OmniBank introduces innovations to bring banking to doorstep of people
New entrant to the banking sector, OmniBank, is set to roll out two products as it seeks to consolidate its foothold in the country since it started its operations last year.
The bank is optimistic that by launching its Free for all Account and Freedom Account by the end of the month, it will demonstrate the flexibility and value it offers.
Free for all
“We have been saying that bankers have been cheating us for too long. When you put your money in a bank account and you are not taking the money out, you should not be charged a maintenance fee because what the bank is doing with your money is investing it. So charging you is not fair.
“If you can keep a minimum of GH¢100 in your account, you will never pay any charge; but for businesses, you have to keep at least GH¢1,000,” the Managing Director of the bank, Mr Philip Oti Mensah, said when he paid a courtesy call on the Editor of the Daily Graphic, Mr Ransford Tetteh, last week.
Mr Mensah said the Freedom Account offered the flexibility of connecting the bank account with mobile money which could be for the payment of bills, including utilities and DSTV.
As part of a strategy to be accessible, the bank is using its PayHouse—a kiosk placed at vantage locations—making it easy to mobilise deposits through mobile money.
Mr Mensah, who described the PayHouse as a less expensive method of reaching out to customers, believed that given the momentum mobile money was gathering, banking would soon move to mobile phones.
Currently, the bank has 30 PayHouses across Accra alone, but hopes to make it between 1,000 and 2,000 by 2020.
“What will happen in the next two years is that mobile money agents will come and take a franchise from us. By then, the PayHouse would have become a strong brand. It would be given to them to pay overtime. Our overall strategy is to remove the merchants under the umbrella.
“The whole revolution will be complete if vendors join the platform. We are developing a system where mobile money will become the system of payment and not cash,” he stated.
To position itself as the most student-friendly bank, Mr Mensah said, OmniBank was recruiting ambassadors on the campuses of tertiary institutions who would serve the brand by mobilising deposits and earn commissions.
When the discussions turned to the meagre interest depositors earned on their funds in banks while the same banks charged astronomical interest on loans, he said the issue was not that simple.
While admitting that the interest on loans was abnormal, he said the government was borrowing heavily from the local market and made the cost of borrowing high for all customers.
Additionally, while individuals may be depositing with banks, the chunk of the deposits were for interest-sensitive customers who negotiated their interest against treasury bills (T-bills) and would always ask for percentages that were higher than the T-bills.
“People will come and say ‘if T-bills is giving me say 20 per cent, you have to give me 30 per cent’. If you don’t give it to them, they will threaten to take their money away. Therefore, the average cost of deposits for banks is quite high.
“Once governments stop borrowing heavily from the market where interest rates are going now, everything will shape up nicely and interest rates on loans will also become reasonable,” he added.
Formerly known as Union Savings and Loans, the microfinance company rebranded as OmniBank after receiving its licences to operate last year.
Mr Mensah said while it might be young in the sector as a bank, “the market has been generally positive. We managed to build quite a strong brand as a savings and loan company”.
“We have had customers from other banks moving to us because we have become what I will describe as a strong alternative. What we want to ensure is that we don’t behave like the big banks when we become big,” he added.
Mr Tetteh, for his part, urged the bank to design products that offered incentives to salaried workers to develop an investing culture.
He said the Graphic Communications Group Limited (GCGL) was interested in a banking product that made it possible for its vendors to pay for newspapers sold early to reduce the default rate.
“We are trying to use the mobile money platform as a complementary payment system to boost sales,” he added.