While always in a state of flux, Ghana’s banking system is now undergoing what is arguably the greatest transformation since the nation’s Independence in 1957.

This change has taken three forms. First, there has been influx of many foreign banks into the country at an unprecedented pace during the last ten years. Second, banks and other financial institutions have begun to offer their services over the Internet. And third, new legislation has opened up the doors to combining banking with other financial services.

The implications of these changes, and for that matter, the promulgation of the universal banking license regime for the competition in the banking industry in Ghana have been widely discussed, but what do they mean for the individual banks?

Some analysts argue that the changes will benefit most banks by increasing the public’s access to financial services and making it easier for banks to continue lending even during regional economic downturns.


Others argue that the changes will end up hurting some banks, especially smaller ones, because the influx of foreign banks with “predatory” marketing style will siphon off funds from smaller banks and thereby outperforming their existing local peers in an entrenched competition.

To shed light on the debate, this article focuses on the group that is most likely to be affected by the transformation of banking – the existing local banks.

Before the recent changes, surveys consistently found that this group relied heavily on their branch networks for their deposit mobilization and lending efforts. It stands to reason, therefore, that they would also be the group most affected by any changes in local banking practices resulting from the influx of foreign banks, Internet banking, or financial integration that have currently culminated into intense competition in the industry.

A further reason for focusing on existing local banks is that these institutions play an especially important role in the economic performance of smaller communities – the communities where the “so called” major foreign banks have neglected doing business with.


What this article seeks to do is to prescribe a cost effective mechanism that has been proven to be very effective in retaining and creating a brand community amongst a company’s big and good customers.

This article presents customer retention and brand community creation mechanism to the existing local banks for an improved profitability through an improved market penetration ratio and share in this new era of universality in the Ghanaian banking industry.

Thus, for the existing banks to continue to stay in business and outperform their foreign counterparts in competition, under the present circumstances, they must adopt relationship banking as customer retention and brand community creation strategy.

Relationship banking, according to Singh, N (2011), refers to the efforts of a bank to promote personal contacts and to keep continuous touch with customers who are very valuable to the bank. It involves, according to the Business Dictionary, financial marketing in which a bank’s customer service representative (also called account officer, customer relationship representative, personal banking officer, etc.) attempts to meet a customer’s needs with a complete package of facilities.


The package may include most or all of services such as cash management, credit cards, deposits, loans, money market investments, etc., that may be summarized on a single bank statement.

It is necessary for the existing local banks to retain its big and good customers. It is also incumbent on banks to establish an effective brand community amongst these big and good customers. These customers will be a source of regular income for the local banks as they will be prompt and regular in repayment of their loans and advances.

In many cases, however, they may be customers having large deposits with the existing local banks. The existing local bank’s profit to a large extent depends upon retaining such honest borrowers and large depositors and building a brand community amongst them.

Similarly, it is also necessary to attract new customers who will be a source of income for the existing local bank. Through relationship banking, the existing banks could be able to attract potential consumers of their financial services and products, grow them to become their customers, groom them to become their clients and finally retain them as their stakeholders for an improved profitability.


In order to retain such profitable accounts with the bank or to attract new accounts, it is necessary for the existing local bank to serve their needs by maintaining a close relationship with such customers. This type of banking activity gains momentum in a highly competitive banking world such as the one Ghana is experiencing now.

What is more, the existing banks should know that relationship banking in its very quintessential nature is continuum and that a relationship ones established must be in perpetuity no matter the development of any distasteful events.

Thus, the article further caution that relationship banking though very rewarding, is expensive and challenging to maintain, especially with regards to banking businesses and that neither death nor litigation should even bring to an end an established relationship with any bank customer.

The article concludes that the recent changes in banking are likely to benefit existing local banks in Ghana, as long as they adopt relationship banking as a strategic tool for retaining both the existing and potential key customers and for establishment of brand community amongst them. It also concludes that the existing local banks face a major but not insurmountable obstacle in continuing to do banking business the way they are doing presently with little or no focus on relationship banking.



Nathaniel Blankson

Email: panafrican-at-hotmail.