Digital financial services have experienced increased adoption in Africa and specifically Ghana over the last decade.

Traditional banks, mobile operators and fintechs have invested heavily in deploying various solutions aimed at facilitating the delivery of efficient payments and collections services in the economy.

From person to person (P2P), person to business (P2B) business to person (B2P), business to business (B2B), person to government (P2G) and government to person (G2P) transactions, we have seen a lot of investments aimed at creating products and solutions to facilitate efficient movement of funds.

From the announcement of the Imposition of Restrictions Act to enforce social and physical distancing protocols in response to COVID-19 and the subsequent closure of our borders on March 22 to the current gradual return to the new normal, we have seen a significant increase in the adoption of digital financial services and emerging payments solutions.

According to the recent PWC Ghana Banking Survey Report 2020, the traditional mode of banking (face-to-face) changed during the COVID-19 crisis with mobile banking becoming the most preferred medium of banking. From a corporate and business banking perspective, we have also seen an increase in the use of digital solutions (web and mobile) such as Stanbic Bank’s Business Online and Host to Host solutions with document upload feature as a means of keeping the business going while adhering to the COVID-19 protocols.

Digital financial services in Ghana is evolving very fast. The beauty about the current evolution is the practicality of customising to the unique needs of Ghanaian clients and their respective ecosystems. The increasing rate of mobile and web penetration in Ghana means that we have a tool that can help us leapfrog and more importantly adopt to suite our reality instead of the wholesale consumption of technologies from advanced countries that may not be practical to our Ghanaian reality.
Prior to COVID-19, I published an article titled ‘Riding the tide: Emerging payments and doing business in Ghana’. In the article, I noted that emerging payments sat at the core of the transformation of the Ghanaian economy and has the potential to impact all spheres of our lives. The rate of adoption then, though good, was relatively slow compared to other countries such as Kenya and South Africa. Since the onset of the current pandemic, adoption of emerging payments in the personal, commercial and corporate segments of the population has increased significantly. For instance, digital payments captured by GhIPPS grew 81% in Q1 2020.

As the saying goes, necessity is the mother of inventions. The current pandemic has contributed in moving people outside of their comfort zone and their proficiency in digital consumption has experienced an increase with exposure to these solutions. The variety of options available such as Apps, Web Portals, QR Codes and USSD made emerging payments and digital financial services available to a wide variety of consumers catering for the varying degrees of sophistication and preferences in the country right from the informal market women to the tech savvy people.

Emerging payments prior to COVID-19 were seen largely as efficient, convenient and cost saving tools. It was largely delivered through a push marketing strategy by financial institutions, mobile operators and fintechs. The pandemic has given it a new relevance and we will likely see that consumption of digital financial services will transform from a push strategy to partnerships and co-creation between consumers, financial institutions, fintechs and telecoms companies. This gives me confidence that, the recent gains in adoption will be sustained and accelerated post COVID-19. I see people naturally gravitating towards contactless payments as a way of life to protect themselves against exposure. This is because it is not only the new normal, I think it’s the new better.

With heightened awareness of hygiene in the wake of the COVID-19 pandemic, and the risk associated with dealing with physical cash I think behaviours and attitudes towards cash will dwindle. At the same time, there is an increasing shift towards emerging payment instruments in Ghana such as account transfers, mobile money payments, QR code, inter-account transfers through instant pay in the personal space.

In the corporate and commercial banking space, the ability to make domestic and cross border payments with the added feature to upload supporting document online as well as the functionality to connect clients ERP through a secured interchange with banks means payment flexibility and security for clients. With Stanbic Business Online for example, Corporate clients can initiate cross border payments on their electronic banking portal, attach all the necessary supporting documents to enable the payment go through automatically without the need for any manual intervention.

Financial institutions and Fintechs need to build on the current momentum to consolidate the adoption rate of digital financial solutions. There is a need for constant engagement with clients to understand what works for them. Stability, simplicity, efficiency, security and cost are some of the key areas of concern and efforts must be made by the players to address these to create the needed comfort and confidence in financial institutions.

While there are risks associated with emerging payments, they are insignificant compared to risks associated with physical alternatives especially cash and cheques in Ghana. I would argue that due to various layers of authentications, the risk of fraud is minimized with greater adoption of digital alternatives. The key here is the intensification of client education to prevent them from falling victims to phishing attacks.

In the recently published 2019 Banking Industry Fraud Report, overall fraud increased by 5.4% to 2,295 in 2019. Out of this total number, suppression of deposits and forgery of documents saw a year on year growth of 43.18% and 15.40% respectively. These together with cheque fraud accounted for 85.8% of the total number of fraud cases in Ghana. On the other hand, while email and e-money fraud contributed 4.6% and 0.6%b respectively, there was a 34.48% decline in cyber and email fraud from 174 to 114 cases.

The increased adoption of digital financial services allows banks, telcos and Fintechs to continue to invest in protecting clients by using artificial intelligence, robotics, data mining and analytics. These and many other embedded features such as two factor authentication, use of biometric and facial recognition and audit trails means digital payments are safer than physical transactions.

Positive digital financial services adoption is linked to increased uplift of GDP as it helps in reaching and roping in the largely unbanked population. It can also be a great tool for revenue mobilization by governments as well as deployment of targeted social interventions in P2G and G2P respectively.

A recent study by MasterCard revealed that countries that prioritize digital payments are better placed to mitigate the associated adverse impact of unemployment, financial exclusion, fraud, theft, cost of cash and corruption. The study found that each 1% increase in use of digital payments produced an average annual increase of 0.04% in GDP in developed markets and 0.02% in developing countries.

The digitization agenda by government across the various segments of the economy highlights the importance of digitization and financial institutions and other significant players have a great role in facilitating it. The next evolution in digital financial services development is likely to be in the area of full integration into ecosystems as an embedded function that is seamless and intuitively connected.