AT the National Theater in Accra on April 28, President John Kufuor launched the e-zwich payment plat-form for banks and other merchants who will need the platform for transaction settlements and cash withdrawals.

The Ghana Interbank Payments and Settlements System (GHIPSS) have introduced e-zwich as part of banking reforms in Ghana. E-zwich is the brand name for the common platform, the National Swicth, that links the payment systems of all licensed banks and non-bank financial institutions e.g. savings and loans companies, credit unions, money transfer institutions, and rural banks in Ghana. The colourful occasion was well attended by the big commercial banks, but conspicuously absent were the other non-bank financial institutions and savings and loans companies.

It also appears that the central bank is more interested in patronage by the big banks and that the small savings and loans companies may not be big enough for the project. Even though all advertising and marketing materials mention savings and loans companies as key collaborators in the programme, the initial pilot testing did not include a single savings and loans company. Some have been earmarked for the second phase. What is significant though, about the common platform is that it provides an opportunity to the savings and loan companies to open more “branches” utilizing the point of sale (POS) equipment needed for the e-zwich access communication for this process.

Branchless banking has been embraced as an effective market penetration strategy for most microfinance institutions. This model of offering financial services to communities has provided MFIs the opportunity to mobilize deposits within communities hitherto difficult to reach. With the very large unbanked population in most developing countries including Ghana, branchless banking is seen as necessary, if the idea of eradicating rural poverty through the laudable initiatives of programmes by the international community, especially the declared millennium development goals, are to be achieved. Driven by the information technology revolution branchless banking has seen tremendous improvement in the fortunes of MFIs in Asia, East Africa and Latin America, and this is where e-zwich could be significant to the savings and loans companies in Ghana.

Branchless banking initiatives are mostly deployed through a concept of “Village banking” whereby financial services activities are brought right to the doorsteps of consumers utilizing the POS system and a switch platform that even enables off-line transactions, which mean that where there is no electricity or internet access, transactions could still be carried out. Not only has this led to increased deposit mobilization within communities, but it has also led to improved financial literacy within communities where it is practiced. In Ghana, Women’s World Banking, Ghana (WWBG) has one of the most innovative financial services offering in the country. The company was the first to introduce POS into Ghana for its flagship virtual banking project. The company had had a successful transition from a non-profit organization into a profit-oriented institution, while with an eye on ensuring that its social and environmental obligations are also satisfied within the communities. With an overriding commitment to ensure that it meets customer’s needs at all times, WWBG has introduced the virtual banking project which is currently serving the two main cities of the country – Accra and Kumasi. The virtual banking project offers clients the opportunity to meet bank staff to address their grievances as to how they would expect to be served better, deposit funds through virtual banking staff, and access a range of financial services products at the comfort of their own shops and offices. What is more, virtual banking staff also educate and inform clients on new products. This reduces travel time and cost to clients, and improves partnership between WWBG and its clients.

This approach of branchless banking by WWBG has the potential of improving the bank’s overall profitability, and positions the company as the leading MFI in the country, in terms of innovation and customer satisfaction. WWBG sees e-zwich as a welcome addition to the growing list of innovative products it is currently offering clients. The other savings and loans companies can learn from the WWBG model, and the promoters of e-zwich can use the WWBG model as a case study for the other savings and loans companies. Certainly, e-zwich offers, a more cost-effective way for the other MFIs to open more “branches”.

Source:- Daily Graphic.