<<Print>>

Managing Director of Cal Bank, Mr. Frank Adu, has revealed that digital and mobile banking forms the biggest threats to banks not only in Ghana but countries across the globe. This he believes would create room for more fraudulent activities than ever. According to him, the limitation on the control of cash in circulation, in digital and mobile banking, makes it difficult for any central bank to control how much money would be in circulation at any given time. �With cash, you hold the cash, deposit it, it goes to the central bank, the central bank prints the cash so at any point in time the central bank decides how much money there will be in circulation but digital money is different. The minute you allow it to go independent, who controls it, which central bank is responsible for it?� he queried. Mr. Adu explained that with the �borderless� nature of the digital and mobile banking currencies, which can be used anywhere across the globe, it becomes difficult to regulate the amount of cash that would be in circulation. �It is a borderless currency. It can be used in St. Petersburg, it can be used in Maputo and in Accra. So those are the issues. That is where the world is coming to right now. Even in developed countries, they are debating how to deal with it. It is the way of the future so a way has to be found�, Mr. Adu added. Speaking on the possible rise of fraudulent activities due to the rapid growth of electronic banking, Mr Adu explained that though internet and electronic banking are still nascent in Ghana, there was the need for caution since electronic surveillance is not a strong part of operations in the country. �It is still a nascent industry in the country but I know that in the developing countries there is a huge debate between the banks and the merchants as to who is to be held responsible because the banks have always been held responsible for internet and electronic fraud but most of the time, the witnesses are with the merchants so now the banks are pushing back.� �The minute we get to that level where a significant percentage of our transactions are done electronically, we have to be very careful because electronic surveillance is not necessarily a strong part of our operations in Ghana yet�, he said. Welcoming the idea of electronic and internet banking, the Cal Bank MD further stressed that despite the possible risks associated with electronic and internet banking, Ghana could not be left behind in the technological age. He therefor stressed the need to institute and implement effectively, the systems that would arrest such fraudulent acts. Despite his fear of a possible threat to the banking industry, the Cal bank boss was confident that electronic banking would not collapse the traditional banking industry in the future as he believes the central banks would find a way to tackle the situation. Already, some major banks in Ghana whose liquidity is being greatly affected by the activities of microfinance institutions and mobile banking have resulted to �deposit and win� promotions in a bit to raise cash to meet withdrawal demands of customers. With surging activities of non-bank financial institutions in the country, which are rechanneling massive liquidity from the banks with promises of high returns on savings, traditional banks are at their wits end as they face stiff competition from all angles. With a combination of innova�tive savings products and credit arrangements, non-bank financial institutions in Ghana are sprinting ahead of the still sluggish banks in tapping the vast wealth of the informal sector. It is no surprise that there has been a recent explosion of finance in the micro finance sector. Also, the rise in mobile money transfer by telecommunication companies have contributed heavily in the shift of money, which hitherto would have passed through the banks, to the telcos. The development, has resulted in some major banks intensifying promos on "deposit and win" raffles to urge their customers to deposit over GH₵100 every month for exorbitant prize reward. Sources in the country�s major banks engaged in the raffle told Business Day that, the increasing rate of mobile money transfer and micro-finance activities are the major contributory factors to the decline in cash deposits at the banks. �The banks in times like these must be innovative to attract cash deposit to meet daily withdrawals by customers, hence the promo�tional activities,� a source told Business Day. With the competition for customers in the sector increasing by the day, only time will tell the fate of the formal banking and financial systems that had previously dominated the banking and financial sector.