recent years as reflected by a number of factors. First is the formal establishment of a compliance department, whose job it is to deal with issues as compliance gains prominence as a distinct industry discipline across the globe; an increasing recognition of the problems of money laundering, terrorist financing, corruption and financial crime in general, against which new non-traditional lines of defence need to be erected.

Regulators are taking a far more robust stance/approach to the issue of non-compliance by industry-players. Conversely, foreign banks have adopted an attitude of much greater scrutiny of the relationships with their correspondents around the world. The point is to ensure that respondents do not present an unacceptable level of money laundering/terrorist financing risk.

Local regulators have also applied more pressure and have demanded greater demonstration of compliance from local banks. In Ghana for instance this is reflected in several ways: the establishment of the Financial Intelligence Centre (FIC), which in recent times has been known to issue a regulatory report on the levels of compliance achieved by local banks; the drafting of various laws, Anti-Money Laundering (AML) Act, AML Regulations, AML/Combating the Financing of Terrorism (CFT) Guidelines, Anti-terrorism Act, Anti-terrorism Regulations); the conduct of annual AML on-site examinations by the BoG; an increase in the powers given to the FIC, as set out in the amended AML Act; and the mandatory submission of various compliance/AML-related returns to both the FIC and BoG at specific times throughout the year.

In the long run, non-compliance will prove to be an expensive way to do business, and will have severe regulatory repercussions and ultimately erode the reputation and competiveness of any bank.

How did Zenith withstand Ghana’s challenging operating environment in 2014?
The major challenge faced by banks in Ghana in 2014 was shrinking margins as a result of increased competition, rising cost of funds, inflation (see Fig. 2) as well as depreciation of the local currency. However, our prudent management culture, disciplined emphasis on measuring every aspect of our business, well diversified transactions, commitment to controlling expenses as well as unparalleled service delivery, resulted in a strong balance sheet in 2014.

What plans does Zenith have for further growth in Ghana?
We are committed to delivering the right strategy, business mix and culture, using the best people to drive continued growth and take advantage of the opportunities in the marketplace. We want to be the best in all parameters (especially, customer service delivery) in a very dynamic industry, an objective shared by our dedicated staff. The brand is living up to the meaning of its name Zenith and becoming stronger and stronger each year.

As we celebrate our 10th year of operations in Ghana this year, we look into the future with confidence and a deep sense of appreciation of the tremendous opportunities ahead of us. We are proud of our successful track record of balancing the interests of our stakeholders i.e. shareholders, customers, employees and the communities in which we operate in.

We have built a strong foundation of integrity, trust, and ethical behaviour in our businesses. This foundation will serve as a springboard into the next decade, when our operations as well as our commitment to stakeholders should extend far beyond taking deposits and giving out loans.