UMB confident of growth with focus on digital channels, platform play

The Universal Merchant Bank (UMB) recently held a Thanksgiving service at the ICGC Holy Ghost Temple as part of activities to round off the Bank’s Jubilee celebrations. The bank, founded as a policy bank in 1972, has since March 15, 2022, been celebrating its 50th anniversary.

On the sidelines of the service, the CEO and executive directors of the Bank engaged the media in a question-and-answer soiree. Outlined is the report from this correspondent from this interaction.

Q. How does it feel to be 50 years old and what is your message to your customers and the nation?

A. It is a humbling experience. We are proud to be one of the surviving indigenous banks in the market, coupled with the fact that 50 years of sustaining any business in Ghana is an achievement. This is why we have embarked on this round of Thanksgiving to Providence for seeing us through.

We reserve our greatest appreciation on this anniversary for our customers, a significant percentage of whom have been with the bank for over 30 years. We are grateful to every customer.

Q. What are some of the key highlights of your time banking in Ghana? Have you delivered impact?

A. As you will recall, UMB was established as the Merchant Bank for Ghana, to push forward the agenda of helping Ghanaians seize the controlling heights of this economy. We have largely delivered on that mandate. UMB has been key to the thrive-in-Ghana story for many corporates in the country.

This is perhaps why we have banked 35% of all Cocoa LBCs to date. UMB was significant in the establishment of the Ghana Stock Exchange, and in the 1970s and 1980s, we effectively handled all investment banking in Ghana. We played significant roles in key floatations in this market, for example, the famous Ashanti Goldfield floatation in the 1990s.

Many of the famous names in Ghanaian banking are alumni of the bank, and we spawned institutions like the Home Finance Company, which is now Republic Bank. Clearly, we have delivered impact, and we will continue in this tradition. Since we evolved into a universal bank, we have continued this tradition of innovation in Ghana.

At this point, we are developing an exciting hub of platforms that delivers world-class digital banking to Ghana. This is based on our current digital innovations, the UMB SpeedApp and UMB SpeedPay. It has been an exciting 50 years made possible by our people—staff, partners, and more importantly customers.

Q. It is interesting that you are undertaking this Thanksgiving in the financial release period for the banking industry. The numbers are not encouraging - are they?

A. The Ghana Association of Banks has provided a detailed and accurate commentary on the numbers, which we fully support. As indicated by the CEO of GAB, the 2022 numbers are not a cause for alarm, as the trajectory of the numbers was anticipated and had been prepared for.

The key takeaway from the numbers is the fact that the banking industry in Ghana, under the leadership of the Association and the Bank of Ghana, has stepped up to ensure that the economy continues to recover.

This recovery is becoming more eminent as we can see that the quarter-one numbers for the industry are positive. In the case of UMB, our numbers had significant strong lines that are a testament that our medium-term strategic journey is on course.

For instance, our liabilities (deposits) grew to GHS 4.1 billion versus GHS 3.2 billion in 2022, and we have seen this confidence from customers firm up in 2023. The uptick in deposits could potentially drive positive interest income, as increased deposits can fund increased loan activity for businesses and individuals.

We have also seen income from our digital transactional platforms increases by double-digit percentage points. UMB’s significant increase in non-interest income from 131 million in 2021 to 261 million in 2022 demonstrates the bank's success in diversifying its revenue sources. This diversification is a critical strategy for banks to mitigate the impact of declining net interest margins in a highly competitive market amid high inflation and rising costs of doing business.

The impressive growth in fees and commissions, trading, and other income suggests that UMB has been successful in expanding its operations, developing new products and services, and creating additional revenue streams. Such achievements bode well for the bank's future profitability, as a broader revenue base will help offset the challenges from declining net interest margins on interest-earning assets and position the bank well in the market to build a sustainable future. Overall, we also saw growth of GHS 333 million in our total asset value.

Our analysis based on a total appreciation of the foregoing leads us to conclude that we are confident of recovery and growth in Ghana in 2023.

Q. Is the growth strategy for Ghanaian banking now digital?

A. We led the process of delivering an online platform for Ghana card linkages through our EZUPDATE product. Our Banking-As-A-Service platform allows 3rd parties including fintech and non-bank financial institutions to embed banking products such as account opening, loans, payments, and collections into their existing products and services.

We have seen this result in a 20%+ improvement in revenue collection for clients who sign onto these platforms.

Q. So where does your SME focus play here, considering your elaborate digital strategy?

A. UMB has a focus on empowering SMEs with digitization to promote growth. UMB SpeedPay is an example of our digital platform that allows SMEs to generate invoices, receive payments, and manage accounts from their phone. Aunty Mercy, a leading wax print dealer in Okaishie uses UMB SpeedPay to make payments, manage accounts, and pay taxes without leaving her shop.

The platform also allows her to receive instant credit on her accounts and have bulk cash collections done from her business premises. UMB SpeedPay serves as a business intelligence tool for SMEs, providing information on top customers, payment channels, and trade finances.

UMB’s approach to digitization is ‘DIGITALL’ which is comprehensive and aims to encompass all sectors we operate in. Our unique selling proposition is to empower SMEs to achieve digitization for growth and we offer UMB SpeedPay as a platform to facilitate this process.

Q. Any final words for Ghana from UMB?

A. Thank you for 50 years. We promise to continue to strive and give you the best uniquely Ghanaian perspective on banking since 1972.