Banks’ clients prefer branch banking

The banking hall remains customers’ most preferred channel for transacting banking business in Ghana, an April 2013 Africa Banking Industry Customer Satisfaction Survey by KPMG, the global accounting firm, has revealed.

The report said, in spite of heavy investment in technology by banks to encourage the use of alternate channels in banking- such as ATMs, Internet banking, Point of Sale terminals (POS), and mobile banking -- consumers prefer to use a bank branch.

Six out of 10 respondents said they withdraw cash using the branch while 83 percent pay their bills at a bank branch. Comparatively, only 8 percent of customers use the Internet for the same purpose.

Customers also prefer to walk into a bank branch to check their balances, with 56 percent of respondents admitting to checking their balances at the branch, while 38 percent use the ATM and only 3 percent use the mobile-banking platform.

There are currently 26 registered commercial banks and 889 bank branches. Banking penetration currently stands at about 30 percent of the Ghanaian population of about 25 million.

The relatively low penetration is attributable to a myriad of reasons, including the multiplicity of bank charges on customer accounts and the lack of products that directly meet the needs of the bulk of the population. Travel distance and the amount of paperwork involved are also among the barriers to adopting banking services.

Ghana’s banking sector had a total asset base of about GH¢25billion (US$13billion) in 2012. According to the Economist Intelligence Unit, this is expected to almost US$18billion by 2015.

Though the survey revealed the dominance of branches and the Automated Teller Machine (ATM) over other banking channels in Africa, it also predicted exciting prospects for the adoption of alternative payment channels. Analysts reckon that it costs about US$500,000 to put up a standard branch of a bank.

The cheap cost of using agents and technology -- which translates into lower charges and lower capital expenditure -- is a key benefit that is expected to draw banks into branchless banking.

Branchless banking involves the delivery of banking services outside of conventional bank branches, often using non-bank agents and relying on information and communication technology (ICT) to transmit transactions.

The inaccessibility of certain places and overhead costs associated with establishing branches nationwide, are some key challenges that branchless banking, which integrates alternative channels, is expected to remedy.

However, to achieve the desired results, there is the need to continuously create awareness about the use of alternative channels to increase banking penetration in the country.

According to the report, customer-loyalty and advocacy for local banks is below the overall average in a total of 14 countries surveyed by KPMG. These include Angola, Botswana, Cameroon, Chad, Côte d’Ivoire, Kenya, Nigeria, Senegal, Sierra Leone, Tanzania, Uganda, Zambia and Zimbabwe.

For instance, in Ghana 44 percent of respondents said they would repeat business with their bank while 55 and 70 percent of respondents said the same in Kenya and Nigeria respectively.

Fifteen percent of the customers surveyed in Ghana also expressed the likelihood of changing their bank, citing service-quality as the top reason for changing.

The inaugural edition of the KPMG Africa-wide Banking Industry Customer Satisfaction Survey covered over 25,000 retail banking customers from 14 countries across Africa.