Dr Patrick Tandoh-Offin, the newly elected President of the Association of Rural Banks, Eastern Region Chapter, has urged rural banks to embrace innovation and digitalization to strengthen their operations.
Speaking at the 10th Biennial General Meeting (BGM) in Koforidua on October 22, 2024, Dr Tandoh-Offin, emphasized the importance of adapting to technological advancements to attract new customers and grow deposits.
Held under the theme, “Leveraging Technology and Digitalization for Banking Convenience and Improvement,” the event brought together key stakeholders to discuss the future of rural banking in the region.
Present was Mark Adjei, Head of Banking Operations, ARB Apex Bank Limited.
Dr Tandoh-Offin, highlighted that 93.33percent of the rural banks in the Eastern Region, reported profits for 2023, showcasing the sector’s overall financial strength.
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Despite this positive outlook, he stressed the need for improvements in loan quality and risk management.
“There are still areas in our operations that need attention, particularly the quality of loans we grant and the need for more prudence in managing our capital levels to support our risk profiles,” he said.
“It has been more than 6 years since the financial situation in the country led to the halting of the activities of some investment houses and financial institutions that almost crippled our member RCBs for obvious reasons. These events have resulted in untoward strains on the operations of many of our institutions. Over this period, we have seen the industry change in material ways, including the appointment of a Receiver by the Government and the introduction of several policies by our regulators all in the bid to sanitize our industry and how we operate to serve our diverse stakeholders”.
“Despite the adverse effects of the recent events in the financial and investment industry on our operations including our locked-up funds with investment houses like McOttley, Black Shield, Gold Coast fund and others, today, most of our Banks remain active and are improving our performance as a result of prudent risk management practices, resiliency, and the ability to successfully weather those stormy years”.
“Today, the data show, on average, strong metrics for the balance sheets of RCBs in the Region. For instance, the financial indicators our banks have made available to the regional secretariat for the year 31st December 2023 showed that out of the fifteen (15) Banks that made their data available, fourteen (14) of them, representing ninety-three (93.33%), reported a cumulative profit position for that year. Only one (1) reported a cumulative loss position for 2023. On the whole, the reporting Banks indicated some positive growth in their client base and the capital adequacy ratios, as well for the same period”.
He explained that, regulatory bodies continue to emphasize the need for more robust risk management practices and oversight to strengthen operating capital.
Dr Tandoh-Offin, further noted that the future success of rural banks would be closely tied to their ability to invest in technology and new processes. “Customers today prefer online banking, and millennials favour alternative banking options. This presents both an opportunity and a strategic imperative,” he said.
He encouraged the banks to collaborate with educational institutions to foster innovation and bring banking services to new and diverse clientele.
“There may be no better time than now to reimagine transformation through investments in innovation, improved multi-channel delivery, and financial technology partnerships with universities and even high schools,” Dr Tandoh-Offin added.
However, he cautioned that with these new activities come challenges, including managing vendor relationships, ensuring data privacy, protecting consumers, and enhancing cybersecurity.
Dr Tandoh-Offin, concluded by urging rural banks to maintain their focus on the customer experience, which he described as crucial to the relationship-based business model that rural banks embody.
“As the financial industry evolves, this presents challenges, but also significant opportunities. This is new territory for us all, and it is the expectation of the regional chapter that these issues will remain a part of the ongoing supervisory dialogue in the years ahead.”
He underscored the need for strategic changes and collaboration to ensure the continued success of rural banks as they navigate a rapidly changing financial landscape.
