Asian Banking & Finance (January - March 2023)

Page 42

EVENT COVERAGE: SFF PANEL 2

Intent vs ability: Ghana’s Kwame Oppong on why banks should shift lending models Current mechanisms leave out SMEs and MSMEs from accessing much-needed credit. SINGAPORE

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anks and regulators must rethink their lending models if they want to foster a loan environment that is more accommodating to the financial needs of small and medium enterprises. Speaking in a panel during the Singapore Fintech Festival, Kwame Oppong, Director of Fintech and Innovation for the Bank of Ghana, said that financial institutions should do away with the model that looks at SMEs’ ability to pay, and rather focus on the intent to pay and find a means from there. “The problem is it [traditional lending] has been incompatible with the SME space. Frankly, even when it comes to just basic payment collection, and the KYC around creating accounts for merchants, the due diligence requirements–we noticed that even at that level, there was a problem,” Oppong told attendees of the conference, which took place in at the Knowledge Plenary Singapore. He said that regulators at the Bank of Ghana then looked at international standards. “We realised that we put in place a mechanism that is only really applicable to larger SMEs and perhaps

The existing model of credits and delivery has worked for a while but has it worked enough?

Kwame Oppong

larger institutions. SMEs and MSMEs are just left out, which means the basic points of even being able to get access to an account, a digital means of collecting payments, was a problem [for them]. So as a starting point, that was an issue,” he said. SMEs are often a focal point of regulators when it comes to the issue of financial inclusion. Some financial authorities–notably those from Singapore–even mentioned financial inclusion for SMEs as a consideration for whom to hand out their digital bank licenses. Fixing the model Oppong highlighted the need to start looking at intent to pay as well as a criterion for lending. “The NPLs were no worse than the traditional portfolios of banks using the existing models. So clearly rethinking the approach was important,” he said regarding lenders who adapted new models that looked at intent to pay or lent to SMEs or entities whom traditional banks would have skipped or rejected. “We really took a step back and asked ourselves, this existing model of

SMEs are often a focal point of regulators when it comes to the issue of financial inclusion

40 ASIAN BANKING & FINANCE | Q1 2023

credits and delivery has worked for a while but has it worked enough? And in spite of all our efforts, I don’t think anyone can with a straight face say ”yes”, at least in Ghana’s context,” the fintech expert said. “We had to rethink these things. It may work for a segment, but for the largest segment of SMEs, for a larger segment of entities in the business community, this just does not work,” Oppong added. With this in mind, the Bank of Ghana recently launched a digital regulator sandbox, bringing in some banks to offer loans where some of the usual requirements they imposed as regulators have been suspended. This is in order to test and learn whether the new model could work. “We may find out this is the worst decision possible, and perhaps does not require scaling. But we would at least have learned what not to do. But our hunch, and with everything we’ve seen thus far, there’s a likelihood that this may be the game changer that we want. So we’re pretty excited about that, and we’re looking forward to executing that project,” the Bank of Ghana director shared.


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Articles inside

OPINION PAT PATEL Economic lifeline: The coming together of fintech leaders in driving growth amid crisis

3min
pages 50-51

Steering a bank through geopolitical rapids DEREK LEATHERDALE

3min
pages 48-49

Paywatch enables early salary withdrawal for Malaysians

2min
pages 47-48

CASE STUDY 1: DBS CARD LOANS DBS HK introduces fully digital card loans for instant cash

2min
page 46

AI adoption in the banking sector is not a ‘race’ but a question of trust: HSBC

2min
page 44

EVENT COVERAGE: SFF PANEL 2 Intent vs ability: Ghana’s Kwame Oppong on why banks should shift lending models

2min
page 42

Better rates, lower fees will not be enough for digital banks to make a profit

5min
pages 40-41

EVENT COVERAGE: SINGAPORE FINTECH FESTIVAL

1min
page 39

EVENT COVERAGE: SINGAPORE FINTECH FESTIVAL Tokenised assets, stable coins central to Singapore’s crypto hub ambitions

2min
page 38

ANALYSIS: DIGITAL ADVISORY

2min
page 37

Why a hybrid platform is key to banks’ digital advisory woes

2min
pages 36-37

SECTOR REPORT: CARDS & PAYMENTS Meaningful experiences, wellness as key pillars of the return of travel: Mastercard

2min
page 34

BNPL regulations toughen debt prevention and financial literacy in Asia Pacific

4min
pages 32-33

Why the universal banking model is no longer sustainable in modern-day banking

6min
pages 30-31

REPORT: UNIVERSAL BANKING MODEL

2min
page 29

REPORT: UNIVERSAL BANKING MODEL Retail banks must operate like tech firms to thrive

3min
pages 28-29

SECTOR REPORT: CARDS & PAYMENTS

1min
page 27

Real-time cross-border payments edge closer to reality with ISO 20022

3min
pages 26-27

French fintechs tap into Asia’s booming market

3min
pages 24-25

INTERVIEW How GCash cornered the Philippines’ sachet economy with SMS-based remittance service

4min
pages 22-23

BANKING OUTLOOK: APAC APAC banking industry outlook by market

1min
page 21

Inflation, weak economies to erode Asia Pacific banks’ buffers in 2023

3min
pages 20-21

BRANCH WATCH 2: CITI HONG KONG Citi entices Hong Kong’s ultra-wealthy with first-ever Global Wealth Centre

1min
page 19

BRANCH WATCH 1: HSBC SINGAPORE HSBC Singapore’s new head office embraces hybrid ways of working

1min
page 18

How will the FTX collapse affect the cryptocurrency industry?

2min
page 16

Only 1 in 10 of banks’ energy financing deals went to renewables

2min
page 15

Revised license and laxer listing rules to rock Hong Kong fintechs

2min
page 14

P2P lending in regulatory shake-up

1min
pages 12-13

Loan demand to recover, but China’s banks still need to buff loss cushion

3min
pages 10-12

BTN’s housing loan innovation a big hit amongst millennials

3min
page 8

Daily news from Asia

1min
page 6
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