[BLOG] Banking the Unbanked
The bottom line for bankers is in the customer base. The more customer base you have the more customer deposits you will get, which means cheaper funds to invest to gain more interest income. Surprisingly, this is not the case in Ghana. According to the World Bank, 70% of Ghanaians -- representing 17.7 million -- are not banking.
The most essential commodity in the 21st century is not being utilised by Ghanaians. However, if you compare the number of Ghanaians who are banking to the number of Ghanaians who are mobile subscribers, it is a wonder as to why we are not seeing the same figures in the banking sector.
Currently, the number of Ghanaians who have subscribed to a mobile telecom SIM card is 27.59 million. In effect, this means that there are more mobile subscribers in Ghana than our population.
Over the years, I have had the opportunity to study the financial and business performance of most of the banks in Ghana and the question that keeps popping up is: why are banks not reaching out to the unbanked? Through my studies I identified the issues below, and I hope that banks in Ghana will take notice:
Customer Universe
The way banks set-up their branches and design their products and services send only one signal -- they don’t know their customer universe. Without understanding your customer universe, it is difficult for any business to achieve its desirable results. If the banks know their customer universe, it will help them to know the right products and services that will attract customers to their fold. In addition, banks will be able to know how to market their products and services to reach their customer universe. Until then, products and services will be developed without making any major impact on the unbanked.
The total Ghana population is made up of the following:
• 0-14 years: 38.7% (male 4,902,094/female 4,858,630)
• 15-24 years: 18.8% (male 2,360,293/female 2,382,573)
• 25-54 years: 33.7% (male 4,120,921/female 4,363,889)
• 55-64 years: 4.7% (male 577,431/female 610,716)
• 65 years and over: 4.1% (male 476,297/female 546,765) (2013 est.)
With these figures, banks should be able to know what products and services will satisfy each of the population age segments and then reach out to them. However, before banks rush into products and services development, the question that needs to be asked is: do the banks have the right products and services?
Products Differentiation
From my analysis, it seems banks products and services are designed from two inspirations: competitors and fashion. Banks in Ghana lack products differentiation; due to this, I do not know why I should move from my current bank to another. Moreover, the name of the products and services are given as if the banks are having a fashion show.
During my MBA studies, I had the opportunity to design A Child Account. I had one determination -- design products that no one is offering in Ghana and the world. Guess what, I was able to do just that.
Over the years, I had always hoped that a bank in Ghana would design such an account -- but nothing is happening. Maybe I need to set up a bank. There are about 9.1 million prospective customers for children/kids account in Ghana; therefore, if I should do that I would be able to gain 50% of this number -- hence, making me a market leader in the next five to ten years.
In addition, what has given rise to microfinance in Ghana is lack of access to funds. Most business owners and customers have come to the conclusion that banks are not willing to give you funds, from the countless stories of loan-applications denial. However, with the right products and services, the conclusion can change to “do this and do that and you will get loans from the banks”. Until then banks will be losing a lot of customers who are in the 25 to 54 years population bracket to microfinance companies.
If banks can therefore accurately identify their customer universe and design the right products and services for that customer universe, they will only be left with finding the right marketing strategy.
Marketing: Awareness and Sales
After studying most of the marketing and sales campaigns and promotions, the obvious fact is that they are all into promotion instead of the bottom line: recruiting more customers. As to what informs their decision, I am not privy to.
However, if banks are really serious about reaching out to the unbanked, knowing them and designing the right products are not the only things they need to do. They must sell it to them. If you are spending more than 30% of your marketing budget on awareness then you are wasting money.
Banks should spend 70% of their budget on recruiting more customers. Recruitment can take different forms, but one key way to measure the return on your investment in marketing and sales is all about knowing where each customer is coming from. Therefore, marketing heads needs to implement a Return on Investment System, which will save the organisation from unprofitable marketing and sales promotion initiatives. I have had the opportunity to devise and implement this strategy on a number of business ventures and my job roles, and the results have been tremendous.
Whilst recruiting customers, banks need to review their systems. Many a time the systems are the main blocks to recruiting customers.
Systems: Winning or losing customers
Systems are key. With the right systems in place, recruiting customers becomes easy. Most companies spend more time recruiting customers, but they do not see a return from them customers because the system is driving customers away.
Systems=Operations: The system that I will focus on here is branches and customers signing up. Most banks are not setting-up branches close to prospective customers. Therefore, without potential customers seeing your presences close to them, there will be no desire to sign-up.
Apart from the branches, what drives most customers away are the requirements needed to open accounts. Whilst the banks have little choice with that since it is a directive from the Bank of Ghana, they can help customers to meet the BoG demand. Sadly, I have tried to open an account with a bank and the process alone puts me off. In addition, there was no follow-up because the banks do not have a follow-up plan.
The other system that is making banks to lose customers is their employees, especially the customer service representatives.
Customer Service Representatives
Customers’ services at banks are so poor that you might wonder why I am still with a bank. I am currently saving with a particular bank and I just wish that I could close my accounts and leave it because of the way I am treated by some of the customer service agents.
These poor services are pushing many customers from one bank to another. The question is if the current customers want to stop doing business with you because of your services, why do you think you can recruit new customers? It is classical comedy at its best. Every 6 out of 10 bank customers will have something bad to say about the customer service representatives at a bank.
And when I talk about the customers’ service representatives, I am talking about the following agents of customer services:
• Tellers
• Customer service representatives
• Business relationship managers
• Branch managers
However, what banks don’t know is that with the right strategy they can turn customer services into sales agents.
Recently, I visited one of the branches of the bank I save with and I nearly closed my accounts because of the way the teller treated me; and to add insult to injury, the way the customer service representative and branch manager treated me made me feel worse than before.
It was during that time my fiancée and I started talking about how to make customer services as sales agents. By the time we concluded, we brought up a system that shocked both us. Why is the banking sector not knowing what we know? The answer is because -- they are not ready to know. If a bank can turn its customer services to sales agents whilst playing the role of customer services, then I guarantee you it will have customer loyalty and be able recruit new customers.
Leader in the industry
Get the customer universe right, design the best of products and services, implement the right sales strategy and system, and turn customer services to sales agents: you will become the leader in the industry. Whilst acquisition will make you a leader for a short term, it will not make you a leader over the next five years because there are 17.7 million Ghanaians who are not banking -- and if MTN can have not less 11 million subscribers, then any bank can achieve that.
The 11 million figure might be ambitious, but it takes ambitious people to achieve ambitious plans. Therefore, banks need to sit-up. If you think you are comfortable with the number of customers you have, then let me be the first to tell you that you have not arrived yet. As long as there are many more Ghanaians who are not banking than those who are banking, it is important that banks go all out for them.
To be honest I am waiting for that one bank which can go for the unbanked, and I hope Ghanaians and I will not have to wait for long.
Isaac Gyimah Adigu is a Chartered Certified Accountant and holds a BSc in Applied Accounting from Oxford Brookes University and an MBA in Financial Services from University of East London. Since 2011, he has studied the financial services industry of Ghana from 2008 till date. In addition, during his MBA studies he studied the 2007 Global Financial Crisis.
Contact: Mobile Number- 0245121485
Email address: isaac@isaacgyimah.com
BFT
