Navigating Economic Recovery

The world today is defined by unprecedented change, uncertainty, and volatility. As we navigate an era marked by rapid transformation, economic volatility, and technological disruption, banks must not only respond to uncertainty but look beyond it. The focus for survival and growth lies in adaptability and innovation—two principles that will shape the future of banking future.

In recent years, the banking industry has faced several disruptions. However, the global banking sector is projected to experience significant changes and growth by 2025. The key projections include a substantial shift towards digital banking, with increased adoption of digital channels for account opening, onboarding, and customer service. Furthermore, there will be a robust expansion, with a potential value creation opportunity of up to $20 trillion. This growth will be driven by banks realigning to compete in new arenas, leveraging technology and data to offer real-time services. In addition, enterprise IT spending in the banking and securities sector is expected to grow steadily, reaching approximately $715 billion by 2025.

In Ghana, our sector has not been immune to these pressures. The Bank of Ghana’s Monetary Policy Report for January 2024 revealed that the NPL ratio rose to 20.7% in December 2023, up from 16.6% in December 2022. This signals growing stress in maintaining asset quality within the financial sector, attributed to macroeconomic difficulties such as inflation, exchange rate pressures, and economic downturns. It reflects the challenges banks face in ensuring that loans are repaid on time and that overall financial stability is maintained. Rising NPLs indicate potential risks to profitability and solvency.

This level of economic volatility, however, is congenital with the banking ecosystem. Historically, banks have weathered economic downturns and crises by evolving—innovating to meet new challenges head-on. Now more than ever, adaptability is paramount, and technology is at the forefront of this evolution.

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