DIGITAL BANKING SUMMIT 2019
KEYNOTE ADDRESS
DR. MAXWELL OPOKU-AFARI
FIRST DEPUTY GOVERNOR
BANK OF GHANA
AUGUST 19, 2019
KEMPINSKI HOTEL, ACCRA
1. Good morning and it is a great pleasure to be here today at
this Digital Banking Summit. Before I continue, let me thank
the International Centre for Strategic Alliances (ICSA) and
KPMG for providing this unique platform to deliberate on
pertinent issues on digitisation of banking services across
the African continent. The choice of Accra for this important
event, with Master Card as the lead sponsor, underscores
the growing importance of Ghana as one of the emerging
digital financial service hubs on the African Continent.
2. Ladies and gentlemen, digital innovation is creating
unprecedented opportunities for Africa to grow its economy,
create jobs, and transform people's lives. New technologies
and business models are opening alternative pathways to
economic growth in emerging markets, offering opportunities
to reshape our lives and improve economic growth.
The Government of Ghana's commitment to formalize the
3.
Ghanaian economy through digitisation is laudable.
Digitisation is a key component of the "Ghana Beyond Aid
Agenda" which is firmly anchored in leveraging technology to
promote economic efficiency and inclusiveness for
accelerated development and poverty reduction. Indeed, the
President has shown keen interest and remains committed to
building an inclusive modern society. This drive has seen the
roll-out of several digital initiatives such as, the digital
property addressing system, the National biometric ID cards
which will be linked to Government agencies to help ease
identification processes and promote integrity and efficiency
in business transactions.
4. We are also witnesses to the tremendous impact of
digitisation on the financial sector. Ghana's progress in
migrating to electronic payments has been phenomenal. In
less than a decade, we have increased the number of
financially included persons from 41 percent in 2014 to 58
percent in 2017, and most of the jump emanated from mobile
money patronage. For instance, the volume of mobile money
transactions jumped by more than 40 percent from 982
million to 1.4 billion transactions between 2017 and 2018.
5. With the advent of technology, conservative banking
operations has given way to dynamism and competition as
innovative financial services and product are constantly
being churned out. Currently, banks are not only competing
among themselves for financial services but also with non-
traditional providers such as financial technology companies
(fintechs). These developments raise important issues on
banks' business models that would appropriately deal with
the increased levels of competition in the industry. Faced
with these challenges, banks are adopting collaborative
strategies and leveraging on opportunities to partner new
payment service providers or existing players in the delivery
of financial services.
6. In the mobile money space, financial technology companies,
banks and mobile money operators have collaborated to
introduce value added services such as digital credit, savings
and investment, online payment platforms, Unstructured
Supplementary Service Data (USSD) services, mobile
banking services, Quick Response (QR) codes, Point of Sale
(POS) devices, termination of inward remittances into mobile
wallets or bank accounts, and agency banking services.
Fintechs have also partnered with insurance companies to
deliver digital insurance products to the underserved.
Indeed, digitisation provides great potential for the banking
7.
sector to offer products and services that hitherto was not
regarded as feasible. However, the transition to a digital
economy requires re-orientation of the sector to meet
consumer demand. Ladies and gentlemen, it is against this
'Digitisation of the
background that the chosen theme of
- En route to a Cashless Africa'
Banking Sector is
deemed appropriate and timely as the Continent seeks to
harness the potential of digital technology to achieve the
cash-lite agenda.
In the pursuit of this agenda, let me draw on Ghana's
8.
experience and highlight some important elements of the
country's strategy towards financial inclusiveness and
cash-
lite transactions. Over the past fifteen years, the Ghana
Interbank Payment and Settlement Systems (GhIPSS), a
subsidiary of the Bank of Ghana, in collaboration with other
payment service providers have made enormous
investments in the payments system infrastructure to provide
the platform for digital payments.
9. Among others, the payments system infrastructure has also
created an integrated and interoperable retail payments
ecosystem which includes cheque codeline clearing with
truncation, automated clearing house for direct debit and
credit transactions, an instant retail payment system, mobile
money interoperability and the recently launched hybrid card
- -
which has consolidated the e-zwich and gh-link cards to
provide convenience to customers.
10. Mr. Chairman, for the payment system to operate
efficiently, it must be subjected to strong legal and regulatory
frameworks to provide certainty to all stakeholders. In this
regard, the Bank of Ghana initiated processes that led to the
passage of the Payment Systems and Services Act 2019,
(Act 987) to provide an enabling regulatory regime for digital
payments.
For all intents and purposes, the Act seeks to promote
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innovation in the design and delivery of payment products
and services by widening the scope of the payments industry
to Fintechs and engendering competition. It is expected that
Fintechs' innovations will deliver products that meet the
needs of all stakeholders, whether banked or unbanked and
underserved, to attract them into the digital payment space.
Also, a proportionate regulatory regime has been adopted to
promote fairness in regulation and accommodate different
payment service providers.
12. The quest for cashless payments is gradually shifting
consumer interfaces from the manual environment to cyber
space. Alongside this transition, there has also been an
increased spate of complex cyber security threats which is
posing risks to the cashless agenda. The Bank of Ghana has
therefore issued a cyber-security directive for compliance
by banks and payment service providers to build a robust
and resilient digital ecosystem. To further accelerate the
digitisation process, stakeholders must work collectively to
promote merchant acceptance of digitised financial
products and services, with particular emphasis on lower-
tier merchants, such as small and micro-enterprises.
The next key area is
13. enhancing public confidence.
Despite the successes achieved so far, some consumers still
lack awareness and confidence in electronic payments. In
this direction, the various stakeholders are undertaking
continued consumer education and financial literacy to build
confidence and help in fraud reduction. GhIPSS and
stakeholders in the payment industry are also building a fund
to support consumer education. Also, on a regular basis,
payment service providers are educating the public on how
to avoid scams in the use of the newly deployed payment
products and services.
14. The Bank of Ghana is fully committed to the cash-lite
agenda which ties in with the Government of Ghana's digital
economy agenda. So far, we have seen the introduction of
the biometric national identification system and the digital
addressing system which are all supportive of our quest to
drive digitised financial transactions. As the central bank, we
will continue to work with all stakeholders to ensure the
successful implementation of these initiatives. Of course,
there will be challenges, but with firm commitment, we will
eventually reduce the dominance of cash in transactions and
improve the efficiency and security of payments for a more
inclusive society.
15. To conclude, let me note that the future of banking
services is digitisation and it brings opportunities as well as
challenges. We can harness digitisation to promote
transactional efficiency in the delivery of financial services as
well as scale up and broaden financial access to all
segments of the society. Together, we must leverage on
these opportunities to deliver financial inclusion across our
various countries and the continent at large. I believe that
these issues will form the basis for the panel discussions and
focus sessions at this two-day Summit. I wish you a fruitful
deliberation.
16. Thank you for your attention.