PARIS GRADUATE SCHOOL OF MANAGEMENT

INTERNATIONAL EXECUTIVE MBA

GROWTH STRATEGY AND ITS IMPACT ON PROFITABILITY WITHIN THE

BANKING SECTOR A CASE STUDY OF BARCLAYS BANK OF GHANA
EXPANSION PROGRAMME FROM 2006-2008

BY

DANIEL AFEDZI

(STRATEGIC AND CONSULTANCY MANAGEMENT)

STUDENT I/D: WA 10209

A DISSERTATION SUBMITTED TO THE PARIS GRADUATE SCHOOL OF

MANAGEMENT IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR
THE AWARD OF INTERNATIONAL EXECUTIVE MBA IN STRATEGIC AND
CONSULTANCY MANAGEMENT

JULY, 2013

DEDICATION

I
This work is dedicated to my entire family, especially my wife, my lovely children Phyllis
Nhyiraba Afedzi, Nkunyimdzinyi Dennis Afedzi and Kezia Nhyimdzee Afedzi not forgetting my
lovely grandmum Hannah Akwonu who passed a year ago. The project is also dedicated to the
memory of my dear late step mum Mrs. Flourince Afedzi. May God bless her soul for her
support in my education.

DECLARATION

II
I, Daniel Afedzi, do hereby declare that this Dissertation is my own original work and that it has

not been presented for any other degree or diploma of other institute of higher learning, except

where due acknowledgment has been made in the text.

…………………………………… DATE:……………………………………

Daniel Afedzi

SUPERVISOR’ CERTIFICATION

I, the undersigned do hereby certify that this Dessertation by Daniel Afedzi was done under my

strict supervision and in accordance with the requirements of Paris Graduate School of

Management (PGSM).

I hereby recommend it to the Paris Graduate School of Management for acceptance.

………………………………................. DATE:.....................................................

MR. SAMUEL MAWUSI ASAFO

(MBA, MSc, PhD in view)
(SUPERVISOR)

ACKNOWLEDGEMENT

III
I wish to express my sincere thanks to the almighty God for his direction, protection, guidance
and been able to lead me throughout this research work

I am particularly grateful to my supervisor, Mr. Samuel Mawusi Asafo of the CIAMC and Prof.
D. A King, for their valuable guidance and support.

My sincere thanks also goes to my childhood friend and classmate and my first degree course
mate Emmanuel Ntim Amankwah for his suggestions and comments which contributed
immensely towards the success of this work.

Finally, thanks also go to management and staff of Barclays Bank of Ghana for allowing access
to the institution and assisting in answering of the questionnaire.

IV
 ABSTRACT

Growth is something for which most organisations strive, regardless of their size. Small firms
want to get big, big firms want to get bigger. Indeed, companies have to grow at least a bit every
year in order to accommodate the increased expenses that develop over time. With the passage of
time, salaries increase and the costs of employment benefits rise as well.

The competition in business keeps becoming keener and keener. Each organization wants to be
the best in every area of the business world. In Ghana, the focal point for banks is to be named as
the best bank in the banking award and also to be the most profitable bank, and to have the lion’s
share of the market. This desire makes organisations put in place growth strategies that will keep
this aspiration and vision going year on year.

Organizational growth has obvious upsides. It spurs job creation. It creates a stimulating and
exciting environment within a firm. Organizational growth also has downsides. When growth is
too rapid, chaos can prevail. In such a situation a company may see increased sales but a drop in
profits.

This paper aims at analyzing the profit efficiency of Barclays Bank of Ghana, and testing how it
could have been affected by banking expansion-growth. This has been conducted using a sample
of 100 customers as well as 50 staff, and analyzing the financials covering the period from 2006
to 2011. Data was analyzed using qualitative and quantitative techniques as appropriate. Profit
efficiency has been measured, using the ratio of actual profitability to the best one, which a
similar bank (in size) can realize. Tests indicated that we could accept hypotheses regarding the
effects of structural expansion, product expansion and effects of staff welfare on profit efficiency
of Barclays Bank of Ghana.

TABLE OF CONTENTS

CONTENTS PAGE
V
DEDICATION II

DECLARATION III

ACKNOWLEDGEMENT IV

ABSTRACT V

TABLE OF CONTENT VI

CHAPTER ONE 1

1.1 Introduction 1
1.2 Statement of the Problem 1
1.3 Objectives of the Study 2
1.4 Research Questions 2
1.5 Justification of the Study 3
1.6 Research Methodology 3
1.7 Organization of the Study 4
1.8 General Overview of Growth Strategies and Profitability 4
1.9 The Banking Law of 1989 11
1.10 Structure of Ghana’s Banking Sector 12
1.11 Testing Levels of Competition in the Ghanaian Banking Industry 18
1.12 Bank Size and Financial Performance 19
1.13 Determinants of Bank Profitability 21
CHAPTER TWO 25

Review of Related Articles 25

2.1 Article ONE 25
2.2 Article TWO 32
2.3 Article THREE 40

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CHAPTER THREE 51

3.1 The Profile of Barclays Bank of Ghana Limited 51

3.2 The Vision of Barclays Africa 51

3.3 The Barclays Africa Mission 51

3.4 The Barclays Brand 54
3.5 Product and Service 52
3.6 Risk Management Policies 54
3.7 Barclays Bank Expansion Programme and quest for Profitability 59
3.8 Human Resource Management Policy 67

CHAPTER FOUR 70

4.1 Introduction 70

4.2 Source of Data 71

4.3 Questionnaire Design 71

4.4 Types of Questions 72

4.5 Sampling 72

4.6 Types of Sampling 72

4.7 Treatment of Data 73

4.8 Analysis of Data 73

4.8 Findings 95

4.9 Discussion of Findings 97

CHAPTER FIVE 101

5.1 Recommendations 101

CHAPTER SIX 103

SUMMARY AND CONCLUSION 103

VII
6.1 Summary of Thesis 103

6.2 Conclusion 106

REFENCES 110

Appendix I 112
Appendix II 119

VIII
IX
CHAPTER ONE

1.1 INTRODUCTION

The aim of the study is to establish the effect of expansion-growth on the profitability of a
business. The study aims to establish if the mere fact of expansion necessarily increase the
market share of a business and eventual profitability of the business. The study also aims to find
out what must be done to make the expansion-growth programme of a business affect the market
share and profitability of the business positively. The study will focus on the expansion
programme of Barclays Bank between the year 2006 and the year 2008 and examine the impact
of the expansion programme on the banks market share and its profitability. The study will also
look into what structures was put in place for the expansion to succeed. The study will discuss
the views of customers, staff and stakeholders on the business Barclays bank, its human resource
structures. The study will discuss the financials of Barclays since it embarked on the expansion
programme. The study would also compare expansion programme of other businesses and how it
impacted on its market share and profitability. The study will also explore other measures which
impact on the market share and profitability of a business as well as the impact of the
profitability on national development.

1.2 STATEMENT OF THE PROBLEM

This research is being done to ascertain the reason for the High rate of Human Resource
Turnover for Barclays Bank. The research is also being done to examine why Barclays bank
declared losses consistently between the period of 2007 and 2009. For instance I would want to
examine why Barclays Bank lost GH¢46.9m to fraudsters, loan defaulters in 2008. Another
instance is that Barclays’ losses constituted a third of the total write-offs made by all the banks in
the industry, which was GH¢150.68 million as at the end of 2008. The over 752 percent jump
from 2007 in Barclays’ write-off raises questions over the potency of the bank’s internal controls,
credit appraisal and risk management policies.

The activity of the fraudsters in the industry has reached worrying levels as it takes the form of
untraceable transactions and bad loans.

X
The Banking Survey released by PricewaterhouseCoopers (PWC) on the performance of banks
for 2007 showed that these losses called impairment charges, expressed as a ratio of gross loans
and advances, worsened from 1.5 percent in 2007 to 2.2 percent last year.

1.3 OBJECTIVE OF THE STUDY

The objective of the study is to examine the various growth strategies adopted by Barclays Bank
in Ghana in its quest for growth. The objective is also to examine the reasons or challenges
which led to the failure of the strategies adopted

Specific objective
 To examine the nature of the challenges the strategy faced
 This project also inturns to examine alternate strategies which could have been
considered to arrive at the same conclusion or even a better growth conclusion.
 Another is to examine why there is a high human resource turnover
 To examine the effects of the Profitability of a bank on National Development
 To examine the effects of Profitability on The Tax Net of the Nation
 Effects of Profitability on Service Quality and Customer Service

1.4 RESEARCH QUESTIONS

The study will base on the following research questions:

1. Can organisations run easily without growth?
2. Can an organization survive without Profitability?
3. Can consultancy services help organization achieve mission and enhance vision?
4. Whether consultancy fee can have impact on consultancy services?
5. What is the expected impact the study will bring?

1.5 JUSTIFICATION OF THE STUDY

This study needs to be done in order to examine the growth challenges that Barclays bank
encountered in its quest for growth and to give recommendations for other institutions who may
adapt similar strategy in future in their quest for growth to do it in a better way. The study is also
to fill a research gab left by past research on the topic area in other articles. The outcome of the
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study will not only inform Barclays bank on why their strategy failed but be a guide to other
organisations in the future. Again this study is also a requirement for the award of an
International Executive Master of Business Administration in Strategic and Consultancy
Management at the Paris Graduate School of Management.

There are more likely problems that will occur if this research is not done to bring out the
identified problems and their causes and provide solutions as a way of recommendations and
suggestions to ensure effective management of organizational growth and profitability.

This study will boost knowledge in diverse ways of managing growth and profitability. Also in a
future study in growth management, this study will sharpen the researcher’s activities in the field
of consultancy to appear quite unique among peers in same business.

1.6 RESEARCH METHODOLOGY (DATA COLLECTION AND ANALYSIS)

In examining growth challenges and its impact on profitability of organization, the study will
dwell on both primary and secondary source of data collection.

Primary source

Under this source, a set of questionnaire and interviews possibly will be conducted for staff and
management of Barclays Bank of Ghana in Kumasi.

Secondary Source
Existed literature (Theoretical framework) and empirical evidence will be sorted for this source
and all information obtained will be analyzed to ascertain the real impact growth challenges may
have on the profitability of organization through the use of Microsoft Excell.

1.7 ORGANIZATION OF THE STUDY

The study will be organized in six chapters.

XII
Chapter one will be the introduction, statement of the problem, research objectives, research
questions, justification of the study as well as research methodology and general overview of
growth challenges. Chapter two will be literature review and will review articles on growth
challenges and its impact on profitability of organisations. Chapter Three will take the
Background of the organization (Barclays Bank of Ghana) and will include the mission, vision,
core objectives and the policy on what growth strategies they adopt to improve the profitability
of the bank in Ghana. Chapter four will present Research Investigations, Data Analysis, findings
and discussion on findings while chapter five will be devoted to the recommendations of the
study and final chapter six summarizes and concludes the study.

1.8 GENERAL OVERVIEW OF GROWTH STRATEGIES AND PROFITABILITY

 To examine the different types of growth strategies available

 Growth programmes
 Overview of growth programmes in the past

Organizational growth has the potential to provide businesses with a myriad of benefits,
including things like greater efficiencies from economies of scale, increased power, a greater
ability to withstand market fluctuations, an increased survival rate, greater profits, and increased
prestige for organizational members. Many firms desire growth because it is seen generally as a
sign of success, progress. Organizational growth is, in fact, used as one indicator of effectiveness
for small businesses and is a fundamental concern of many practicing managers.

Organizational growth, however, means different things to different organizations. There are
many parameters a company may use to measure its growth. Since the ultimate goal of most
companies is profitability, most companies will measure their growth in terms of net profit,
revenue, and other financial data. Other business owners may use one of the following criteria
for assessing their growth: sales, number of employees, physical expansion, success of a product
line, or increased market share. Ultimately, success and growth will be gauged by how well a
firm does relative to the goals it has set for itself.
(http://www.inc.com/encyclopedia/organizational-growth.html (19th May, 2012)

Growth strategies of Banks come in Internal Growth strategies and External Growth strategies.
Internal growth strategies include Increase in capacity of the organization within which includes

XIII
Branch and agency expansions, Human resource increase and product development contributes
to internal growth of banks.

External growth strategies include Merging, Joint ventures, Licensing, Sell off and development
of new products.

Many academic models have been created that depict possible growth stages/directions of a
company. Some of the most commonly used methods for creating organizational growth within a
small business include Joint Ventures/Alliance, Licensing, Sell off, New Markets and New
product developments.

Joint Venture/Alliance

This strategy is particularly effective for smaller firms with limited resources. Such partnerships
can help small business secure the resources they need to grapple with rapid changes in demand,
supply, competition, and other factors. Forming joint ventures or alliances gives all companies
involved the flexibility to move on to different projects upon completion of the first, or
restructure agreements to continue working together. Subcontracting, which allows firms to
concentrate on those aspects of their business that they do best, is sometimes defined as a type of
alliance arrangement (albeit one in which the parties involved generally wield differing levels of
power). Joint ventures and other business alliances can inject partners with new ideas, access to
new technologies, new approaches, and new markets, all of which can help the involved
businesses to grow. Indeed, establishing joint ventures with overseas firms has been hailed as one
of the most potentially rewarding ways for companies to expand their operations. Finally, some
firms realize growth by acquiring other companies.

Licensing

A firm may wish to expand and grow by licensing its most advanced technology. This course of
action is often recommended to firms with their own proprietary technologies because
competitors will likely copy whatever a company develops at some point. Licensing is one
method that can be used to maximize the benefit that a firm can gain from its technology. It is
also a way to gain the resource to fund future research and development efforts.

Sell off Old Winners

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Some organizations engaged in a concerted effort to grow divest themselves of mature "cash
cow" operations to focus on new and innovative lines of products or services. This option may
sound contradictory, but analysts note that businesses can command top prices for such tried and
true assets. An addendum to this line of thinking is the divestment of older technology or
products. Emerging markets in Latin America and Eastern Europe, for instance, have been
favorite places for companies to sell products or technology that no longer attract high levels of
interest in the United States. These markets may not yet be able to afford large quantities of state-
of-the-art goods, but they can still benefit from older models.

New Markets

Some businesses are able to secure significant organizational growth by tapping into new
markets. Creating additional demand for a firm's product or service, especially in a market where
competition has yet to fully develop, can spur phenomenal growth for a small company, although
the competitive vacuum will generally close very quickly in these instances. In the last ten years,
many small firms have turned to an online marketing presence as a tool for reaching beyond their
traditional markets. For those who do not yet market and sell online, this is one area that may be
explored.

New Product Development

Creation of new products or services is a primary method by which companies grow. Indeed,
new product development is the linchpin of most organizations' growth strategies.

Outside Financing

Many small companies turn to outside financing sources to fund their expansion. Smaller private
firms search for capital from banks, private investors, government agencies, or venture capital
firms.

Competition in the Banking Industry

There is a vast academic literature on the measurement of competition in the banking sector.
Currently, there are two major approaches that may be used to evaluate the level of market power

XV
within a particular sector. The approaches differ according to whether the underlying model of
the sector is structural or nonstructural.

The Ghana Banking Survey 2008 has shown that the traditional banks are losing out as
competition in the industry deepens, triggered by aggressive new entrants.

The survey, based on the financial results of the banks revealed a squeeze in profit in 2007 across
board with the big banks the major losers, although it said performance in the industry on the
whole was creditable.

The survey, a collaborative work between PriceWaterHouseCoopers and the Ghana Association
of Bankers, indicated a high deposit level for the industry with the new banks accounting for the
greater chunk.

Presenting a brief of the outcome, Mr. Vish Ashiagbor, Partner PWC, said the banking industry
saw an appreciable growth in deposits, loans and advances as well as improved portfolio
management and asset quality in 2007.

He said the various regulatory changes undertaken by the Bank of Ghana, such as universal
banking and review of secondary requirements, among other things, had helped to strengthen the
environment and made the sector robust and vibrant. As regards the cost income ratio as a
measure of operational efficiency, Mr Ashiagbor said the rate was going up in most banks while
few banks showed declining ratio with increase in profitability levels.

Besides, asset quality had also seen major improvement a lot healthier than in 2003.
Mr Ashiagbor said the success in the industry would depend on creativity of the banks and a hard
eye for opportunities, adding that any slip on the part of the players would be costly.

Launching the survey, Dr. Paul Acquah, Governor of the Bank of Ghana then, said banks in the
country needed a sound capital base to build the capacity for financing bigger projects and
volumes of trade without posing risks to financial stability. “The regulatory capital provides a
cushion for absorbing potential losses and as such is a critical component for ensuring the safety
and soundness of the financial system,” he said. Dr. Acquah said the increase in the minimum

XVI
capital requirement was to provide a safeguard against shocks and ensure that the banking
system was operating in a safe and sound environment.

While the range of financial services had broadened with innovation, he said, the potential for
expanding loan portfolios and providing sophisticated financial services was being constrained
by the low capital base of the banks.

Total shareholders’ funds for the 25 banks stood at approximately GH¢870 million at the
beginning of the year. This figure compares with the annual syndicated short-term loan of some
800 million raised on the international capital market for the purchase of cocoa. (Source:
http://www.modernghana.com/news/169055/1/traditional-banks-facing-stiff-competition-
survey.html 7th July, 2012)

Summary of Overview of literature -Measuring Competition in the Banking Industry

Research on the determinants of bank profitability has focused on both the returns on bank assets
and equity, and net interest rate margins. It has traditionally explored the impact on bank
performance of bank-specific factors, such as risk, market power, and regulatory costs.

More recently, research has focused on the impact of macroeconomic factors on bank
performance.

Using accounting decompositions, as well as panel regressions, Al-Haschimi (2007) studies the
determinants of bank net interest rate margins in 10 SSA countries. He finds that credit risk and
operating inefficiencies (which signal market power) explain most of the variation in net interest
margins across the region. Macroeconomic risk has only limited effects on net interest margins in
the study.

Macroeconomic and regulatory conditions have a pronounced impact on margins and

profitability. Lower market concentration ratios lead to lower margins and profits, while the
effect of foreign ownership varies between industrialized and developing countries. In particular,
foreign banks have higher margins and profits compared to domestic banks in developing
countries, while the opposite holds in developed countries. Gelos (2006) studies the determinants

XVII
of bank interest margins in Latin America using bank and country level data. He finds that
spreads are large because of relatively high interest rates (which in the study is a proxy for high
macroeconomic risk, including from inflation), less efficient banks, and higher reserve
requirements.

There are however obstacles to growth and profitability for most organisations who aspire to
embark on growth. These include the ability to manage cost effectively. Managing cost
effectively must not have a negative impact on staff welfare and remuneration as any such effect
on staff welfare and remuneration will affect the quest for growth and profitability positively or
negatively depending on the variables involved. One of the major obstacles to growth and
profitability is fraud.

What is Fraud?

‘’To commit fraud means to deprive a person/organization dishonestly of something which is

his/theirs or of something to which he is or would be entitled’’. Whichever way we look at it,
fraud is a criminal act which robs organisations and individuals of their rights.

Fraud is a growing problem because of:

 The effects of worldwide recession
 International fraudster networks
 Detection mechanisms that are quickly outdated
 Rare convictions and light penalties
 Fraudsters being well-funded in their own “businesses’
As we become more sophisticated in our fight against crime, fraudsters are also streamlining
their activities and becoming more sophisticated. This in turn makes them all the more
convincing and difficult to detect.

Direct and Hidden Costs

Fraud for any business is costly and has direct and hidden costs which amount to millions each
year. Direct costs would include costs like:
 The money lost
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  The costs of the recovery efforts
 Legal fees
 Private investigators
The direct costs of fraud are obvious but there are also hidden costs like:
 Buried write-offs such as credit losses, negative revenue and foreign exchange
 Re-recruitment and training costs if a staff member was involved
 Negative publicity and reputational damage – a bank in South Africa, after a hacker had
defrauded customers of thousands through Internet banking, had to spend millions to
restore confidence and trust in the Bank’s reputation.
 Competitors take major advantage of the situation, further damaging the victim bank’s
position.
 Ongoing constraints (new controls) that cost money to develop. (Source: Barclays Bank
Advanced Operations Management Participant Workbook).

1.9 THE BANKING LAW OF 1989

The Banking Act of 1970 did not provide clear guidelines for minimum capital requirements,
risk exposure, prudential lending limits for banks, provisions for possible loan losses, and
methods for interest accrual on non-performing loans. Thus, a singular importance to the reform
measures was the new Banking Law of 1989. The law explicitly defines the minimum capital
requirements for various types of banks and for bank ownership. These are as follows:

The minimum paid-up capital for commercial banks with at least 60% Ghanaian ownership was
fixed at 200 million cedis.

For foreign banks with Ghanaian ownership less than 60%, the minimum paid-up capital
required is 500 million cedis.

Development banks are required to maintain a minimum paid-up capital of one billion cedis.

Each bank is required to maintain a minimum capital adequacy ratio of 6 percent, although the
BOG has the discretion to increase it.

XIX
The 1989 Banking Law also dictates explicit safeguards as well as penalties for excessive risk
taking. These include:

a. Maintenance of a reserve fund from annual profits. Funding depends on the ratio of reserve
fund balances to paid-up capital, and this can be as high as 12.5% of net profits.
b. Banks cannot lend more than 25% of their net-worth by way of secured loans and not more
than 10% of net-worth by way of unsecured credit.
Banks may not undertake non-bank activities directly. They can do so only through subsidiaries.
In any case, the Law regulates equity and loan exposure of a bank in such subsidiaries, thereby
preventing insider lending. Bank of Ghana's examination and supervisory functions have been
upgraded, and a comprehensive system of reporting was introduced to enable Bank of Ghana to
carry out systematic on-site and off-site analysis of any bank's performance and financial
condition. If necessary, Bank of Ghana can issue cease-and-desist orders, and even take control
of banks that are financially weak or have fallen short of the provisions of the Banking Law.
Penalties in respect to non-compliance with provisions of the 1989 Banking Law have been
increased in order to make them effective law.

Another important reform measure introduced was Non-Bank Financial Law of 1993 which
contains the following main features:
a. Coverage of the NBFI Law is for discount houses, finance companies, acceptance houses,
building societies, leasing and hire-purchase companies, venture capital funding companies,
mortgage financing companies, savings and loans associations, and credit unions.
b. The minimum capital requirement for the establishment of an NBFI was set at 100 million
cedis.
c. The minimum capital adequacy ratio is set at 10% of risk assets, and the Bank of Ghana
has the authority to prescribe the minimum level of liquid assets. Exposure limits are put at 15%
of net worth for secured advances and 10% of unsecured advances.
d. Unlike the pre-reform era, when money lenders had to be licensed by the police and other
nonbank institutions had to obtain their licenses from the Registrar General's Department, the
BOG is now the designated authority for licensing and regulating NBFIs.

e. NBFIs can accept deposits from the public, but only for a fixed period of not less than
three months, unless prior exemption from the BOG has been granted. The liberalization of the

XX
banking sector and the subsequent enactment of the new Banking Law and the NBFI Law
appeared to have streamlined the emergence of financial institutions which added depth and
diversity to the financial system. In this regard, various types of NBFIs have been established by
private entrepreneurs, targeting categories of savers and investors not accommodated by the
banking system with such services as equity finance and long-term credit

1.10 STRUCTURE OF GHANA’S BANKING SECTOR

Ghana has a well-developed banking system that was used extensively by previous governments
to finance attempts to develop the local economy. By the late 1980s, the banks had suffered
substantial losses from a number of bad loans in their portfolios. In addition, cedi depreciation
had raised the banks' external liabilities. In order to strengthen the banking sector, the
government in 1988 initiated comprehensive reforms. In particular, the amended banking law of
August 1989 required banks to maintain a minimum capital base equivalent to 6 percent of net
assets adjusted for risk and to establish uniform accounting and auditing standards. The law also
introduced limits on risk exposure to single borrowers and sectors. These measures strengthened
central bank supervision, improved the regulatory framework, and gradually improved resource
mobilization and credit allocation.

Other efforts were made to ease the accumulated burden of bad loans on the banks in the late
1980s. In 1989 the Bank of Ghana issued temporary promissory notes to replace non-performing
loans and other government-guaranteed obligations to state-owned enterprises as of the end of
1988 and on private-sector loans in 1989. The latter were then replaced by interest-bearing bonds
from the Bank of Ghana or were offset against debts to the bank. Effectively, the government
stepped in and repaid the loans. By late 1989, some ¢62 billion worth of non-performing assets
had been offset or replaced by central bank bonds totalling about ¢47 billion.

In the early 1990s, the banking system included the central bank (the Bank of Ghana), three large
commercial banks (Ghana Commercial Bank, Barclays Bank of Ghana, and Standard Chartered
Bank of Ghana), and seven secondary banks. Three merchant banks specialized in corporate
finance, advisory services, and money and capital market activities: Merchant Bank, Ecobank
Ghana, and Continental Acceptances; the latter two were both established in 1990. These and the
commercial banks placed short-term deposits with two discount houses set up to enhance the
development of Ghana's domestic money market: Consolidated Discount House and Securities

XXI
Discount House, established in November 1987 and June 1991, respectively. At the bottom of the
tier were 100 rural banks, which accounted for only 5 percent of the banking system's total
assets.

By the end of 1990, banks were able to meet the new capital adequacy requirements. In addition,
the government announced the establishment of the First Finance Company in 1991 to help
distressed but potentially viable companies to recapitalize. The company was established as part
of the financial sector adjustment program in response to requests for easier access to credit for
companies hit by ERP policies. The company was a joint venture between the Bank of Ghana
and the Social Security and National Insurance Trust.

Despite offering some of the highest lending rates in West Africa, Ghana's banks enjoyed
increased business in the early 1990s because of high deposit rates. The Bank of Ghana raised its
rediscount rate in stages to around 35 percent by mid-1991, driving money market and
commercial bank interest rates well above the rate of inflation, thus making real interest rates
substantially positive. As inflation decelerated over the year, the rediscount rate was lowered in
stages to 20 percent, bringing lending rates down accordingly.

At the same time, more money moved into the banking system in 1991 than in 1990; time and
savings deposits grew by 45 percent to ¢94.6 billion and demand deposits rose to ¢118.7 billion.
Loans also rose, with banks' claims on the private sector up by 24.1 percent, to ¢117.4 billion.
Banks' claims on the central government continued to shrink in 1991, falling to a mere ¢860
million from ¢2.95 billion in 1990, a reflection of continued budget surpluses. Claims on
nonfinancial public enterprises rose by 12.6 percent to ¢27.1 billion.

Foreign bank accounts, which were frozen shortly after the PNDC came to power, have been
permitted since mid-1985, in a move to increase local supplies of foreign exchange. Foreign
currency accounts may be held in any of seven authorized banks, with interest exempt from
Ghanaian tax and with transfers abroad free from foreign exchange control restrictions. Foreign
exchange earnings from exports, however, are specifically excluded from these arrangements.

The Ghana Stock Exchange began operations in November 1990, with twelve companies
considered to be the best performers in the country. Although there were stringent minimum
investment criteria for registration on the exchange, the government hoped that share ownership

XXII
would encourage the formation of new companies and would increase savings and investment.
After only one month in operation, however, the exchange lost a major French affiliate, which
reduced the starting market capitalization to about US$92.5 million.

By the end of 1990, the aggregate effect of price and volume movements had resulted in a further
10.8 percent decrease in market capitalization. Trading steadily increased, however, and by mid
July 1992, 2.8 million shares were being traded with a value of ¢233 million, up from 1.7 million
shares with a value of ¢145 million in November 1991. The market continued to be small, listing
only thirteen companies, more than half in retailing and brewing. In June 1993, Accra removed
exchange control restrictions and gave permission to non-resident Ghanaians and foreigners to
invest on the exchange without prior approval from the Bank of Ghana. In April 1994, the
exchange received a considerable boost after the government sold part of its holdings in Ashanti
Goldfields Corporation. (http://www.mongabay.com/history/ghana/ghana-banking.html)

By 2003 there were 17 banks operating in Ghana. Of the 17 there were 9 commercial banks, 5
merchant banks, and 3 development banks (Table 1). The three largest commercial banks
accounted for 55 percent of total assets of the banking sector, which is relatively moderate
compared with other countries in the region. However, about 25 percent of total assets and 20
percent of deposits were held by a single state owned commercial bank (“bank 1”). The
development banks and merchant banks, which focus on medium- and long-term financing and
corporate, banking, respectively, together share about 30 percent. The five small commercial
banks operate on a much smaller scale. Foreign investors held about 53 percent of the shares in
eight commercial banks, which was below the sub-Saharan Africa average, and three banks were
state-owned (Table 2). The banking penetration ratio, at one bank branch per 54,000 inhabitants,
was relatively high, but formal banking reached only 5 percent of the population and the
coverage varied widely. This reflected the fact that 35 percent of bank branches were in the
greater Accra region even though this region represented less than 13 percent of the country’s
population. About half of all bank branches in the interior belonged to the dominant state owned
bank.

XXIII
Commercial banks engaged in traditional banking business, with a focus on universal retail
services. Merchant banks were fee-based banking institutions and mostly engaged in corporate
banking services. Development banks specialized in the provision of medium- and long-term
finance.

As measured by the aggregated total-assets-to-GDP ratio, the banking sector grew rapidly
between 1996 and 2000, reflecting partly financial deepening, as well as loose monetary
conditions. After reaching 44 percent in 2000, the ratio dropped to 38 percent in 2001 and further
to 31 percent at end-2003, reflecting tightened monetary conditions. The same trend
characterized the share of commercial banks’ foreign operations: the share of bank assets
denominated in foreign currency reached 35 percent on 2000 and then declined to 30 percent in
2001, probably reflecting the increased stability of the cedi exchange rate.

Following the tightening of monetary policy in 2001, domestic credit to the private sector had
remained at around 10 percent of GDP, which was low even by African standards (Table 2).
This essentially reflected a typical crowding-out effect, as most of the banks’ resources are
absorbed by the public sector, either in the form of loans to state-owned enterprises or holdings
of government securities. As shown in Figure 1, increasing government financing requirements

XXIV
led to very high real Treasury bill yields, especially in periods of tight monetary policy, and by
extension, to high lending rates. During 1998-2003, net loans averaged 34 percent of total assets
(peaking at 43 percent in 2001), as banks preferred to invest their resources in liquid, low-risk
assets, such as government securities, the latter constituting about 25 percent of total assets
during the period

Apart from the financing constraints imposed by Ghana’s large fiscal deficits, the banks’
holdings of government securities is also sustained by high secondary reserve requirements that
require banks to hold 35 percent of their deposit liabilities in such securities.

In addition, state-owned enterprises have attracted sizable amounts of lending from commercial
banks recently, thereby exacerbating the crowding-out effect (Figure 2). As a result, during the
last few years, bank lending to the public sector has typically absorbed more than half of total
available resources. The residual resources available for lending to the private sector (about 35
percent of total assets in 2003) have been mainly channeled to the manufacturing sector (25
percent of credit to the private sector), commerce and finance (9 percent) and services (8.5
percent). The agriculture, forestry, and fishing sectors have received less than one-tenth of total
bank credit although agriculture accounts for 36 percent of GDP. With the exception of the
national oil refinery plant which was the sector’s largest exposure no single borrower amounted
to 10 percent of the financial sector’s total equity.

XXV
1.11 Testing Levels of Competition in The Ghanaian Banking Industry

Financial systems tend to evolve around a banking sector seeking to achieve economies of scale
in order to offset the costs of collecting and processing information designed to reduce
uncertainty, thereby facilitating a more efficient allocation of financial resources. In well-
functioning economies, banks tend to act as quality controllers for capital seeking successful
projects, ensuring higher returns and accelerating output growth. However, a competitive
banking system is required to ensure that banks are effective forces for financial intermediation
channeling savings into investment fostering higher economic growth.

At first sight, the very high profit ratios and high cost structure of Ghanaian banks could indicate
a monopolistic banking structure. This is partly corroborated by the findings of this paper. By
deriving variables from a theoretical model and using a 1998-2003 panel data set, we find
evidence for a noncompetitive market structure in the Ghanaian banking system, possibly
hampering financial intermediation. The structure, as well as the other market characteristics,
constitutes an indirect barrier to entry thereby shielding the large profits in the Ghanaian banking
system.

Besides the banking sector, the Ghanaian financial system also includes insurance companies,
discount houses, finance houses, leasing companies, savings and loan associations, credit unions,
and a stock exchange. Thus, by narrowing the focus to the banking sector only, other potentially
important participants of the Ghanaian financial system might have been overlooked. However,
the banking system is by far the largest component of the financial system, and, according to the
recent Financial Sector Stability Assessment (FSSA) update, many of these other financial
institutions remain underdeveloped, even by sub-Saharan African standards. Moreover, this
paper defines the banking sector to include only deposit-taking financial institutions; it excludes
rural banks and the Bank of Ghana.

1.12 BANK SIZE AND FINANCIAL PERFORMANCE

Financial performance indicators portray a mixed picture. On the one hand, the average capital
adequacy ratio (CAR) was about 13.4 percent in 2002 and 9.3 percent at-end 2003, well above
the minimum 6 percent required by law. There was, however, significant dispersion among

XXVI
banks, and two small commercial banks even failed to meet the minimum capital standard
requirement, prompting intervention by bank supervisors.

In addition, as a result of the negative macroeconomic developments in 1999-2000, the asset

quality of the banks’ loan portfolio appears to have deteriorated. Past-due/nonperforming loans
soared from 16.2 percent in 2000 to an eight-year high of 28.6 percent of total loans in 2001 and
2002 before declining slightly to 24.4 percent in 2003 (Table 3). The overall impact of this
sizable increase on the banking system has been partially softened by the relatively prudent
lending of the two largest foreign-owned banks, however. The system is also characterized by
high overhead costs. The five largest banks incur on average overhead costs of 7 percent to
average assets, which is similar to the sector as a whole but substantially higher than the sub-
Saharan African average of 5.7 percent. Note, however, that these costs are below those reported
in Nigeria and Zambia (Table 2). The high costs could partly reflect substantial investments in
banking infrastructure, notably in information and communication technologies, as
telecommunication in particular suffers from interconnectivity problems.9 It could also reflect
some marketing practices, such as the refusal to network the automated teller machines, which
appears to have led to unduly high investments in such systems.

XXVII
However, one key element in the total overhead costs is the staff expenditure component (about
3.7 percent to average assets), which constitutes roughly half of total overhead costs. For
example, the dominant state owned bank (“bank 1”) has one of the highest staff costs (4.3
percent to average assets), while the other large commercial banks’ average is 3 percent.
This high ratio suggests both a low level of assets per employee and a relatively high average
staff cost per employee.

On the other hand, profitability indicators indicate that, despite high overhead costs and sizable
provisioning, Ghanaian banks’ pretax returns on assets and equity are among the highest in sub-
Saharan Africa (Table 2) a situation that reflects very wide interest margins.
On an adjusted basis, the return on assets (RoAA) was 6.1 percent in 2002, which is remarkable
even by African standards, and the same applies to both net interest revenue and noninterest
revenue which are, respectively, 10 percent and 6.4 percent of average assets.
The decline in interest rates in 2002 reduced the banks’ income from government securities and
led to a slight narrowing of interest rate spreads, but the latter remain between 20 and 30 percent.
The combination of wide interest margins, sizable overhead costs, and an ample supply of
relatively low-risk, high-return, government paper, has resulted in high costs of intermediation.
Since the large interest margins also reflect the nonperforming loan problem, the poor quality of
banks’ loan portfolios is a major source of concern for the stability of the system. Most banks
would indeed be vulnerable in the event of a major credit risk shock.

For example, one of the larger, foreign owned banks has set up a direct satellite network to
bypass the national telecommunications network altogether.

1.13 Determinants of Bank Profitability

Bank profits are high in Sub-Saharan Africa (SSA) compared to other regions. A study used a
sample of 389 banks in 41 SSA countries to study the determinants of bank profitability. It was
found that apart from credit risk, higher returns on assets are associated with larger bank size,
activity diversification, and private ownership. Bank returns are affected by macroeconomic
variables, suggesting that macroeconomic policies that promote low inflation and stable output
growth does boost credit expansion. The results also indicate moderate persistence in
profitability. Causation in the Granger sense from returns on assets to capital occurs with a

XXVIII
considerable lag, implying that high returns are not immediately retained in the form of equity
increases. Thus, the paper gives some support to a policy of imposing higher capital
requirements in the region in order to strengthen financial stability. (Source:
http://www.imf.org/external/pubs/ft/wp/2009/wp0915.pdf 7th July 2012)

The financial world today is gradually becoming a global village in itself. The level of offshore
banking in both developing and developed countries today is evidence to this fact. Since the
financial wheel is critical in any development paradigm, the role of banks is even more critical.
Therefore the survival and performance of banks is of much interest not only to policy makers
and shareholders, but it is also of interest to researchers. The performances of Banks have been
highly volatile with the banks recoding negative profits during some periods within the two
decade. A study revealed that non-interest income, non-interest expense, bank's capital strength,
natural log of total assets, growth of money supply, and annual rate of inflation are significant
key drivers of banks’ profitability in Ghana. However, the size of the Ghanaian economy and
loan loss provision or provisions for bad debt did not have any significant impact on the banks
profitability.

Possible Factors Explaining Bank Profitability and the Efficiency of Intermediation

At least three factors may have prevented further financial deepening in Ghana so far, and which
may be relevant for the interpretation of both profitability and efficiency indicators of the
banking system. The first factor is macroeconomic policies, as macroeconomic stability is
essential to the development of the financial sector. This is relevant because Ghana’s
macroeconomic policies over the last decade have been characterized by periodic slippages in
financial discipline, leading to volatile and generally high inflation, large exchange rate swings,
and negative real interest rates for extended periods. The most recent example of macroeconomic
imbalances includes the severe terms of trade shock of 1999-2000, which, combined with fiscal
slippages, resulted in inflationary pressures, a 15 percent exchange rate depreciation, and the
buildup of a sizable domestic government debt. It is intuitive to assume that the high degree of
uncertainty associated with Ghana’s unstable macroeconomic environment has negatively
affected both the size and the quality of financial intermediation.

XXIX
This assumption is supported by the low level of overall savings and investment. As shown in
Figures 3 and 4, Ghana compared rather poorly to other African countries11 on average in recent
years; however, low bank intermediation seems to coexist with a wide range of savings ratios,
thereby suggesting that other elements may also be at play. Another piece of evidence is the short
time horizon in the overall financial sector. Long-term savings are virtually inexistent, as one-
third of all bank deposits are demand deposits and terms for bank loans hardly extend beyond
one year. In addition, Treasury bills—which were until recently also used for open market
operations—carry almost exclusively short-term maturities (three to six months).12 Together with
the high returns offered, this situation has exacerbated the crowding-out effect on private sector
lending.

A second possible factor is the risky lending environment prevailing in Ghana, as reflected in the
high level of past-due/nonperforming loans. This is largely due to the significant losses of some
state-owned companies, but also reflects the lack of any central credit information system and
the lack of cooperation among banks in sharing customer information. Some institutional factors
may also affect the environment in which financial institutions operate.

For instance, as shown in Table 2, the enforcement of creditors’ rights is weak compared with the
sub-Saharan African average. It is important to note that, although nonperforming loans have
some substantial provisioning implications, provisioning standards are lower in Ghana than in
most African countries. Depending on loan classification practices (and potential rollover of
debt), this may suggest that the asset quality of banks’ loan portfolio is somewhat overestimated,
which may act as a further disincentive to engage in financial intermediation.

A third factor that may account for low and inefficient financial intermediation in Ghana is the
presence of an uncompetitive market structure. Interestingly, there is no one-to-one relationship
between concentration and competition. On the one hand, monopolistic or oligopolistic behavior
tends to result in higher intermediation costs and diseconomies of management than under a
competitive structure; thus, noncompetitive behavior is consistent with the presence of wide
interest rate margins and spreads, which tend to deter potential depositors, as well as potential
borrowers, and result in low lending ratios. On the other hand, market size may offer the
possibility of exploiting economies of scale (from overhead in administrative operations and
information gathering), as well as economies of scope (in combining different product lines for

XXX
instance).14 What really matters for the net effect on competition is the level of contestability in
the market: the threat of potential competition or lack thereof—can substantially affect
competitiveness conditions, regardless of market concentration.

In the case of Ghana, there are several reasons to question the extent to which banks actually
compete. Although bank concentration appears to be moderate by regional standards, the
dominant state owned bank (“bank 1”) enjoys a substantial market power, with 20 percent of
total deposits and 44 percent of total branches—a situation that may influence price setting
among banks and distort competition. Another potential piece of evidence is the fact that the
dominant state owned bank invariably records the widest interest margin among commercial
banks (12.2 percent in 2002; see Table 4).

However, beyond anecdotal evidence, more analysis is needed to draw some firm conclusions
about the nature of the market structure in Ghana and the extent to which it offers a plausible
explanation of the sector’s profitability. Therefore, the next section introduces a basic analytical
framework to assess the nature of competitive conditions.

XXXI
In Ghana, the savings-to-GDP ratio was 15.9 percent on average between 1996 and 2002, while
the (private) investment ratio was 10.6 percent between 1996 and 2001.

CHAPTER TWO

LITRATURE REVIEW

2.1 ARTICLE ONE: Rethinking Retail Banking Growth Effective strategies and Its
Impact on Increasing Revenue by Building Stronger Connections to the Post-Crisis
Consumer by Don McNees and Brian Johnston 2011

The objective of this article is to delve into the Retail Banking growth Effective strategies for
Increasing Revenue by Building Stronger Connections to the Post-Crisis Consumer.

The Method used in this article was qualitative research. The strength of qualitative research is
its ability to provide complex textual descriptions of how people experience a given research
issue. It provides information about the “human” side of an issue – that is, the often contradictory
behaviors, beliefs, opinions, emotions, and relationships of individuals.

XXXII
According to the article it’s no secret that revenue growth is one of today’s biggest challenges for
the banking industry. Financial services CEOs ranked growth as their number one priority
according to The Conference Board CEO Challenge 2011 survey1. As low interest rates and new
regulations strangle traditional sources of risk based and fee income, many once-attractive
customer relationships are generating less revenue, causing some to become unprofitable.
Many bank executives are finding that the old tried-and-true strategies for organic market share
and revenue growth are not sufficient anymore. Competing based on pricing, convenience, and
service is still fundamental, but more is required. The financial crisis created a trio of retail
banking giants with approximately 30 percent combined market share and more than 18,300
branch locations – but even with their vast scale; they are also struggling to grow organically.
On the product side, retail deposits have significantly diminished attractiveness in today’s low
interest rate environment.

According to the article even when banks succeed in attracting new deposit relationships, there
are few profitable ways to reinvest those assets in today’s loan environment. Mortgage lending
according to the article has dropped to the lowest levels in a decade, and new fee and rate
constraints on overdrafts and credit cards, along with consumer debt reduction, have silenced
these traditional revenue growth engines. Increased regulation is already slowing another key
revenue stream – debit card transaction fees - which could further strip away potential profits and
make a generation of free checking accounts unprofitable.

According to the researcher Retail banks need new growth engines. They, along with other
financial institutions, are more finely segmenting existing target markets and fine-tuning
products to laser in on the remaining attractive opportunities. In addition, some are rising to the
challenge by executing strategies and developing capabilities that allow them to effectively
compete in still-promising profit sources – wealth management, retirement, and insurance, for
example – where banks have lost ground or have historically failed to establish significant
revenue streams. This article describes a three-step growth strategy: identifying underexploited
revenue and profit sources with growth potential, leveraging analytics to attract and focus on the
most profitable customer relationships, and creating agile operations with the capabilities
required to serve all customers effectively.

For many banks, new product development was among the early cost-cutting casualties.

XXXIII
Banks that retained these capabilities are positioned to develop innovative new ways to attract
and retain profitable customer segments based on emerging customer needs. One leading bank
identified young professionals ages 26–32 as a potential revenue growth segment. Their research
revealed that these customers want to manage their spending and savings in real time. This bank
created an integrated online financial management package built around a personal financial
calendar, rather than a traditional checkbook. Product mobility enhancements helped attract
additional profitable new customer segments, including college students, their parents, and new
technology-savvy customers. Tomorrow’s leaders will continue to develop innovative financial
solutions. Depending on their growth strategy, some banks are targeting these tech-savvy
customers by creating payment systems that will allow smartphones and other mobile devices to
become their new payment tool. Even now, some customers in low-income regions of the world
use their phone as their only “bank.” For them, phones are a transaction device, customer service
tool, and electronic statement wrapped in one low cost package. Learning from these customers’
experiences can change the shape of banking– redefining what it means to be personal and local
in retail banking.

The researcher suggested that recent innovation in personal financial management tools which
includes benchmarks tailored to a customer’s individual investment portfolio, their profession, or
customer segment. We expect to see additional disruptive innovations in the financial service
industry that leverage customer insight, as well as, Internet, social media, and mobile devices to
create information-rich products and services. PayPal, for example, is one of the most significant
payments system innovations to come out of the last decade. Like PayPal, other nonbank
competitors will have the potential to disintermediate traditional financial competitors if the
industry is not continuously monitoring new trends and investing creatively to remake its
portfolio on an ongoing basis.

The article identities that leading banks will use their customer insights to create banking
experiences that are highly personalized. From private banking to mass market, banks have
found that having a conversation with the individual customer, understanding their needs, and
developing relevant solutions increases relationship depth and cross-sell opportunities. Such
face-to-face interaction has decreased over time as the cost for providing it has become
prohibitive, except for significant products like a new mortgage or asset management services for
affluent customers.

XXXIV
Today, however, the article reveals that some financial firms are recreating personal interactions
by providing customers with self-service online tools, structured goal discussions for platform
bankers, as well as direct phone and videoconference communications with virtual relationship
managers or subject-matter specialists.

The article also suggested that Branded customer experiences are ways by which banks use to
retain more customers and thereby gain more of their deposits and more businesses which in turn
affect their growth and profitability. These collective experiences shape customers’ impressions
of individual banks and their competitors, creating perceptions of banks that may range from a
distinct, engaging personality to an undifferentiated utility. Historically, only a few financial
institutions have built a strong marketing brand, the kind created by catchy tag lines and/or
consistent presentation of logo, color, and language, and spokesperson.
Branded customer experiences today are moving much more deeply into the individual customer
sales and service experience details. For example, some banks train their employees to offer
consistent touch-point experiences at greetings/closings – such as “Good morning, welcome to
Bank” and “Is there something else I can assist you with today?” to every customer during every
interaction. For others, every sales conversation may be preceded by a recheck of what the bank
knows about the individual customer’s profile and her specific needs. These examples should be
supported by an integrated view of the customer at every touch-point, which allows each
conversation to begin with the employee having access to the customer’s activity history/content
across channels. This allows individually customized, relevant messages to become your brand
expectation. Human interaction is the defining element of experience for most customers.
Financial institutions have sought to further shape their brand by defining the personality traits,
knowledge, and capabilities of brand representatives who interact with the customer. Qualities,
such as persistency, entrepreneurialism, resilience, sense of humor, and more, emerge from
testing successful representatives and are used to define the type of talent required. These
qualities are built into screening guides for recruiting new representatives and are incorporated
into talent development processes from onboarding to performance management.

Collective experiences create the brand personality, whether simple and efficient, or warm and
engaging. Additional new frontiers of competitive advantage now lie in providing a consistent
screen layout across online, ATM, and PDA devices. The experience has more impact when

XXXV
customers perceive that the bank has their best interests in mind and that employees are given the
flexibility to do “what’s right” for the customer in every interaction. When executed with
appropriate sensitivity to customer segment preferences/economics and leveraged with
technology, this strategy may actually lower total service costs in many cases while improving
customer service perception and satisfaction. It is very likely to increase relationship depth,
loyalty, and persistency, which are key drivers of revenue and profit growth.

The article concludes that Bankers can expect to see more of all three strategies executed across
the industry by participants seeking revenue growth such as, Pursuit of revenue and profit growth
by allocation of resources to businesses supported by profit pool and market trends; Aggressive
use of analytic tools to target high-value customers and engage them with attractive solutions and
also Execution of agile operating models, including innovative products, offerings that are
personally relevant, and branded customer experiences.

Financial institutions that follow these strategies are already renewing their revenue and driving
profit growth. This article is cherished as it confirms the purpose of the study.

Researchers Position

The probability of achieving profitable growth is heightened whenever an organization has a

clear growth strategy and strong execution infrastructure. One without the other impairs the
probability of success.

Many organizations fail to achieve their desired growth targets in revenue and profitability.

Most businesses fall short of achieving their growth objectives for revenue and profitability. In
fact, studies report success rates as low as 20%. Why is growth so elusive? Based on the research
and observations there are two major reasons; inadequate consideration of opportunities within
the core business, adjacent to the core business or within new customer sub-segments.

An organizational infrastructure that cannot support successful execution. However, managers

can do certain things to improve the chances for success. One such thing managers can do,
namely build a systematic framework composed of three strategies for growth and three key

XXXVI
elements for successful execution. There are strategies and key elements which in my view
increase the probability for success. These include as explained below:

Strengthen the execution infrastructure by investing in ‘safe bets’ which means that Regardless
of which growth strategy is selected, an organization’s infrastructure must be up to a standard
that supports successful execution. An on-going commitment to creating such an infrastructure is
a ‘safe bet’. Achieving this requires eliminating departmental or regional silos, utilizing leading
indicators and performance drivers that align with the strategy and growing leaders at all levels
managerial and non-managerial.

Again to increase profitability it is important to initiate a process to identify strategies with a

high probability for success. Three customer growth strategies include Growing the core
business, Growing by sub-segmenting customers and growing adjacent opportunities. It is
recommended that the senior leaders begin the process by considering the growth potential
within the present core business and/or the opportunities and growth potential associated with
creating innovative value propositions for underserved customer groups. As the senior leadership
group moves through this process, it will become clear if and when adjacent growth options
should be considered.

The process of identifying profitable growth opportunities most often begins with the Core
Business, that is, the products, services, customers, channels and geographic areas that generate
the largest proportion of revenue and profits. In-depth conversations with the senior leaders on
the topic, “What is our core business?”, is the preferred starting point.

An evaluation of the overall performance of the core business follows. This involves measuring
and benchmarking profitability, rate of revenue growth and the firm’s reputation with its most
important customers.

Such an assessment will raise a number of questions. For example: In what direction is each of
these key indicators headed and why; who are and who are not the core customers? Why?; What
is the bank’s key competitive market differentiator? How can it be strengthened? ; Is the core
business under major threat? And Are there attractive growth opportunities within the core?

When considering these questions, input from external stakeholder groups is very helpful,
particularly from loyal and even not-so-loyal customers.

XXXVII
The overall process need not take a great deal of time, but can yield significant returns. These
include: A renewed commitment to operational excellence within the core business, Insightful
conversations on the growth potential of the core business, or conversely,
 An urgent need to make significant changes to the core or even a plan for abandoning the
present core and exploring more profitable growth options.

A second customer-focused growth strategy is based on the bank’s existing customers. This
strategy involves creating High Impact Value Propositions for new customer sub-segments.
Underpinning this strategy is the willingness to view customers through a different set of lenses.

A process can be created to assist both managers and specialists at the customer interface gain
fresh insights into customer needs and preferences. This is a necessary first step in discovering
underserved customer groups and hidden growth opportunities.

XXXVIII
2.2 ARTICLE TWO: Growth strategy and bank profitability: case
of housing bank for trade & finance by Mustafa M. Soumadi, PhDBassam Fathi
Aldaibat, PhDAl-Balqa Applied University, Jordan

The objective of this article is to explore growth strategy and bank profitability with housing
bank for trade and finance as the case study.

The study was aimed to estimate growth strategy for (HBTF) in Jordan measured by total assets
percentage growth and profit percentage growth. This study also correlated growth strategy with
the accounting-based determinants of bank profitability measured by return on assets (ROA), and
return on equity (ROE) during the period (1999-2009). The researcher collected bank-specific
Data variables from the financial statements of housing bank for trade and finance in Jordan over
the period 1999-2009 available in the annual reports and Amman financial market. The
researcher used the Descriptive Analytical Method; the researcher used Analytical method to
analyze the data from the financial statements throughout the statistical package for social
sciences (SPSS-15). The study revealed the following findings: There is statistical significant
correlation at of significance (p≤0.05) between ROE and growth percent in profit during 2000-
2009; There is statistical significant correlation at of significance (p≤0.05) between ROE and
growth percent in total Assets during 2000-2009; There is statistical significant correlation of
significance (p≤0.05) between ROA and growth percent in assets during 2000-2009 and There is
no statistical significant correlation at of significance (p≤0.05) between ROA and growth percent
in profit during 2000-2009.

According to the article Jordanian Banking sector is playing a major role in the national
development process. This role is increasing day by day. Since the establishment of Jordanian
central bank at 1964, the banking sector in Jordan grew incrementally. This development didn’t
include the increasing number of banks but also the establishment of specialized banks and the
desertification of the banking work methods and kinds of services that banks provided to
customers. (Alfumi & Awad, 2003). According to the author, the banking sector is the backbone
of the Jordanian economy and plays an important financial intermediary role. Therefore, its
health is very critical to the health of the general economy at large. Given the relation between
XXXIX
the well-being of the banking sector and the growth of the economy, knowledge of the
underlying factors that influence the financial sector's profitability is therefore essential not only
for the managers of the banks, but also for numerous stakeholders such as the central banks,
bankers associations, governments, and other financial authorities.

The author identified that Knowledge of these factors would be useful in helping the regulatory
authorities and bank managers formulate future policies aimed at improving the profitability of
the Jordanian-banking sector. Banking sector plays an important role in an economy to improve
stability and increase economic growth. Banks play a central role in the money creation process
and in the payment system. Moreover, bank credit is an important factor in the financing of
investment and growth (Fayoumi& Abuzayed, 2009).The environments in which banks operate
today are divergent. The Jordanian banking sector has been facing unprecedented challenges
with the wave of privatization and globalization of Jordanian economy. Banks in Jordan are
under intense pressure to perform in today’s volatile market place. And because of the main goal
of management, to maximize the Owner's wealth, managers especially in the banking sector are
working under pressure from shareholders, international financial crisis, and the central Bank
regulations to improve profitability (Zamil & others, 2010).

The authors noted that Economies of scale emerge as a financial firm grows in size (usually
measured by its total assets).The cost of production per unit of output tends to fall as a smaller
firms grows into a larger one due to greater efficiency and the spreading of a greater volume of
output over firm's fixed costs. (Lawton& Harrington, 2006);(Paula 2002); (Uppal &Kaur 2006).
The Housing Bank for Trade and Finance (HBTF) was established in 1973 as a public
shareholding limited company with a capital amounting to half a million JD. The primary focus
of the bank was to provide housing finance. After 24 years of operations, the bank embarked on a
new era, when it diversified its scope and became a comprehensive bank, providing full
commercial banking services with total assets ( 6976.7) million J.D. in 2002.

The purpose of this study the author noted was to estimate growth strategy for (HBTF) in Jordan
measured by total assets percentage growth and profit percentage growth ,this study also
correlate growth strategy with the accounting-based determinants of bank profitability measured
by return on assets (ROA) , and return on equity(ROE) during the period (1999-2009).

XL
According to the author the housing bank for trade have the largest branch network in Jordan,
which includes (110 ) branches spread in different areas in the kingdom, and 13 branches outside
Jordan, in Palestine ,Bahrain , Algeria, Syria, Abu Dhabi ,Libya and Iraq. The (HBTF) has
specialized investment companies like Jordan & Palestine financial investment C.O ,
International Financial center group , Jordan real – estate investment & commercial services and
Specialized leasing finance CO. ( HBTF annual report.(2010). Since the establishment of
(HBTF) in 1973 the bank has grown and achieves strength in Jordanian banking industry and
became the second large bank in Jordan. The Bank has been capable to obtain the highest levels
of “General Conformance Certificate” with International Internal Audit Standards issued by the
American Institute of Internal Auditors “IIA”. (HBTF) used different strategies such as: Offering
a wide range of banking and financial products, Focusing on customization of products that meet
the specific needs of customers, complied with international capital adequacy requirements and
prudential norms, and operate Wide distribution of banks’ branches.

The researcher thinks that the bank have some opportunities that could be utilized such as :
expansion of the banks’ retail services, Expand banks' operations to cover countries in the region,
mergers with or acquisitions of other banks, and discovering the advantages of economies of
scale and scope .

The author noted among the common threats facing the bank are:- focused on the local market,
which means that the bank should expand their operations outside Jordan., Increasing volatility
in local and regional markets., Fluctuations in economic variables including decreased
purchasing power and higher inflation rates. And the Central Bank of Jordan (CBJ) has
encouraged consolidation in the Banking industry, although so far there have been few signs that
banks are keen to consolidate, partly reflecting a culture of family ownership in Jordan.

The researcher think that the bank facing some weaknesses such as: A large number of local banks in
small economy, The banking sector remains dominated by the Arab Bank, The Bank share of the
banking deposits, is (16.7%), The Bank share of the credit market is (12.7%) and the bank also has
(15.1%) market share of total assets. (Association of Banks in Jordan, Annual Report 2009).

According to the article Growth strategy means expand the company activities ,it’s the most
widely pursued strategy to achieve growth in sales ,assets ,profit .growth is a popular strategy to

XLI
survive ,corporation can grow internally or globally by expanding its operations.(Wheelen
&Hunger,2010). On the level of local expansion, and in line with the Bank’s vision aiming at
closer reach of its customers to meet their banking needs in Jordan, The Housing Bank’s biggest
branch network has continued growing further to reach 110 branches, at the rate of 16% of the
total branches operating in Jordan. In the field of regional expansion the bank increase the
branches in Syria, and more recently the bank expanding to European countries through
acquisition of 68 % from the capital of Jordan international bank in London. As for E-banking
services, the Bank continued to provide its services all through the day 24/7, in an easy and
secure method, through electronic distribution channels such as internet, virtual banks, phone
banking, ATM’s and Iskan on Line. Housing bank services enable customers to manage their
accounts through money transfer, cash withdrawal, deposits and payments of bills and SMS
services. The bank still has the largest network ATM’s network machines reaching 187 ATM’s
(HBTF annual report, 2010).

The Housing Bank has reinforced its leading position among Jordanian banking institutions in
the field of credit cards, as number of Visa Cards reached 45 thousands at the end of 2010; Visa
Electron cards witnessed remarkable increase reaching about 640 thousand. Despite the severe
competition in this field, the Bank’s share of various types of Visa Cards in Jordan reached about
29% reflecting the Bank’s activity in providing different types of credit cards, issued by the Bank
are designed to meet the different needs of targeted segments, meeting the highest criteria in
security and safety.

According to the article Conceptual models investigates the effect of bank specific characteristics
and macroeconomics determinants on bank profitability estimated in two financial ratios
(ROE.NIM) The study results showed that the most significant internal and external factors
affecting Saudi banks are :capital adequacy ,earning assets to deposits ratio ,operational
efficiency, growth rate in GDP, and banking sector development. (Sufain & Habibullah , 2009)
suggests that bank specific characteristics, in particular loans intensity, credit risk, and cost have
positive and significant impacts on bank performance, while non-interest income exhibits
negative relationship with bank profitability. During the period under study the results suggest
that the impact of size is not uniform across the various measures employed. The empirical
findings suggest that size has a negative impact on return on average equity (ROAE), while the
opposite is true for return on average assets (ROAA) and net interest margins (NIM).

XLII
(Athanasoglou, Delis, & Staikouras 2008) indicated that as a result banks gain market share and
an increase in earnings and an increase in profitability. Since large banks are assumed to enjoy
economies of scale, they are able to produce their outputs or services more cheaply and
efficiently than smaller banks. As a result, larger banks will earn higher rates of profit if entry is
restricted.

(Redmond & Bohnsack, 2007) examines the profitability of banks within different asset size
categories. Data is used to categorize banks into five categories, in respect to their volume of
total assets. Profitability in this study is measured by Return on Equity (ROE). Two analyses are
implemented. First, tests are run on the mean ROE of the respective bank categories, to
determine if there is a statistical difference in profitability. Next, a simple regression model is
constructed, using dummy variables to proxy asset size. The hypothesis contends that there is a
statistical difference in the profitability of these different sized banks.
(Demirgüç & Huizinga, 1999) also measured profitability using return on equity (ROE)and
return on assets (ROA), they examined the internal and external determinants of profitability for
banks in 80 countries over the period 1988–1995. The explanatory variables in their study
included various internal or bank-specific ratios such as staff expenses to total assets, cash and
securities to total assets, and bank capital to total asset; macroeconomic variables such as money
supply growth, inflation, and interest rates; and industry variables such as concentration,
ownership structure (government or private).

(Bennaceur & Goaied, 2008) used two measures of performance are in their study: the net
interest margin (NIM), and the return of assets (ROA). They examined the influence of bank
regulations, concentration, financial and institutional development on Middle East and North
Africa (MENA) countries commercial banks margin and profitability during the period 1989-
2005. They find that bank specific characteristics, in particular bank capitalization and credit
risk, have positive and significant impact on banks' net interest margin, cost efficiency, and
profitability. On the other hand, macroeconomic and financial development indicators have no
significant impact on bank performance.

(Olson & Zoubi, 2011) used (ROA) and (ROE) as dependent variables to measure bank
performance and bank internal characteristics ( size, loans, security, deposit),bank efficiency
measures ,bank risk measures ,and external factors that are relating environmental factors (GDP,

XLIII
inflation , concentration, ownership) as independent variables at their study in ten Middle East
and North Africa (MENA) countries. they compare accounting-based and economic-based
measures of efficiency and. The results suggest that researchers perhaps should focus more on
profit efficiency than cost efficiency. MENA banks are slightly less cost efficient than European
banks, but similar to banks in developing economies. However, MENA banks score well in terms
of profit efficiency relative to banks world-wide.

(Alfumi & Awad, 2003) examines the relationship between market concentration and
performance in the Jordanian banking sector. While the market concentration is measured by
concentration ratio, the bank performance is measured by return on equity (ROE). The results
showed a significant relationship between ROE and concentration ratio, and the bank size was
the most other important factor that affected the Jordanian banks profitability during the study
period.

(Sufian & Habibullah , 2009)used (ROA),(ROE) and (NIM) as dependent variables for
profitability , also they use bank specific characteristics( loans ,assets , net interest over total
assets ,net interest expense over) and macroeconomic condition(inflation , GDP) as independent
variables . they evaluate the performance of 37 Bangladeshi commercial banks between 1997
and 2004. The empirical findings of this study suggest that bank specific characteristics, in
particular loans intensity, credit risk, and cost have positive and significant impacts on bank
performance, while non-interest income exhibits negative relationship with bank profitability.
During the period under study the results suggest that the impact of size is not uniform across the
various measures employed. The empirical findings suggest that size has a negative impact on
return on average equity (ROAE), while the opposite is true for return on average assets (ROAA)
and net interest margins (NIM). As for the impact of macroeconomic indicators, the researchers
conclude that the variables have no significant impact on bank profitability, except for inflation
which has a negative relationship with Bangladeshi banks profitability. (Sufian & Chong, 2008)
used (ROA) as dependent variables to measure profitability, also they use internal bank factors
(total assets, credit risk, diversification and business mix, efficiency of the management
regarding expenses, bank's capital strength) and external factors 221 (gross domestic products,
The growth of money supply, The ratio of stock market capitalizations) as independent variables
they examine the determinants of Philippines banks profitability during the period 1990–2005.

XLIV
The author concludes with the findings that There is statistical significant correlation at of
significance (p≤0.05) between ROE and growth percent in profit during 2000-2009; There is
statistical significant correlation at of significance (p≤0.05) between ROE and growth percent in
total Assets during 2000-2009; There is statistical significant correlation at of significance
(p≤0.05) between ROA and growth percent in assets during 2000-2009; There is no statistical
significant correlation at of significance (p≤0.05) between ROA and growth percent in profit
during 2000-2009; highest percentages for ROA ,ROE , total assets growth and total profit
growth are in (2005); and the financial global crisis affects bank profit in 2009 the percentage of
decline comparing with 2008 is (0.52). Also the main for profit percentage is (0.05%).

The author identifies that This complementary study recommends that The bankers must
recognize that innovation or evolution of financial services is crucial to retaining customers
Therefore, they should create new services and products beyond the classical services (e.g.,
expanding electronic services, reaching new regions outside Jordan, and improve the investment
in off-balance sheet activities).

The author emphasize that To support Jordanian enterprises that wish to expand abroad,
Jordanian banks should develop an appetite for international business and should make room for
their own expansion overseas. They can start looking for joint venture projects or full-
subsidiaries outside Jordan. Develop new strategies to deal with increasing volatility in local and
regional markets. This can be achieved by concentrating on product and location diversification.
A number of Jordanian banks have an opportunity to enter the Islamic Banking that’s been
growing rapidly through the past few years. They can analyze and evaluate then new Islamic
financial products. There is a good opportunity for Jordanian banks to coordinate with other
foreign banks that are interested in these products. Recently, many foreign banks start thinking
about these Islamic products because they expect to generate attractive return with reasonable
level of risk.

Researchers Analysis and Position

The foundation for growth is customer service. Without extraordinary service, from the
CUSTOMER’S viewpoint, all sales and marketing efforts and all brilliant strategies are only
expensive efforts with little return. Customer retention and evangelistic referrals from customers

XLV
is the first effort that each financial institution must master. While most bank executives think
they deliver great service, the national research from customers shows the discrepancy between
the bank’s perception and the customers’ perception is alarming. Most of the top-performing
banks are adamant about not using the word “sales” in their banks. They use the word among
managers, but never in front of employees. They know that the point is not to “sell.” They know
to direct employees to take such excellent care of customers that they will automatically buy
everything they need at that bank. Their employees know to convince their customers to always
come to them first for every financial need. Their customers feel like they are taken “under
wing,” sheltered, protected, counseled, assisted, and properly informed in all of their financial
matters so they don’t need to go anywhere else.

“Customer Satisfaction” Is for Wimps. You can have customers who are satisfied, but they’ll
leave you for a better rate. The ONLY thing that keeps customers is a feeling of assurance that
you are focused on their success! Top-performing bank managers know that spectacular service
will create sales. You should gauge good service by the facts that your customers never leave;
they always remain loyal to you and thus remain your customer; they bring all of their business
your way now and in the future; and they tell others about you. While most bank CEOs state they
stand out in their customer service, national surveys clearly show that consumers feel the
banking industry ranks lowest in this area when compared to nearly all other service industries.

2.3 ARTICLE THREE: How to Sustain Profitable Growth by Toni C. Langlinais and
Marco A. Merino

The objective of this article is to explore ways of sustaining profitable growth.

This study provides a detailed examination of how organizations can achieve sustainable
profitable growth. Based on the problem analysis, this study raises various policy research
questions as a basis for analytical framework and hypotheses formulation and testing.

According to this article Companies are beginning to look beyond traditional metrics like price
earnings ratio to assess their effectiveness at generating growth through innovation. Determining
a company’s future-value premium provides a simple but effective way for management to
XLVI
diagnose and understand the complexities of market expectations, as well as the investment
community’s confidence in the company’s long-term outlook.

Analysts and the business and financial press have never been at a loss when it comes to
compiling lists of top-performing companies, as measured by one benchmark or another: the best
100, 500, 1,000 or 2,000. But when one turns to companies meeting Accenture’s standard for
high performance the ability to outperform industry competitors across business and economic
Cycles the numbers dwindle considerably. Indeed, our research shows that only about 5 percent
to 20 percent of companies, depending on the industry, are able to sustain top performance over
time. What happens to the rest? Many run aground because they lack a coherent way to measure
and plan for growth through profitable and sustainable innovation. Focused primarily on P&L
transactions and drivers, companies find it easier to look to past performance or to the immediate
present resulting in insights that often account for less than 5 percent of a company’s market
value.

According to the author every company is after sustainability, of course, because every company
wants to achieve profitable growth over the long term. Recent research from Accenture and the
Economist Intelligence Unit found, for example, that about two-thirds of the senior executives
surveyed expect growth initiatives to take a more prominent place on their company’s strategic
agenda. But until now, the desire to perform at high levels into the future has not been
accompanied by strategies and operating models that enable those companies to accurately
determine how much of their market value is represented by investors’ confidence in their long-
term outlook.

The author revealed that many companies are constrained by an inability to achieve long-term
growth through innovation. Their competitive advantage, if they have one, cannot readily be
sustained because it is built only on their current enterprise, with insufficient attention paid to the
innovations necessary to drive future growth and create future value. Such companies often have
superb financial acumen or sales management. They excel from an operational perspective. But
in terms of what Accenture calls a “future-value premium,” even some of an industry’s most
respected names might actually be in the red meaning the market expects the company’s growth
to be lower than the GDP growth rate. For example, the authors analysis shows that during the
past decade, the percentage of the publicly listed US companies in the Russell 3000 Index that

XLVII
have a negative future value premium has increased from about 50 percent to more than 60
percent.

According to the author Leadership teams need more sophisticated leading indicators and types
of analyses to help them make successful strategic investments in innovations that can accelerate
growth beyond the expected performance of their core operations. Future-value premium
analysis can quantify the market’s expectations of whether a company has a positive or negative
growth advantage relative to its peers. By offering that perspective, future-value premium
analysis leads companies to consider a portfolio of initiatives and the innovation required to
build new growth platforms.
.
The author noted that Companies are beginning to look at new kinds of leading indicators,
beyond such traditional metrics as price-earnings ratio, to assess their effectiveness at generating
growth through innovation. Determining a company’s future-value premium provides a simple
but effective way for management to diagnose and understand the complexities of market
expectations, as well as the investment community’s confidence in the company’s long-term
outlook. Many CEOs are startled when they see a future-value premium assessment of their
companies. According to the author Accenture recently performed such an assessment for a
highly regarded global financial services institution. The company has a solid track record of
delivering strong returns to its shareholders. In fact, however, it actually had a negative future-
value premium over the final three years of the analysis period.

The author inquired, why did the market no longer expect the company to grow faster than the
GDP? Like many companies, this firm was more focused on improving current operations and
meeting short term expectations than on sustaining high performance in the long term. It had
failed to allocate the resources required to build future-growth platforms. The company lacked
the organizational structure and discipline (including dedicated funding) to support an innovation
strategy and portfolio, and therefore had not been focused on developing a suite of innovation
capabilities for the commercialization of new ideas. Increasing a company’s future-value
premium by harnessing innovation more effectively has two major thrusts, parts of what we call
a “growth and innovation accelerator”. First, what are the sources of growth most important to a
particular company? Is the company focused on the right growth opportunities, given its current

XLVIII
capabilities, industry realities and customer desires? Second, how can a company unlock its
cultural and operational capabilities to accelerate its ability to convert the raw material of ideas
into profitable growth?

The author suggests that two thrusts, in turn, correspond to five areas of focus, namely White-
space opportunities which means setting a course toward a higher future-value premium
requires identifying the right growth opportunities through a purposeful scanning of three
important dimensions: customers, competition and context. One major pharmaceutical company,
for example, has recognized the need to generate growth by effectively identifying its white-
space opportunities, whether in its traditional business model of new-drug development or in
uncharted and completely new businesses. Several years ago, senior management set new five-
year growth targets that mandated looking at marketplace opportunities beyond the company’s
current operations.
One element of this exercise was a comprehensive growth assessment for the company that
included market research to determine converging trends in the industry, as well as an analysis of
the company’s current capabilities and operating model. The project team identified several key
areas of focus for innovation, and senior management moved quickly and aggressively to put the
operational structures in place to support the exploration and development of those focus areas.
Within six months, the company had fully staffed a new innovation capability group and had
developed statements of work for six growth platform pilots.

The second area of focus according to the author is Profit pools in which an analysis of any
company’s financial performance reveals that its profits will group, or “pool,” around a discrete
selection of opportunities within its overall portfolio. Sustaining high performance over the long
term depends on a company’s ability to develop a clear and real-time understanding of its current
profit pools; the impact of emerging trends on those profit pools; and potential profit pools
(including their timing, magnitude and possible risks) so that a company is always changing
ahead of the curve. High performers are invariably adept at “seeding, feeding and weeding” that
is, they allocate resources to probe new kinds of opportunities and potential profit pools; they
support a handful of such opportunities through the early stages of development; and they know
how to identify the winners in a timely manner and cut off support for the non-starters before
they become a drain on growth and profits. Canadian financial services company Scotiabank
successfully altered its presence in the marketplace through astute analysis of its current and

XLIX
future profit pools. Because of the maturing of the Canadian banking marketplace and the
increasing globalization of the financial services industry, Scotiabank realized it needed to
redefine its identity to change from a Canadian bank with an international presence to a global
bank with a Canadian presence. As part of a three-year global growth agenda, Scotiabank
commenced a Global Trends Report, which included the identification of potential profit pools
by country and by financial product. The bank was able to quantify its identified profit pools and
estimate their impact on current and future profitability. Scotiabank also conducted a competitive
positioning analysis in key markets and, most important, determined the key capabilities it would
need to establish a presence in those markets that would support profitable growth.

The third area of focus is Growth platforms. This area of focus refers to the selection,
prioritization and communication (both internal and external) of new growth platforms and
business concepts that promise to deliver long-term, sustainable competitive advantage. It is
here, most especially, that high performers begin separating themselves from the pack by making
the strategic distinction between effective innovations in general and the effective
commercialization of innovation. Accelerating growth through innovation requires becoming
more disciplined at identifying a company’s innovation “center,” as it were. For some
companies, such as Apple, innovation generally flows from its products and services. Other
companies, such as Wal-Mart, fuel growth through operational innovations. Business model
innovation has helped drive companies such as eBay and Skype.

According to the article Accenture defines “innovation” as the creation and implementation of
strategies, processes, technologies, organizational structures and culture that accelerate and
sustain new idea generation, selection, development and commercialization. The accelerator
helps a company look at what the important sources of growth will be and how the company can
unlock its cultural and operational capabilities to turn ideas into profitable growth. Companies
must manage growth from that innovation center, rather than from the periphery. Part of that
commitment to innovation involves embracing new and disruptive ideas. Another important
aspect is leveraging open innovation and open sourcing methods that bring together suppliers,
partners, employees and management. Companies that effectively commercialize innovation also
develop more risk tolerance when scanning for opportunities outside their immediate business
environment. They become more willing to cannibalize products and services when investigating

L
new growth platforms. They become more adept at the operational requirements of their winning
concepts, leveraging current partners, networks, assets and distinctive capabilities to help drive
growth through innovation (see “Leading by imitation,” Outlook, January 2007). Finally, these
companies know how to communicate their growth and innovation strategy, both within their
company and to the marketplace. Like the old story of the tree falling in a deserted forest, future
value that is not communicated effectively to the marketplace doesn’t make any noise.

The forth area of focus is Culture and organization. By this accelerating growth through
innovation means treating innovation as a discipline, not simply as a personality trait. High
performers know how to apply operational excellence to innovation: the discipline and
organizational infrastructure that enable capabilities and assets to support idea generation, and
then the inventory and screening of those ideas. They are also more disciplined at proactively
creating the kind of culture that values and rewards innovation. Such discipline enables
companies to accelerate the generation of business value by selecting and testing innovative
ideas. Consider Wells Fargo & Company. As the financial services industry and its products have
become more complex, companies like Wells Fargo can struggle to deliver a consistent and high
quality customer experience. To meet this challenge, the bank launched an enterprise wide
program to identify solutions and strategic change ideas to improve the customer experience and,
in the end, ensure customer loyalty and retention. Wells Fargo created an “innovation network” a
means of connecting and tapping into the insights of the banks employees to identify and address
the main threats to customer loyalty. An organization can accomplish more by mobilizing this
type of broad horizontal network of participants than it can by leveraging a small group of
experts such as corporate development or strategy. The success of Wells Fargo’s innovation
network was twofold. First, it generated a pipeline of more than 50 ideas highlighting specific
product and process issues, as well as ideas for improving the end-to-end customer experience.
Second, implementing the innovation network fostered higher levels of employee engagement
and awareness for the customer loyalty program. More than 250 Wells Fargo employees
representing more than 21 US states and 90 job titles submitted substantive ideas, resulting in
seven high quality innovations for the company. Following this initial success, Wells Fargo is
creating ongoing, collaborative networks as part of a broader innovation capability that will
support the transformational and cultural changes needed for the company to achieve sustained
high performance.

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And the final area of focus of the author is People and capabilities. According to the author
accelerating growth through innovation comes down, ultimately, to the performance of a
company’s people. Optimizing that performance, however, depends on a unique and diverse pool
of talented contributors, internal and external, supported by assets, technologies, know-how and
brands, deployed to enable the growth platforms. For example, over the past decade, a leading
US retailer has consistently outperformed its peers in terms of innovation that delivers
sustainable and profitable growth. A great deal of the company’s success is attributable to its
culture and people, and to the organizational structures it has put in place to enlist employees at
all levels in the ongoing success of the company. Never content to rest on its laurels, the retailer
recently determined that, although there were multiple avenues in place to enable the discussion
of issues and ideas throughout the company, there was no central vehicle or process that could
filter, select and execute the ideas coming from across the organization. Over time, management
knew, the absence of such a process could lead to good ideas being overlooked or to the failure
to commercialize ideas due to lack of support. To address that concern, the retailer is building an
“employee collaboration network,” an enterprise wide, innovation enabling functionality. The
network’s stated goal is to support faster speed to market of ideas through cross-functional
collaboration and visibility, driving growth and shareholder value. In addition, this innovation-
generating initiative is explicitly linked to creating the kind of culture and the sourcing and
selection of the right kinds of employees that can drive innovation and growth in the long term.
The company believes that the employee collaboration network will improve the engagement of
its workforce and, by extension, the ability of the company to retain its best-performing workers.

According to the article most companies, especially those enjoying success in the current market
place, will already be focused on these five key areas that are critical to achieving and sustaining
success through innovation. Fewer of these companies, however, will have integrated those
efforts effectively, or will have the right combination of factors that can bring more discipline to
their innovations in support of sustained growth. Here are some things executives can do to
create a more effective innovation capability.

The article identifies that Accenture research has shown that high performers are unique in their
ability to change ahead of the curve (see “Changing ahead of the curve,” Outlook, January 2007).
Many successful companies are unable to sustain that success because they wait too long to

LII
identify new growth platforms and profit pools. High performers, by contrast, change before they
must, knowing that the best way to transform is from a position of strength. Change should not
be crisis driven but opportunity driven.

The article identifies critical barriers and drivers. Part of the new rigor and discipline of
innovation involves an assessment of where a company falls short in its current capabilities.
Companies must identify the symptoms and get to the root causes of the challenges they face in
harnessing innovation in support of growth. Several causes may be at work which may include
Weak portfolios and pipelines for growth and value-creating initiatives; The inability to convert
growth and value-creation ideas into robust concepts, businesses and service offerings;
Disappointing impact due to the inability to market and communicate innovations that can drive
growth.

The article finally says that companies must begin developing the communications and
relationship- building capabilities needed to promote their growth platforms. They have to make
sure that the “tree” makes a noise when it hits the marketplace. High performers succeed not
only because of their commercialized ideas but also because they are adept at exciting the right
parts of the overall value chain about those ideas.

According to the article corporate executives are increasingly dissatisfied with their limited
ability to measure and track meaningful performance data that can help them plan for future
growth. Their frustration is well founded: Most performance metrics are, in fact, based on
accounting transaction information that delivers insights into only current value. The corporate
asset base has changed dramatically, but today’s accounting management systems ignore and
undermanage intellectual capital assets that are value creating and that indicate a company’s
ability to achieve future growth. (“Future value: The $7 trillion challenge,” Outlook, February
2004.)
The author identifies that Future-value premium, a relatively new performance metric, can help
to identify which companies have what we call a “growth advantage” a perception by the market
that the company will be growing faster over time than the overall gross domestic product. As
shown in the figure below, future-value premium can be calculated by beginning with a
company’s enterprise value the total market value of debt and equity less excess cash and
subtracting its current value and expected economic growth. Some of the remaining difference

LIII
can be attributed to simple expected economic growth. In other words, investors have already
figured any likely growth in a nation’s GDP into the share price. Future-value premium,
therefore, represents the incremental value the market expects the company to create, beyond the
value delivered by its current operations and expected GDP growth. High-performance
businesses, by Accenture’s definition, are those that outperform their peers through sustained
economic cycles. A future-value premium analysis can provide the critical forward-looking
financial information to guide companies as they leverage innovation in the pursuit of growth
and long-term success.

Researchers Analysis and Position

Banks have also begun to look at new avenues to drive future revenue growth. Entering markets
or expanding outside of their traditional footprint (e.g., growth in overseas markets) is one
avenue for growth. Penetrating households by selling additional products and services to them
and doing so across multiple service and delivery platforms -- e.g., mobile banking, telephone
banking and enhanced ATM services – represents another avenue of growth. Wells Fargo has
successfully pursued this path for growth for many years and, as a result, has weathered the last
couple of years better than most of the large banks. CEO John Stumpf told analysts on October
20, 2010 that his bank is making up for lost revenue and by offering customers service across
multiple platforms -- where they shop, at ATMs, online, via telephone and mobile banking. Some
analysts believe that hunting for new customers and farming an existing customer base will be
the most important generators of bank growth. Therefore, generating growth will be about
“taking share away from other banks,” said Whalen of Institutional Risk Analytics. “At best, the
global economy will be a zero-sum game.”

Other banks are looking beyond traditional banking operations to drive growth. Morgan Stanley
is looking for growth from its brokerage unit. It purchased a controlling stake in a joint venture
with Citigroup’s Smith Barney, more than doubling its brokerage ranks to about 18,000. Bank of
America is also using its brokerage unit, Merrill Lynch, to sell investment services to existing
bank customers, both in the U.S. and overseas.

Banks have been facing, and continue to face, choppy waters related to the economic downturn
and regulatory actions. This has heightened the need to find new sources of revenue while also

LIV
continuing to manage down costs in line with reduced revenue. This article has provided a brief
overview of what some institutions are doing to address these issues. Additionally, it has
highlighted three specific areas that Hitachi Consulting believes present opportunities for
addressing some of the revenue and cost challenges facing banks.

Profitable growth is the combination of profitability and growth, more precisely the combination
of Economic Profitability and Growth of Free cash flows. Profitable growth is aimed at seducing
the financial community; it emerged in the early 80’s when shareholder value creation became
firms’ main objective.

Profitable Growth stresses that Profitability and Growth should be jointly achieved. It is a break
from previous firms’ development models which advocated growth at first to achieve economies
of scale and then profitability.

Profitable Growth hides in fact a contradiction in terms; one often speaks of the Profitable
Growth paradox. Most growth investment will at first reduce the profitability; cost reduction
efforts to boost the bottom line usually have a negative impact on future growth. This is
especially true with mature products or services. The only way out of the Profitable Growth
paradox is through innovation. It concerns not only technical innovation but mainly business
model innovation, a new product-market space where there is no competition. One research
shows that no business model is able to achieve a sustainable competitive advantage for more
than 10 years.

A strong corporate DNA, differentiation and adaptability to change are keys to success for any
company aiming to achieve sustainable profit growth. According to research, typical challenges
for CEO’s striving for sustainable profit growth include Customers becoming increasingly
demanding; Globalization putting pressure on prices and margins; Short-term solutions standing
in the way of long-term interests; In fast-growing companies, head count tends to increase
faster than profit growth; Cost structure too high; Attracting and retaining talented employees;
Product life cycles are continually decreasing Research and Development expenditure increasing
as a result; Product portfolio too extensive compared to the size of the company; and High cost
of sales versus low hit rate.

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The following can be implemented to in order to achieving sustainable profit growth: Identifying
solutions based on the pains and needs of customers; Implementing a business strategy that
weakens competitors’ positions; Introducing scalability; organisations and staff become more
adaptive to change; Sales and Marketing alignment; Hiring and retaining staff who fit in the
DNA of the organization; Creating an environment that promotes living up to the DNA
and improve involvement, self-development and knowledge sharing; Start a cross-departmental
way of working; Replacing ‘competence-based hiring’ by ‘DNA-based hiring’; and Giving all
employees KPI’s and explaining the impact of their actions on the company’s long-term success
(‘profit contribution dashboard’)

It is expected that after implementing the above companies are likely to achieving double digit
growth with profit growing faster than the topline.

With so many strategic and development alternatives to choose from, banks and profit making
organizations must have top customers to prioritize, justify, and focus on the opportunities that
will deliver the most impact. Leveraging their industry knowledge through collaborative
“outside-inside” thinking is the only way to secure true market alignment that drives
Sustainable, Predictable and Profitable Growth. When service is great enough, when it is
extraordinary, then sales become automatic. When service is substandard, then customers
disappear to more service-oriented banks. Look at your bank from the eyes of your customers
and potential customers. What do they see, hear, and feel about your bank? Determine how you
can improve this perception. Most bank managers and CEOs never meet the average customer.

LVI
 CHAPTER THREE

THE PROFILE OF BARCLAYS BANK

3.1 PROFILE

Barclays has operated in Ghana for over 90 years and has been closely associated with all phases
of the country's development. We now have a major commercial banking network in the country
with branches in all large commercial Centres. With our detailed knowledge of the Ghanaian
market we are uniquely positioned to assist in the development of our customers' businesses.
The first Barclays branch in Ghana was commissioned on 14th February 1917. Its mother
company in the UK, Barclays PLC, is quoted on the London, New York and Tokyo Stock
Exchanges. Three hundred years of banking expertise and a well-earned reputation for quality
and strength in the world of finance has made Barclays a major force internationally in both
corporate and retail banking.

3.2 THE VISION OF BARCLAYS BANK AFRICA

To be the leading contributor to Africa’s growth.

3.3 BARCLAYS AFRICA'S MISSION

To be one of the most admired financial services organisations in the world, recognised as an
innovative, customer-focused company that delivers superb products and services, ensures
excellent careers for our people and contributes positively to the communities in which we live
and work.

3.4 THE BARCLAYS BRAND

One of the greatest strengths of the bank is its brand. Built over many years of hard work and
dedication, the Barclays brand today has come to represent trusted and reliable financial services.
The depths of appreciation that Barclays has for the financial market is what distinguishes the
Barclays brand from the others. Indeed Barclays is "fluent in finance".

LVII
The size of Barclays Bank comes with a strong capital base which is often leveraged to the
advantage of the bank's clients and customers. As one satisfied corporate clientremarked, "You
don't just transact business with Barclays Ghana; you have the entire resources and expertise of
the whole Barclays Group at your disposal."

The first Barclays branch in Ghana was commissioned on February 14th, 1917. BBG is now
wholly owned subsidiary of Barclays Bank of the United Kingdom and is a major force
internationally in both corporate and retail banking. In 2002, Barclays launched Ghana’s fully
automated telephone banking operation. It was the first to introduce online banking for its
corporate clients with Business Master International. Pay Direct, an electronic payroll system
was another first in the country. BBG’s strength in product innovation is not restricted to
technology only, with products like; Prestige Banking, Prestige Plus, Local Business and
Business Solution. The Bank’s products and services are divided into broad groups namely;
Corporate Banking Products, Retail Sector Products and Treasury Products. Barclay’s offers
extended banking hours, focused and differentiated services to its chosen customer segments and
exploits its competitive of VSAT technology to the benefit of its clients.
(http://www.gipcghana.com/gc100/rankings.php?
data=fsd54fsfdpoli3kuldhuwdfh678&cm=14&yr=2008 7th July, 2012)

3.5 PRODUCT AND SERVICE

The products and services of the bank include:

Internet Banking

Mobile Banking

Banking SMS Alerts

Prestige Banking

Barclays Cash Passport

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Executive Loan

Home Loan

Barclayloan

Instant Savings

High Rate Savings

High Interest Bonus Savings

Fixed Term Deposit

All- In- One Current Account

Bank Account

High Value Current Account

Current Account

Student Account

Business Solution Current Account

Business Solution Savings Account

Documentary Letters of Credit

Bonds and Guarantee

Barclay Integrator

Business Club

Prestige Plus Account

Community Solution

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Community Account

Telephone Banking

Corporate Current Account

Barclays Customers Foreign Currency Account (CFC Account)

Barclays Foreign Exchange Account (Forex Account)

Call Deposit

Special Call Account

Alliance Account

Overdraft

Ordinary Loan

Documentary Collection

Deferred Debit Card

Barclays Pay Direct

3.6 RISK MANAGEMENT POLICIES

Risk management policies of Barclays Bank in Ghana are diverse in nature. It includes following
of Sanctions of all individuals who call on the bank to do business including sanctions on new
accounts, loans, draft purchase, letters of credit etc.; Anti Money Laundering.

Barclays bank Ghana has many policies in place to check fraud and money laundering.

Politically Exposed Persons (PEP)

PEPs include:

 Heads of state or of government

LX
  Senior politicians

 Senior government, judicial or military officials

 Important political party officials

Immediate family and close associates of these people should also be treated as PEPs

Sanctions

The United Nations (UN), the office of Foreign Assets Control (OFAC), the Bank of England
and various other international organisations issue financial sanctions that are intended to deny a
range of targeted countries, entities and individuals access to the financial services sector. There
are significant penalties (including fines and imprisonment) for firms and individuals that breach
sanctions.

Some sanctions place a ban on providing financial or trade services of any kind whilst others are
more selective.

Barclays knows that Non-compliance with sanctions could result in Barclays facing fines, public
reprimands, and even enforced suspension of operations or withdrawal of banking authorization
in relevant countries. Individual colperable could face personal liability resulting in a fine and/or
imprisonment. Banks act as a front line against financial crime and have a key role to play in
implementing sanctions.

Screening

There is a legal requirement to screen all prospective and existing customers. This process has a
number of purposes.

It is used to:

 Identify customers who are politically exposed persons (PEPs)

 Identify whether Barclays is prohibited from doing business with the customer (for
example, as a result of international sanctions)

Suspicious Activity Report (SAR)

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SAR describes the report that must be made when there are reasonable grounds to suspect that a
customer is involved in money laundering or terrorist financing.

Money Laundering Risk

Customer due diligence and monitoring procedures are tailored to take into account the financial
crime risk that a customer presents. Taking this risk based approach, tailoring controls to risks,
ensures that anti money Laundering controls are both proportionate and effective.

What sanctions does Barclays apply?

Taking into account ethical, legal, regulatory, and reputational issues, Barclays restricts business
globally with countries, companies, organisations, and individuals sanctioned by the United
Nations, the European Union, the United Kingdom (UK), and the United States (US), unless
doing so would contravene local laws:

These sanctions include:

 UK Treasury financial sanctions list; (formally Bank of England)

 US Office of Foreign Assets Control (OFAC) administered sanctions; and

 US Treasury special measures against targets designated as being of primary money

laundering concerns.

Each sanctions list/notice is unique and can run to several thousand entries.

Barclays has a duty to apply the contents of Sanctions List/Notices and Regulations where they
are legally binding.

Barclays needs a Sanctions Policy to prevent

 Terrorist;
 Organized criminals; and

 Corrupt regimes

Using Barclays for financing or for purposes related to financial crime.

LXII
The sanctions Policy sets out how Barclays will adhere to sanctions laws around the world with
particular emphasis on:

 Obeying legal obligations in all jurisdictions in which we operate;

 Barclays stance on the acceptability of:

Doing business with certain countries, companies, organisations, and individuals; and

Some types of business activity;

 Performing appropriate customer due diligence including the identification and

verification of new and existing customers that might be prohibited under the Sanctions
Policy;
 Screening customers, payments, and transactions for activity that is prohited under the
Sanctions Policy; and

 Being alert for potential breaches of the Sanctions Policy (Source: Barclays Sanctions
Training/ Emerging Markets Relationship Manager Module, February 2009)

Who is the customer?

Some customers present more risk than others. For example:

 Certain individuals in public positions may be exposed to corruption. These individuals
are known as Politically Exposed Persons.
 Complex business ownership structures may make it easier to conceal those who are in
control.
 Customers may be associated with higher risk businesses, for example those which
involves significant amounts of cash
 Some charities need careful consideration as they could be used to finance terrorism.

Putting It into Practice

There are tools used in managing money laundering risk. All potential customers must be subject
to the four checks below.

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  Identity checks
 Screening
 Know Your Customer (KYC)
 Monitoring
This serves a number of purposes. It checks that potential customers are who they claim to be. It
ensures that Barclays does business with the customer. The information that is collected helps us
to identify any suspicious activity and make reports to the authorities where necessary.

Identity Checks

Initial identity checks must be carried out on all potential customers. There are two stages to this
process. First is to identify the persons or entity by obtaining a range of information from them.
The second is to verify some of the information using reliable independent source documents or
electronic checks.

Screening

There is a legal requirement to screen all prospective and existing customers. This process has a
number of purposes. It is used to identify customers who are Politically Exposed Persons, or
PEPs. It is used to identify whether we are prohited from doing business with the customer, for
example as a result of financial sanctions.

Know Your Customer (KYC)

Describes the additional information that Barclays must collect as part of risk based anti-money
laundering approach. KYC helps Barclays understand the circumstances and business of the
customer. There is thus the need to gather information on the customer’s personal circumstances,
employment and income. KYC is an ongoing obligation. Customer information must be
continuously updated when the opportunity arises, to reflect activity, for example moving house,
application for new product, request for additional cardholder.

Monitoring

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The KYC evidence enables certain assumptions about the types of transactions that a customer
will undertake. It is enables Barclays to make assumptions about the anticipated level of account
activity. Barclays then monitors account activity and transactions to ensure that they are in line
with expectations. While some of this is done via computer systems, employees should be alert
to any behavior that does not fit a customer’s profile. Any unusual activities should be
investigated whether there is a rational explanation. If none can be found a suspicious activity
report may need to be made.

All records of all checks that are done must be kept, including, identification and verification
documents, where electronic checks are done this is recorded automatically, customer screening
and KYC information. These records must be kept for a minimum of five years from the date
when the customer relationship ends. If any suspicious activity report is done, it must not be
recorded on the customer’s account as this may result in tipping off. (Source: Barclays Emerging
Market AML policy August 2007)

3.7 BARCLAYS BANKS EXPANSION PROGRAMME AND QUEST FOR GROWTH

The four factors of production are land, labour, capital and enterprise. An enterprise’s capital is
its money in the form of cash, bonds and shares or assets, such as machinery and raw parts. If a
company needs more capital than labour, it is known as capital-intensive while a company that
needs more labour than capital is known as labour-intensive. Profit provides a business with
capital for such things as new machinery, more labour or more advertising to expand its products
or services.

A company’s profit is calculated by subtracting its costs, which include price of raw materials
and production costs, from its revenues, which include sales from products and services and
earnings from interest and dividends. Profit is important because it rewards business owners,
allows for business expansion and enables companies to give back to the community. (Michele
Jensen, 2012)

Normal profits represent the business owner’s opportunity costs, which is the money lost by the
owner for engaging in the chosen business rather than in some other business. When a company
realizes a normal profit, the profit serves as a reward. For the entrepreneur, it is a reward for

LXV
taking the risk of starting an enterprise. For an established company, it might be the reward for
taking the risk of entering a new market or expanding a product line.

INPUTS NEEDED FOR EXPANSION

1) Reasons for Considering Expansion
i) To gain more market share
ii) To gain profitability
iii) To increase public Image
iv) Ease of accessibility
v) Corporate Social Responsibility

Branch Networking

Networking of branches is the computerization and inter-connecting of geographically scattered

stand-alone bank branches, into one unified system in the form of a Wide Area Network (WAN)
or Enterprise Network (EN); for the creating and sharing of consolidated customer
information/records.

It offers quicker rate of inter-branch transactions as the consequence of distance and time are
eliminated. Hence, there is more productivity per time period. Also, with the several networked
branches serving the customer populace as one system, there is simulated division of labour
among bank branches with its associated positive impact on productivity among the branches.
Furthermore, as it curtails customer travel distance to bank branches it offers more time for
customers’ productive activities.

Barclays Bank of Ghana Expansion Case

Components of an Expansion Plan

A comprehensive expansion plan should include all of the following. Examine each component
to determine if it has been adequately addressed.
1. A determination of how the how many branches need to be added to compete for market
has to be determined.

LXVI
 2. A site plan, which provides the details of the layout of the new locations and other
structures.
3. A description of additional facilities, including software needed and training on the
available software.
4. A determination of how much human resource will be needed for the proposed new
branches.
5. A plan to fight potential fraud.
6. Meeting customer needs and expectation must be a key factor in any plain designed for
expansion

Opening of New Branches

Barclays bank of Ghana in its quest to achieve growth and profitability embarked on a massive
branch and agency expansion beginning 2006. Through this expansion programme branches like
Asafo branch in Kumasi, Ahodwo branch in Kumasi, Suame branch, Tanoso branch, Tafo
branch, Adum branch, Agogo branch all in the Ashanti region of Ghana were opened. Some
branches include the Winneba branch, Kasoa branch in the central region; Kokompe branch,
Tarkwa mines as well as Asankrangua branches all in the Western region were opened. New
branches in the North included the Gumani branch and Bawku branch. Others include Brekum
branch in the Brong Ahafo region of Ghana, Spintex road branch, Palm wine junction branch,
Nungua branch, Ashiaman branch all in the Greater Accra region of Ghana.

Composition of Population (Structure of Population)

The composition of the research population will include Staff, Customers and Third party
customers of the Bank sampled from three branches of the bank in the Ashanti Region. The
branches will include the:

1). Kumasi Prempeh the Second Street branch of Barclays Bank

2). Asafo Branch of Barclays Bank
3). Tanoso Branch of Barclays Bank
4). Ahodwo Branch of Barclays Bank
5). Kejetia Branch of Barclays Bank

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The Kumasi Prempeh the Second Street branch is one of the oldest branches and also the biggest
in terms of staff numbers, assets, liabilities and structure and the most profitable branch of
Barclays Bank in Ghana over the past five years. It has three agencies namely Ashtown Agency,
Central Market Agency and KNUST Agency which all work under its base. Ahodwo branch
serves customers around Ahodwo, Santasi and its environ. It boasts one of the most profitable
branches in the country and has one of the banks high customer bases. It is one of the successful
new branches which were opened during the expansion in 2007. Kejetia is one of the oldest
branches of the bank. It is one the biggest in terms of size, staff numbers, customer numbers and
profitability. It serves a very broad range of customers which include Market women as it is
sighted in the middle of Kejetia where the Kumasi main market is located and Asafo and Tanoso
branches are also among the new branches which were opened during the Bank’s expansion
programme. The Asafo branch is one of the most profitable among the new branches opened
during the expansion programme. It also has one of the largest customer base of the bank
countrywide due to it previously having a Direct sales Centre which was directly responsible for
opening of accounts and loans. The target sample source and size will give me a fair reflection of
the research question as there is a high probability of meeting a high percentage of the banks
customer group and staff group in the chosen branches.

Direct Sales Centres

Barclays bank also introduced the direct sales centres with the hope of reaching out to customers
at their workplaces, market places and shops. The bank thus employed thousands of Direct sales
Agents on contract bases to open accounts, sign on loans, fixed deposits and sign on customers to
many of the bank’s products from wherever they are. By this the customers did not need to walk
into the bank to get served. The direct sales agents who are now known as Lead generators were
paid commissions depending on how many accounts they opened, Barclay loan, Scheme Loans
and Fixed deposits they signed customers on.

Challenges with the Direct Sales

The direct sales agents did not have effective monitoring system and contributed immensely to
the failure of the expansion programme as well as many of the bad loans, and many of the fraud

LXVIII
that hit the bank during this period. Many of these Direct sales agents opened fraudulent
accounts in a quest to gaining huge commissions. Some of the identifications they used in
opening the accounts were forced and others many others duplications and manipulation of data.

Introduction of New Account products

Barclays bank in its quest for growth and ambition to remove the tag of being a bank for the rich
and becoming a bank for all introduced new account products which included the Dwetire
Current Account, Abapa Current and Savings Accounts which allowed market women to open
accounts with five Ghana cedis (GHS5.0). Customers opened a lot of fraudulent accounts with
non-existing names and business names and did fraudulent transactions with such accounts.

The result was that the bank was hit with so many cases of fraud during the period which
affected the Banks’s profit and made the expansion effect a negative one.

Introduction of Loans

The bank in a quest to woo more customers also opened up ease of taking loans by customers
and introduced new loans. Some of these include

Business Solution Loans

The business solution loan was introduced to help business and potential business men access
loans for their business. To qualify to take a business loan, one needed to open a business
account and operate it for a period of six months and based on the turnover of the account an
amount of loan could be acquired from Barclays.

Challenges

The challenges this faced included ability of customers to open fraudulent business account and
operate with non-existing funds in collusion with some direct sales agents and staff. Such
customers after managing to secure huge amounts of loans fled and in some occasions the bank
could not locate the places where their business resides.

LXIX
Barclay Loans (Salary Loans)

This loan was introduced for salaried workers who received their salary through the bank. To
qualify one needed to open a salary account and received three months’ salary through the
accounts to qualify. Alternatively one could open a salary account and receive one month salary
and bring along three months bank statement indicating salaries from his previous bankers.

Challenges

The challenges this faced was the inability of the bank to confirm the salaries that reflected on
the accounts. The bank then had no defined way of confirming the salaries of the customers and
could not even confirm their places of employment. Customers took advantage of this and
sometimes opened multiple accounts as the account opening KYC had challenges and one
individual could have as many accounts and pay in salaries that did not exist with the assistance
of some fraudulent staff and took multiple loans and fled thereafter.

Scheme Loans

This loan was introduced to give opportunity for non-customer salaried workers to be able to
access loans from the bank. The strategy was also to use it to attract such individuals to bank
with Barclays. To qualify, organisations with staff strength of about twenty could sign an
agreement with the bank to supervise collection of loan repayment from their staff at an agreed
rate negotiated between the organisations and the bank. Hence a salaried worker didn’t need to
have an account with Barclays to qualify for a loan. His employers could sign up a scheme loan
with Barclays and by so doing qualified to take a loan.

Challenges

The bank failed in many of the occasions to ascertain the existence of those organisations and
even their address. The results was that many people with the assistance of fraudulent staff and
sales agents signed up non existing organisations and aided individuals they claimed to be staff
to take huge loans

LXX
Challenges Faced by the Expansion Programme

The effects of the expansion programme was however very negative to the bank. The expansion
was meant to open up to the bank to new businesses and make caused the image of the bank to
improve as a friendlier bank, a bank for the poor and needy in the society. A quest to reach out to
the huge unbanked population failed woefully. The cost of the bank rose so much as the cost for
acquiring some apartment for the new branches were also somehow fraudulently inflated whiles
some of the buildings which had been acquired for use were not being used and the business was
paying rent, and utility charges on them.

Direct sales agents also opened many fraudulent and sometimes zero balance accounts in quest to
increase their monthly commission. The agents were paid a commission based on the number of
accounts they opened number of loans and fixed deposits they did. Hence they went every learnt
to open as many accounts. There are occasions where a customer applied to open one type of
account but in order to increase their commission opened two more for him just to increase their
number of accounts opened for the month and eventually increase their commission for that
month. The effect was that because many of such accounts were zero balance accounts the bank
got nothing from such accounts. Striking the balance meant the bank run at a loss in that area.
For instance if you spend one cedi to open an account and paid the one who opened two cedis
and had no money deposited, you loss three cedis. If you open hundreds of such accounts you
loss hypothetically loss three hundred cedis and there many more than this hypothetical situation.
For instance in the year 2009 Asafo branch alone closed over one thousand zero balance
accounts which had been on the system zero for two years.

The bank subsequently suffered huge impairment losses as a result of the bad loans they booked
and caused the bank to run into losses.

Below is a quote of a description of fraud that hit the bank in 2007.

Barclays Bank Ghana Ltd. last year wrote-off GH¢46.9 million from its books, due to activities
of fraudsters and bad loans, from a low of GH¢5.5 million in 2007, according to the findings of a
survey.

LXXI
This is unprecedented in the history of the banking industry in Ghana, which is over 100 years
old. Barclays’ loss constitutes a third of the total write-offs made by all the banks in the industry,
which was GH¢150.68 million as at the end of 2008.

The over 752 percent jump from 2007 in Barclays’ write-off raises questions over the potency of
the bank’s internal controls, credit appraisal and risk management policies.

The activity of the fraudsters in the industry has reached worrying levels as it takes the form of
untraceable transactions and bad loans.

The Banking Survey released by PricewaterhouseCoopers (PWC) on the performance of banks

for last year showed that these losses called impairment charges, expressed as a ratio of gross
loans and advances, worsened from 1.5 percent in 2007 to 2.2 percent last year.

In terms of overall profitability, the industry’s profit before tax margin dropped from 30 percent
in 2007 to 26 percent last year. Ecobank topped by posting a profit margin of 41.9 percent,
followed by Zenith Bank at to.5 percent and Stanbic Bank at 39.9 percent.

Barclays, UT Bank and UBA were unable to recover costs from their operations and recorded
losses in the year. (http://www.ghanabusinessnews.com/2009/06/16/barclays-bank-loses-gh
%C2%A2469m-to-fraudsters-loan-defaulters-in-2008-survey/)

3.8 HUMAN RESOURCE MANAGEMENT POLICY OF BARCLAYS BANK

The PD process forms an integral part of the remuneration process in Barclays, determining the
level of pay and bonus awards. It is, therefore, essential that members fully participate in the
process ensuring that they are happy with the outcomes at all times but especially the annual
review.

Few issues in management stir up more controversy than performance appraisal. There are many
reputable sources - researchers, management commentators, and psychometricians - who have
expressed doubts about the validity and reliability of the performance appraisal process. Some
have even suggested that the process is so inherently flawed such that it may be impossible to
perfect it. Performance appraisal - whatever its practical flaws - is the only process available to

LXXII
help achieve fair, decent and consistent reward outcomes. An attempt was made to find out what
employees feel about the whole process of Performance Appraisal (as part of Performance
Development [PD]) and how it is practiced as well as how it is linked to rewards and
recognitions in Barclays Bank of Ghana.

Questionnaires were administered to the Retail Function employees only, using a combination of
techniques; simple random sampling, purposive sampling and quota sampling. Secondary data
on PD were reviewed and Management of the Bank was contacted through the Human Resource
Department to show how the PD system should work and how it feels about employee
satisfaction as far as PD is concerned. Data was analyzed using qualitative and quantitative
techniques as appropriate. From results obtained, employees made it clear that line managers do
not always carry out the face to face appraisals or reviews and feed backs not given after such
sessions. They were of the views that, instead of making the PD process a developmental tool to
enhance performance; it has been turned into a discriminatory, punitive and/ or judgmental
process, where cronyism and biased considerations dominate rather than objectivity. While
Management of the Bank rated the PD process as very effective, employees think otherwise and
stated among other things that they are unhappy about the whole process and wish the process is
phased out for better alternatives which will not require human intervention.

Annual Review

This is an annual review statement that consistent comes with the PD review process.

As the time approaches for your annual review, we would urge members to adopt the following
approach to ensure a successful outcome to their review. Remember this is your review; you
need to take ownership and be well-prepared and should be given fair notice of the date of the
review, at least 48 hours. Ensure that you have all your evidence prepared and with you so that a
fair discussion on all aspects of your work takes place. The meeting should take place in a
private room or area with no interruptions, including phone calls to either party. The process is a
two way discussion and should be carried out face-to-face. Ensure that both behaviors and
deliverables are properly taken into account. You must see the team leader’s comments before
the review is complete. You should take the opportunity to give your comments on the form.
Only sign off your review if you UNDERSTAND and AGREE with it. If you cannot agree to the

LXXIII
review with your team leader, ask for an adjournment; take time to consider the matter further
before a reconvened meeting. If in doubt, contact your local rep. If you still do not agree with the
rating then you must use the Bank’s laid down grievance procedure but this must be started
WITHIN 10 DAYS of the date of the review.

LXXIV
 CHAPTER FOUR

RESEARCH INVESTIGATIONS, DATA ANALYSIS, FINDINGS AND DISCUSSION ON

FINDINGS

4.1 INTRODUCTION

This chapter introduces research investigations, data analysis, findings and discussions on
findings on the questionnaires on the given research topic “Growth Strategy challenges and its
Impact on Profitability within the Banking Sector in Ghana”. The following data is analyzed as
follows.

4.2 SOURCES OF DATA

The sources of data used include both primary and secondary data.

4.2.1 PRIMARY DATA

When data is obtained for the specific purpose for which it is collected then it is termed as
primary data. The methods of collecting primary data were by means of questionnaires,
interviews and observations. The questionnaires embrace various categories of questions. The
data will also be collected by means of recording, analyzing actual performance or any other
relevant means. Most of the respondents assisted in providing relevant information for the
purpose of this study.

4.2.2 SECONDARY DATA

Data that has been collected and readily available from other sources is secondary data. Such
data are more quickly obtainable and cheaper than primary data. These sources include articles,
research publications, books, reports and the most predominant being internet sites.

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4.3 QUESTIONNAIRE DESIGN

The questionnaire was designed with the aimed to identifying the objective of the research study
in gathering information from respondents. Mostly, they are designed for statistical analysis. The
advantages over other types of surveys are that they are cheap, do not require as much effort
from the questioner as verbal or telephone surveys, and often have standardized answers that
make it simple to compile data. However, such standardized answers may frustrate users. The
respondents must be able to read the questions and respond to them appropriately. If not,
questionnaires are sharply limited by this fact.

4.3.1 TYPES OF QUESTIONNAIRES

Structured non disguised questionnaire

These questions are listed in a pre-arranged order and respondents are told about the purpose of
collecting information.

Structured- disguised questionnaire

These questions are listed in a pre-arranged order and respondents are not told about the purpose
of conducting survey hence their feedbacks are general.

Non-structured non disguised questionnaire

These questions are not structured and researcher is free to ask questions in any sequence he/she
wants and respondents are told about the purpose of collecting information

Non-structured disguised questionnaire

These are questions not structured and the researcher is free to ask questions in any sequence
he/she wants and respondents are not told about the purpose of conducting survey.

4.4 TYPES OF QUESTIONS

Open ended questions:
The respondents are free to answer the questions in their own words. It does not restrict them to
choose from the given alternatives as in closed-ended questions. The respondent expresses
his/her thoughts in a freewheeling manner. The respondents provide their own answer without
being constrained by a fixed set of possible responses.

LXXVI
Closed ended questions:
The closed ended type of questions provides the respondent the chance to select from a fixed list
of replies. Respondent has to choose any one of the options given or multiple options.
This facilitates coding and helps in quantifying the answer to the questions. Respondents don’t
have to think much and answer within the options given. Respondents’ answers are assigned to a
fixed set of responses.
Matrix questions

The response categories are limited to multiple questions. The questions are placed one after the
other, forming a matrix with response categories along the top and a list of questions down the
side.

Contingency questions
The respondent gives a particular response to a previous question after a question is answered
(such as, after a question follows if yes …).

4.5 SAMPLING

Sampling is a statistical technique that deals with the selection of a subset of individuals from
within a population. It includes ascertaining the population from which our sample is drawn. A
population can be defined as including all people or items under considerations. The data
obtained will come from examining a small and representative subset of the population.
A case study of Barclays Bank of Ghana, a leading Bank in Ghana. Sampling size of 50
employees and 50 customers was used to determine the Impact growth strategy Challenges has
on the Profitability of the Bank in Ghana. Interviews and questionnaires were conducted to
provide the necessary data for this study.

4.6 TYPES OF SAMPLING

Sampling techniques often used in business and commerce can be classified into three (3).

4.6.1 RANDOM SAMPLING

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This sampling ensures that each and every member of the population under consideration has an
equal chance of being selected. This can be categorized in Simple random sampling and
Stratified (random) sampling

4.6.2 QUASI SAMPLING

This type of sampling technique is generally thought to be as representative as random sampling

under certain conditions. This is categorized into Systematic sampling and Multi-stage sampling.

4.6.3 NON-RANDOM SAMPLING

This sampling technique is used when neither of the above techniques is possible or practical.
This can be categorized into Cluster sampling and Quota sampling

4.7 TREATMENT OF DATA

Microsoft Excell is a software package which can be used for statistical analysis. This data was
analyzed using Microsoft Excell. It is one of the most widely used programs for statistical
analysis.

4.8 ANALYSIS OF DATA

This section describes analysis of data based on the fifty (50) answered questionnaires from
customers and thirty (50) from employees of Barclays Bank in Ghana. The areas investigated
included the following:

4.8.1. GENDER ASSESSMENT OF CUSTOMERS/EMPLOYEES

The result on gender indicates that 29 of the respondents (customers) representing 58% were
males while remaining 21 of the respondents (customers) being females are 42%. This is
illustrated below in figure 1.

Distribution of Gender (Customers)

LXXVIII
Figure 1
Source: Researcher’s survey

Gender Assessment of Employees

The result on gender indicates that 33 of the staff who responded representing 66% were males
while remaining 17 of the staff being females are 34%. This is illustrated below in figure 2.

Distribution of Gender (Employees)

Figure 2 Source: Researcher’s survey

4.7.2. Age Distribution

Age (Customers)

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The age categorized for respondents in the customer groups stating from 18-29 years comprised
of 11 respondents representing 22%, second group 30-39 years consist of 23 respondents
representing 45%, third group 40 to 49 years consist of 9 respondents representing 18%, the
fourth group 50-59 years consist of 5 respondents representing 4% and the final group 60 years
and above consist of 2 respondents representing 4%. Age distribution of customers is further
demonstrated in figure 3 below.

Figure 3 Source: Researcher’s survey

Age (Employees)

The age categorized for respondents in the Employee groups stating from 18-29 years comprised
of 7 respondents representing 14%, second group 30-39 years consist of 27 respondents
representing 54%, third group 40 to 49 years consist of 11 respondents representing 22%, and the
final group 50-59 years consist of 5 respondents representing 6% Age distribution of Employees
is further demonstrated in figure 4 below.

Figure 4 Source:
Researcher’s survey

4.7.3. Educational Background of Respondents (Customers)

LXXX
The Educational background of respondents comprise of Basic Education that is not necessarily
finishing the basic level of education representing 10%, Junior Secondary School Education
(Junior High School) holders representing 13%, while those who have had Secondary School
Education represented 43% and those with Tertiary education represented 34%. This is illustrated
in figure 5 below.

Figure 5 Source: Researcher’s survey

Educational Background of Respondents (Employees) at the Time of Joining the Bank

The Educational background of respondents comprise of Basic Education, Secondary Education,

First Degree/Polytechnic Education and Second Degree (MBA etc). The response showed that
24% of the respondent entered the bank with Secondary Education qualification and 76% entered
the bank with Tertiary First Degree qualification. This is illustrated in figure 6 below.

Figure 6 Source: Researcher’s survey

LXXXI
Educational Background of Respondents (Employees) After Joining the Bank

The Educational background of Employees after joining the bank comprise of Basic Education
which accounts for 0%, Secondary Education comprising 8%, First Degree/Polytechnic
Education accounting for 58% and Second Degree (MBA etc) also accounting for 34%. This is
illustrated in figure 7 below.

Figure 7 Source: Researcher’s survey

4.7.3. Occupation of Respondents (Customers)

The various occupation of customers interviewed for the research included Students which
represented 16% of the respondents, Self Employed which represented 40% of the respondents
and Government workers which also accounted for 22% and those with Private organisations
accounted for 20% and finally those who could not tell and unwilling to disclose their type of
occupation accounted for 2% of the respondents. This is illustrated in Figure 8 below

Figure 8 Source: Researcher’s survey

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4.7.4. Are You a Customer of Barclays?

The study intended to find out if the respondents interviewed were all account holders of the
bank or third party customers and Figure 9 below illustrates that 24% of the respondents were
not account holders of the bank which indicated that there were third party customers who had
either come to make payments for the clients or relations and 76% were account holding
customers of the bank.

Figure 9 Source: Researcher’s survey

4.7.5. Have You Enjoyed Your Relationship with Barclays Bank

Respondents were also asked whether they have enjoyed their relationship with Barclays Bank of
Not. Figure 10 below illustrates that 34% of the respondents said they have enjoyed their
relationship with Barclays Bank while 44% have not have not enjoyed their relationship with
Barclays Bank of Ghana, however 22% of the respondents said they were indifferent.

LXXXIII
Figure 10 Source: Researcher’s survey

4.7.6. Why Do You Like Barclays

Figure 11 Source: Researcher’s survey

Figure 11 above gives a clear pictorial view on why people like Barclays bank and still do
business with the bank. The study shows that 36% of the respondents bank with business because
of the brand name Barclays. The fact that Barclays Bank is an International brand makes some of
the respondents still loyal and wants to remain with Barclays bank. A sizeable percentage of the
respondents being 25% also do bank with Barclays bank because of its wide network and the fact
that they can access Barclays bank close to locations where they live. This means that the
expansion of branch and agency network had a positive impact in the sense that many that did
not belong to the ‘elite’ ‘qualified to bank’ with Barclays bank. The introduction of Barclay loans
and Scheme loans has also drawn some customers who under normal circumstance wouldn’t
have tried Barclays to do so. In the past Barclays was seen as a bank for the elite but with the
opening up of the doors to make room for all salaried workers to take loans many joined.

4.7.7. Why Do You Dislike Barclays

LXXXIV
Figure 12 below gives a distribution of why respondents do not like Barclays Bank.

Figure 12 Source:
Researcher’s survey

4.7.7 Distribution of When Employees Joined the Bank

The figure 13 below indicates that 20% of the respondents joined the bank before 1990, 2%
joined between 1991 and 1995 as well as between 1996 and 2000 while 8% joined the bank
between 2001 and 2005, majority of the current staff representing 62% of the staff joined the
bank between 2006 and 2010 whiles 6% joined the bank after 2011.

Figure 13 Source: Researcher’s survey

4.7.8 Distribution of Why Respondents Joined Barclays

Figure 14 below has a distribution of why employees chose to join Barclays ahead of other banks
and organisations. 1% of the respondents were poched from other organisations, 30% joined
because they considered the salary to be better compared to other organisations, 38% joined

LXXXV
because of the Brand name the bank has while 31% of the respondents joined because they had
no job at all.

Figure 14 Source: Researcher’s survey

4.7.9 Respondents Current Grade

Enquiries into the banks structure indicated that the bank employees had been put in different
categories which included Contract staff which accounted for 12% of the respondents, 34% were
of the B1 categories, 12% were of the B2 categories, 22% were of the B3 categories, 16% were
of the B4 categories and 4% of the respondents were of the B5 categories. This is illustrated in
Figure 15 below

Figure 15 Source: Researcher’s survey

4.7.10 Distribution of Whether Respondents have Promotion/Grade Change or not

LXXXVI
Figure 16 below indicates that 56% have never had a grade change/promotion since joining the
bank while 44% have had some grade change/promotion since joining the bank.

Figure 16 Source: Researcher’s survey

4.7.10 Distribution of Time Frame for Gaining Promotion/Grade Change

14% of the Employees got their promotion/grade change within two years of joining the bank,
32% of the employees spent between 2 and 5years before gaining promotion, 27% gained
promotion between 5years and 10years of service whiles 27% also spent above 10years before
gaining their first promotion. Figure 17 below illustrates the distribution.

Figure 17 Source: Researcher’s survey

4.7.11 Distribution of Respondent's Desire to Leave Barclays

The survey conducted reveals that 68% of respondents would leave the bank, and just 32% of the
respondents don’t really think of leaving anytime soon. This is displayed in figure 18 below.

LXXXVII
Figure 18 Source:
Researcher’s survey

4.7.12 Distribution of Time Frame Respondents Wish to Leave Barclays

The survey conducted found that majority of the respondent would like to leave as soon as they
find a new job or better which accounted for 65% of the respondents. However 25% which was
revealed in the data as mostly the aged would like to retire in Barclays, Again 6% of the
respondents have plans of staying with the bank between 2 and 5years before leaving and 4% of
the respondents would wish to leave in the next one year. Figure 19 below displays the
distribution

Figure 19 Source: Researcher’s survey

4.7.13 Distribution of Why Respondents Would wish To Leave Barclays or Otherwise

LXXXVIII
A further research on why respondents would wish to leave Barclays or otherwise indicated that
28% wish to leave as they feel they are not progressing in their carrier and feel they would be
better off elsewhere, 27% thinks that the conditions of service is not lucrative enough to entice
them to stay, a further 26% think that the salary isn’t good enough and 9% have other personal
reasons for which they wish to leave.

Figure 20 Source:
Researcher’s
survey

4.7.13 Do you like the Expansion done in 2006-2008

Enquiries into how respondents appreciate the branch and product expansion project indicated
that 85% percent of the respondents really liked the idea of branch and product expansion by the
but while 8% really didn’t appreciate the idea and 7% of the respondents really were indifferent
of the expansion idea. Figure 21 below gives a view of the distribution.

Figure 21 Source: Researcher’s survey

4.7.13 What do like about the Expansion

LXXXIX
The research inquired from the respondents why they liked the expansion project and 34% said
they like the job openings it brought, 19% said they like the Scheme Loan and Barclay Loan that
was introduced as a result, 14% said they were moved by the wide network and 11% said they
liked the Ease of Access as they could find the bank at vantage locations, again 8% said it was
the banks Customer service that attracted them whereas 5% said they liked Business Loans
openings, another 5% said they were interested in the fixed deposits rate of the bank and a
further 5% liked the new accounts that was introduced as well as the interest and the charges as
compared to other banks. Figure 22 below illustrates the various distributions.

Figure 22 Source: Researcher’s survey

4.7.14 How Easy or Otherwise Is It to Open Account with Barclays Bank

The research found that 39% of the respondent think that it is difficult to open account with the
bank because of the numerous requirements, 36% think it is too frustrating whiles 11% think it is
very easy to have an account with the bank and 7% think they are okay with the procedure do
they don’t see it as very easy. Figure 23 below illustrates the distribution.

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Figure 23 Source: Researcher’s survey

4.7.15 What Do You Like About A/C Opening in BBG?

The research also found out that 17% of the respondents did not like the documentations required
to open account with the bank, 12% did not like to open a single account, 10% of the respondent
thought the minimum opening balance set is discouraging and 15% says that the packages in the
account were not enticing enough while 6% did not like the charges on their account. Figure 24
below illustrates the distribution

Figure 24 Source: Researcher’s survey

4.7.16 Have You Taken a Loan from Barclays Before

The research inquired from the respondent if they have taken a loan from the bank before and
42% of the respondents said Yes they had taken a loan from the bank before while 58% have yet
to take a loan from the bank. Figure 25 below shows the distribution.

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Figure 25 Source: Researcher’s survey
4.7.17 Would You Consider Taking a Loan If You Haven't

The research inquired if the respondents would consider taking a loan from the bank and 45%
said No, 22% of the respondents said Yes they would do that in future, 12% said Maybe they
would consider when the need come while 21% were indifferent/Not Sure. Figure 26 illustrates
the picture.

Figure 26 Source: Researcher’s survey

4.7.18 When Did You Take the Loan

Enquiries into when the respondents who had taken loans from the bank before took the loan
indicated that 66% took the loans between 2005 and 2008 during the expansion period and 27%
took their loans between 2009 and 2012 while 5% took their loans before year 2000 and 2% of
the respondents said they took their loans between 2001 and 2004. Figure 27 below shows the
distribution.

XCII
Figure 27 Source: Researcher’s survey

4.7.19 Do you like the Repayment Terms

Figure 28 below indicates that 54% of the respondents who had taken loans from the bank did
not like the repayment terms whiles 46% are okay with the repayment terms.

Figure 28 Source: Researcher’s survey

4.7.20 What Do You Dislike About the Repayment Terms

The study wanted to know what respondents did not like about the repayment terms 41%
indicated that the percentage of the Loan which was in most occasions not communicated to
them until the loan was credited to their accounts was what they did not like about the loan, 28%
did not like the Interest Rate charged for the loan while 21% did not like the percentage they paid
as Insurance. Figure 29 illustrates the distribution.

Figure 29 Source:
Researcher’s survey

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 4.7.21 Would You Take a BBG Loan Again

The study again inquired if respondents who had taken loans from the bank before would
consider taking a loan from the bank again the 56 said they would never take a loan from the
bank again whiles 30% Yes they would still take a loan from the bank again and 14% of the
respondents said they may consider to take a loan from the bank when the need be. Figure 30
below illustrates the groupings.

Figure 30 Source: Researcher’s survey

4.7.22 Staff Turnover

The table below shows distribution of staff turnover between November 2010 and June 2012 and
it was observed that between the period more staff left the bank than join. The table below
indicates that a total of 340 permanent staff left the bank while only 41 new permanent staff
joined the bank. During the period 36 staff gained promotion countrywide while 97 new contract
staff were recruited probably to fill the spaces left by the leavers.

PROMOTIONS/CHA TEMPORAL
MONTH/YEAR LEAVERS JOINERS
NGE IN ROLES RECRUITS
Nov-10 10 8 3 15
Dec-10 9 3 0 1
Jan-11 11 1 2 0
Feb-11 32 10 0 0
Mar-11 16 3 0 32
Apr-11 50 2 0 0
May-11 15 0 4 0

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Jun-11 12 0 3 0
Jul-11 9 0 1 0
Aug-11 22 0 3 6
Sep-11 14 0 2 5
Oct-11 11 5 10 15
Nov-11 7 2 0 0
Dec-11 6 1 0 0
Jan-12 33 0 0 3
Feb-12 20 0 3 20
Mar-12 15 0 0 0
Apr-12 15 3 2 0
May-12 19 0 3 0
Jun-12 14 3 0 0

TOTAL 340 41 36 97

Table 1
Source: Compilations from Barclays Bank monthly Newsletter November 2010-June 2012

4.7.23 What Change Do you Think Barclays Needs to put in Place to Maintain Its Staff

The research indicated that 30% of the respondents would like to see performance assessment of
the bank to be more objective in order for them to stay longer, 24% of the respondents thought
that the salary needs to be improved to the market rate for them to stay, whiles 20% think that the
bank will need to think of managing its promotion well for them to stay longer and 10% felt that
job roles needs to be looked at for them to stay longer and a further 10% think that Staff loan
rates should be looked at and finally 6% of the respondent think that Retirement benefits should
be seriously looked at for them to stay. Figure 31 below gives an illustration of the various
responses

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Figure 31 Source: Researcher’s survey
4.7.24 What Change would you Recommend Barclays Needs to retain its Customers

The research inquired what respondents think Barclays needs to do to retain its customers and
attract more and figure 32 below indicates that 30% of the respondents think that the bank needs
to improve its customer service, 31% think that the bank needs to improve its complaint
Management efficiency whiles 21% think that the bank needs to relook at its Loan rates as well
as other interest rates and make it a bit customer friendly. Again 10% of the respondents think
that the bank will need to improve the technology it uses in serving customers and 8% of the
respondents said that the bank should make the account opening processes more customer
friendly.

Figure 32 Source: Researcher’s survey

XCVI
4.7.25 Analysis of Barclays Bank of Ghana Financial Figures (2006-2011)
The table 2 below shows an extract on the financial performance of Barclays Bank between 2006
and 2011.

ANALYSIS OF BARCLAYS BANK OF GHANA FINANCIAL FIGURES (2006-2011)

2006 2007 2008 2009 2010 2011

(GHS) (GHS) (GHS) (GHS) (GHS)

(GHS)
IMPAIREMENT
-3448 -5540 -46890 -60882 -20815 -6205
CHARGES
OPERATING
-41423 -66896 -125919 -152293 -114576 -105857
CHARGES
RESTRUCTURING
0 0 0 -10311 -20723 0
COST
PROFIT BEFORE
45642 52807 -9500 -24966 85626 115441
TAX
PROFIT FOR THE
31567 36594 -6795 -19661 59244 83045
YEAR
TOTAL INCOME 90513 118714 163309 188209 241741 227503
CASHFLOW FROM
OPERATING 32112 52767 54179 66830 106384 99336
ACTIVITIES
TOTAL 128201 159013
590163 1096567 1260984 1394912
LIABILITIES 4 2
146449 190699
TOTAL ASSETS 652870 119856 1384912 1637177
2 2
CASH/CASH
EQUIVALENT AT 90557 159128 346650 175544 292479 467252
END OF YEAR

NB: All amounts are expressed in Thousands of Ghana cedis

Source: Analysis from Barclays Financial Statement 2006-2011

XCVII
Figure 31 below shows the trend in increment Impairment charges, Operating cost, Restructuring
Cost, Profit before Tax, Total Profit for the Year, Total Income of the bank, Cash flow, Total
Liabilities, Total Assets as well as Total Cash/Cash Equivalent of the bank between the year 2006
and year 2011.

Figure 31 Source: Researcher’s survey

Figure 32 below also shows the trend in Impairment charges, Operating Cost Restructing Cost as
well as Profit before Tax and Total for the years between 2006 and 2011.

Figure 32 Source: Researcher’s survey

4.9 FINDINGS

The study was conducted on growth strategy challenges and its impact on profitability within the
banking sector, A case study of Barclays Bank Expansion Programme in 2006-2008. All the
necessary requirements as to procedures were followed. Data was collected and analyzed
through acceptable scientific means and the following findings were made available:

XCVIII
1. Customers and staff with rich experience as well as freshly recruited staff were contacted to
obtain primary information through scientific means.

2. The study revealed that it takes good strategy to achieving growth and having the growth
have a positive impact on the banks profitability.

3. Growth and profitability of a bank depends on effective capture of a sustainable lion share
of the market (customers and businesses) and also getting the best managed human
resource to maintain the captured market (customers and businesses).

4. Some services of banks among other things include; maintaining of current and savings
accounts, granting loans and overdraft, trade financing and management and financial
advisory services which comes with their own challenges.

5. The study further revealed that though there are problems and challenges, Barclays provide
effective financial assistance to businesses and customers in a quest to achieving growth
and profitability.

6. According to the study, some major problems facing Barclays Bank in delivery effective
services and thereby achieving a maintained growth and profitability is effective
management of its staff complaints and grievances as well as management of staff benefits
and remunerations. The rippling effect is that customer service and customer complaint
management suffers as the saying goes that a hungry man is an angry man.

7. One major problem challenge affecting Barclay’s growth and profitability is its fraud
management technics and policies. Permanent staff as well as contract and auxiliary staff
are not well remunerated hence they are unable to help much in preventing fraud through
customer service, theft as well as staff fraud.

8. Fraud is a major challenge that consistently leaks the banks profit away majority of the
fraud that has hit the bank in recent times were facilitated by staff.

9. According to the study, other banks and financial institutions provide the similar products
and services and for that matter they are a greater threat to achieving and maintaining a
high market share.

10. The problem of recruiting the best staff and maintaining them is another problem facing
banks in delivering effective services.

XCIX
 11. The problem of customer service and expectation management is a big challenge for
Barclays in delivering effective services.

12. Banks profitability depends solely on world class customer service and effective complaint
management and resolution as well as proper management of staff grievances and
expectations and also effective fraud management and prevention policies but this comes
with numerous problems.

13. The bank has obligations to their customers and staff to assist them with their needs before
achieving the profitability they aspire and it is a major challenge.

14. The study also revealed that adopting quality control management procedure is a big
challenge.

15. Staffs progression and promotions management are a major problem and results in apathy
among staff and this brings a culture of I don’t careerism.

16. On the whole, problems and challenges in managing growth and profitability are numerous
though organization cannot survive without growth and profitability.

17. Inevitable problems like customer service, staff remunerations, complaint management,
advancement in technology banking, fraud prevention and management, staff and customer
satisfaction cannot be done away with.

4.10 Discussion on Findings

In meeting requirement for the study, it demands that findings ought to discuss therefore salient
findings in this study are discussed shortly.

1. The finding indicated that to ensure effective management of growth and profitability, there
is a need to allocate resource to individuals who are assigned to responsible position.
Resource allocation arises as an issue because the resources of an organisation are in limited
supply, whereas human wants are usually unlimited, and because any given resource can
have many alternative uses. In planned economies and in the public sectors of mixed
economies, the decisions regarding resource distribution are political. Within the limits of
existing technology, the aim of any economizing agency is to allocate resources in a manner
that obtains the maximum possible output from a given combination of resources whilst in
banking and financial institution, resources is the base for delivering results.

C
2. It was also revealed that it has been difficult to maintain sustainable growth and profitability.
Research from most materials indicates that a greater part of the population in Ghana is
unbanked. Majority of the funds of the unbanked can be a good resource for banks to invest
in other areas as majority of such funds can be referred to as a free money sought of and
there is a need for banks to do more education on the need for them to have a bank account
and also reassure the unbanked population who have cynical mind-set about bankers on the
need to trust the banks and entrust their finances in their care.

3. In a banking world where income wholly depends on customer activities, retaining customer
trust is a very key measure to having a sustainable share of the market. In order to maintain a
sustainable share of the market, it is important to have an excellent array of staff very well
trained in the field of customer service and also very well motivated to effectively handle
customer service issues. Customer complaint management and resolution is also very
important to customer satisfaction. Staff motivation is very important to effective customer
service. The saying goes that a hungry man is an angry man hence failure of the bank to
motivate their staff well will affect their customer service drive as the staff will see no reason
to give off their best when management is not giving them the best of service.

4. The research found that Barclays bank Ghana had High Employee turnover due to low
remunerations as compared to other competitor banks. Staff of the bank were also concerned
that the bank didn’t seem to have any proper way recognising hard work and motivating staff
to stay.
5. The research also found that the best way to reducing Human Resource Turnover is to
making the staff feel needed and appreciated for the work and effort they put in the
organisation. A little bit of motivation such as improvement in benefits as well as low loan
interest rates for staff loan, very good healthcare and education benefits are sure ways of
making staff satisfied and committed to the bank.
6. The problem according to the study sometimes facing banks is acquisition of multi skills.
Diversity skills are useful strategies and techniques that help banks to understand and deal
with customer needs and expectations. Effective interaction requires a receptive attitude, a
degree of sympathy, active listening, and broad awareness of other cultures, values, identities
and perspectives. Using and practicing these skills can enhance communication resulting in
increased understanding of customer needs and how to meet them. With an open mind and
willingness to reach out to customers, banks will on their way to successfully applying

CI
 diversity skills to any group of target customers and in the end will earn their trust as well as
their business and eventually increase their growth and profitability.
7. Fraud prevention and management is also key to a sustainable growth and profitability.
Failure of banks to institute a very smart fraud prevention scheme and policy will
consistently expose the bank to fraud and potential fraudulent activities that have a potential
of even collapsing the bank as customers can lose trust in the ability of the bank to manage
their funds. Besides customers loosing trust consistently, impairment charges would like go
up.
8. Technology had changed the way people obtain financial services. It has also saved time and
money allowing people to conduct banking efficiently. Technology has helped banking
transform from bulk paper and waste to paperless communication and means of transferring
funds. The technology evolved includes telephone banking (telephone technology), credit
cards, debit cards (money transfer technology), electronic money, and automatic teller
machines. These technologies have created efficiency and time saving methods of conducting
business for people. Some importantly, technology has led to tighter security and safer
methods of conducting business for everyone. Bank security or compliance officers use
computers and technology to help ensure that banks understand, follows guidelines and
control the risk of the complex and new world of financial services. Security has changed
over many years through the advancement of technology, evolving from manual examining
fraudulent activities to using advanced computers and programs that can identify fraudulent
activities, checks, and even viruses(new age threat to banking). Technology advancement in
banks has led to convenience, speed time saving and cheaper methods of conducting
banking. Today, many people are slowly deleting traditional methods of utilizing financial
services or money such as the change from checks to debit/credit cards and automatic
payments.
9. The research also found that the country benefits when financial Institutions of the country
grow and become profitable. This is because, the more profit an organisation makes the more
tax they pay to government. Again the more financial institutions grow, the more
opportunities for employment avails itself and by so doing it helps to reduce the
unemployment burden of the nation. For instance in the case of the expansion programme of
Barclays bank between 2006 and 2008, many unemployed university graduates at the time
had the opportunity to get some employment and thus in that case reduced unemployment
level somehow in the years under review. Again as more and more people gain employment,

CII
 income tax collections of the nation improves and more money is available to government for
development.
10. The research also indicated that the more profitable a bank or any organisation, the more the
organisation thinks of alternate measures to retaining the customers they have and win the
hearts of more customers to the banks or organisations. This in effect leads to improved
customer service.

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 CHAPTER FIVE

RECOMMENDATIONS

5.1 Recommendations

The following recommendations are considered helpful for the study:

1. Change management is big challenges to most organisations as that call for effective
brainstorming and for that matter is recommend that Barclays Bank should adopt strategies to
meet organizational demand irrespective of any change in order to achieve growth and
profitability.
2. The success of every organization, public or private, depends largely on the availability and
quality of well-motivated human resource. Financial motivation and other forms of
motivation in the form of rewards and recognitions are used by organizations to achieve
higher productivity. It is believed that, money is a crucial factor in motivating people in
organizations, of which Barclays is no exception. Most companies are able to meet set targets
or even exceed because they have attractive reward and recognition systems for employees
(Maund, 2001).
3. The notion of taking good care of your customers and employees is hardly new; the passion
for delivering on this promise permeates every aspect of the company’s operations. The
success of an organization is not based on technical proficiency or a complicated business
model,” Andy Taylor says, “We derive our success from careful adherence to a commonsense
approach: We treat our customers well, we give our employees respect and opportunities to
grow, and we know that if we stick to these two rules, profits and growth will naturally
follow.”(Kazanjian, Kirk; 2007 Exceeding Customer Expectations)
4. A critical analysis of the staff education background indicates that many of the staff of
Barclays Bank came into the bank with First degree and many of those have acquired a
second degree. Many of them are in the B1 (tellers) and contract grade. With improved
number of years of working experience and with improved educational qualification many of
these staff who also expressed desire to leave in the research may leave if not well motivated.
This means that the bank is training good brains for competitors to tap into.
5. Employee-friendly organizations that value, empower, recognize, enable, provide feedback
to, and fairly pay their employees will not have a recruiting or an employee turnover
problem.
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6. Yes, employees are more difficult to find, especially employees with Web, software
development, IT, and science experience, and in some career fields the rate of college
graduation is way below what the world needs universities to produce. But "good" companies
will attract employees more successfully than others. "Good" companies will experience less
employee turnover.

7. Accurate appraisals are crucial for the evaluation of recruitment, selection, and training
procedures that lead to improved performance. Appraisal can determine training needs and
occasionally, counselling needs. It can also increase employee motivation through the
feedback process and may provide an evaluation of working conditions, thus, improving
employee productivity, by encouraging the strong areas and modifying the weak ones. When
effective, the appraisal process reinforces the individual’s sense of personal worth and assists
in developing his/her aspirations. According to Maund (2001), ‘‘Appraisal is the analysis of
the successes and failures of an employee and the assessment of their suitability for training
and promotion in the future and Performance Appraisal was introduced in the early 1970s in
an attempt to put formal and systematic framework on what was formerly a casual issue’’.
Appraisal can be used to improve current performance, provide feedback, increase
motivation, identify training needs, identify potentials, and let individuals know what is
expected of them, focus on career development, award salary increases, and solve job
problems. Performance appraisals help in a very practical way to manage an organization’s
staff effectively.

8. Competitive salary, competitive vacation and holidays, and tuition reimbursement

(employees want time off for work-life balance and the chance to grow professionally) are
three basics in employee retention. Creativity in compensation and benefits can make quite a
difference to the welfare of the employee. Barclays should assess overall employee needs
when addressing retention issues.

9. Putting the customer at the heart of everything we do is a key business goal for every
organization. Organisations should aspire to take customer complaints and take pride and
passion to resolve them accurately and quickly. The customer needs some honesty from his
bank. The customer must understand why he is being charged for A or B and how much. He

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 needs a better explanation to why he has X amount debited as pineal charges from his
account.
10. Fraud and other syndicated activities are becoming more frequent and sophisticated. The
impact is either financial or reputational. The solution is Improved staff awareness, improved
internal control environment and a motivated staff. One key to prevent fraud is to pro-
actively provide expert advice on fraud, protect the business’s total business value and build
staff collective capacity to do same, ensuring that the organisation’s operations is
continuously sustainable, robust and fraud-free. Fraud losses sustained under the period of
review were largely due to failure of staff to follow due process and failure to pursue or
investigate suspicious incidents. Organisations must be able to minimise or reduce
opportunities available to commit fraud and increase the likelihood of early detection by
establishing detection and prevention strategies that identify and improve controls.

11. Barclays must ensure that Fraud policy and fraud prevention plan is maintained and adhered
to. Each team member must be aware of the plan and understand their roles and
responsibilities with regard to preventing fraud.

12. Brainstorm possible solutions: The first step in the problem-solving process is to take the
data and brainstorm possible solutions to the problems that the data raises. Although Bankers
could brainstorm by themselves, it is recommended that they get a much wider variety of
options and possibly include their clients in their brainstorming sessions, and this can begin
by building client buy-in to their recommendations.

CHAPTER SIX

SUMMARY AND CONCLUSION

6.1 Summary of Thesis

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The research was conducted on growth strategy and its impact on profitability within the banking
sector with Barclays bank of Ghana’s expansion programme from 2006-2008 as a selected case
study. The research wanted to know the effects expansion (branch expansions) has on the growth
and profitability of an organization in this case, the research wanted to find out the impact
Barclays expansion programme between 2006 and 2008 had on the growth and profitability of
the bank.

The research set out to investigate the following specific objectives which included: To examine
the nature of the challenges the strategy faced; to examine alternate strategies which could have
been considered to arrive at the same conclusion or even a better growth conclusion. Another
was to examine why there is a high human resource turnover of Barclays bank of Ghana. The
research examined the effects of the Profitability of a bank on National Development. The
research again examined the effects of Profitability on The Tax Net of the Nation. The research
also inquired on the Effects of Profitability on Service Quality and Customer Service.

The important questions the research wanted to unravel included: Can organisations run easily
without growth; Can an organization survive without Profitability; Can consultancy services help
organizations achieve mission and enhance vision?; and also What the expected impact the study
will bring?

Important articles were also examined to find out previous research done on related topics.

The research find out that there are various means organizations can achieve growth and
profitability which include going into Joint Venture/Alliance; branch expansion; Licensing;
going into new markets; developing new products and services; as well looking for Outside
Financing.

The research identified that in a quest to achieve growth and profitability Barclays bank of
Ghana embarked on a massive branch and agency expansion programme during which over
thirty (30) new branches and urgencies as well as sales Centres were added to the existing
branches the bank had. The bank also increased the number of ATMs it had country making the
bank one of the most accessible banks in the country.

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The bank also increased the number of products it had in a quest to attracting more customers.
Some new products introduced included the Abapa Savings/ Current accounts, Scheme Loans
and many others. Some other old products were improved to make it more attractive to
customers. The bank also employed a lot of unemployed graduates from the various Polytechnics
and universities as direct sales agent. The sales agents were tasked to meet customers in their
homes, offices, market places and every available location and sell the banks products such as
Student Accounts, Instant Savings accounts, Bonus savings accounts, Fixed deposits, Barclays
Loans, Scheme Loans as well as Business Loans.

The research identified that customers could for instant open nill balance accounts and the bank
was paying the sales agents based on the number of accounts they opened. The agents also had a
target of Barclay Loans, Scheme Loans and Business Loans to sell in a month and they were paid
commissions on these parameters.

The research identified that this approach of the bank made the bank very accessible and many
previously none account holders took advantage and opened accounts with Barclays Bank. Many
customers took advantage of the banks’ loan products and took loans from the Bank to expand
their businesses and also solved other household challenges.

The research also identified that the bank in a quest to achieving growth and profitability forgot
its controls and also its human resource management. For instance the research identified that
through the opening up the opportunities for customers to open nill balance accounts, the bank
incurred huge cost as majority of the nill balance accounts opened were eventually not funded
and thus in effective the bank spent more money opening accounts and eventually incurred
losses. Many of the account also ended up being fraudulent accounts as the bank had no proper
way of verifying the identity cards presented by the customers for opening the accounts. Many of
the accounts which were used for fraudulent transactions happen to have been opened with ID
cards which could not be verified. Many like employee ID cards as well as Voters ID cards were
cards that were created but fraudsters with an intention to opening the accounts specifically to
commit fraud and since the bank had no means of identifying the genuinty or otherwise of the
cards. Again Barclay Loans were opened to all salaried workers whether their salaries could be
verified or not and fraudsters took advantage of this loophole and considering the fact that the
one the id cards used to open the accounts were in many cases just generated for them by

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fraudsters and also they bank had no way of verifying the salaries of the salaried customers,
customers opened fraudulent accounts and used the same accounts which in many cases had seen
just about a month or two or at worse three months salaries and took loans through these
accounts.

Customers who could open business accounts had a bomper harvest. A customer could open
business account with a about 50 Ghana cedis and above and depending on the turnover of the
accounts the customer could take a loan initially after three months and later after six months
without any collateral. Many opened fraudulent business accounts, massaged account turnovers
and took huge business loans which were even at lower rates. The contact addresses, house
numbers, and sometimes phone numbers and business registration documents used to open the
accounts were falsified. This made it difficult to retrieve a greater percentage of the business
loans given out by the bank. Till date Barclays Bank of Ghana is unable to give Business loans to
its business customers and as a result has lost many of its business customers is still struggling to
recall the old ones and convincing new business customers.

The research also identified that the bank experienced great losses during this period as a result
of increased staff fraud, increases bad loans, increased fraudulent withdrawals. Staff motivation
was also at an all-time low and since the loop-holes were many and sometimes difficult to trace
who even used the loop-hole, many staff and customers took advantage and committed a lot of
fraud.

The study identified that staff promotions and motivation was one of the least important issues to
management. This also resulted in an increased staff exodus and many of the staff who departed
were those with huge experience and had great ideas the bank could have maintained to help
solving some of the challenges they encountered.

The research also revealed that growth and profitability of organizations and banks has a rippling
effect on national development in general. When organizations (banks) embark on growth-
expansions it opens doors of employment for unemployed in the society and the national
unemployment burden is reduced. Again organizational growth and profitability has a positive
impact on the National Gross Demestic Product (GDP) growth as well as improvement in the
profits organization (bank) will pay to the national covers. More tax payment to government

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means that government will be able to fund a lot of the projects it projected to do during the year.
This eventually improves the national growth rate and improves the National image and also
encourages more and more investors to invest in the country.

Growth is something for which most companies strive, regardless of their size. Small firms want
to get big, big firms want to get bigger. Indeed, companies have to grow at least a bit every year
in order to accommodate the increased expenses that develop over time. With the passage of
time, salaries increase and the costs of employment benefits rise as well. Even if no other
company expenses rise, these two cost areas almost always increase over time. It is not always
possible to pass along these increased costs to customers and clients in the form of higher prices.
Consequently, growth must occur if the business wishes to keep up. Organizational growth has
the potential to provide small businesses with a myriad of benefits, including things like greater
efficiencies from economies of scale, increased power, a greater ability to withstand market
fluctuations, an increased survival rate, greater profits, and increased prestige for organizational
members. Many small firms desire growth because it is seen generally as a sign of success,
progress. Organizational growth is, in fact, used as one indicator of effectiveness for small
businesses and is a fundamental concern of many practicing managers.

6.2 Conclusion

According to the study Organizational growth may have the potential to provide businesses with
a myriad of benefits, including things like greater efficiencies from economies of scale, increased
power a greater ability to withstand market fluctuations, an increased survival rate, greater
profits, and increased prestige for organizational members. Many firms desire growth because it
is seen generally as a sign of success, progress. Organizational growth is, in fact, used as one
indicator of effectiveness for small businesses and is a fundamental concern of many practicing
managers. Expansion may contribute to the growth of an organisation. Profitability is the primary
goal of all business ventures. Without profitability the business will not survive in the long term.
Measuring current and past profitability and projecting future profitability is very important.

Profitability is measured with income and expenses. Income is money from the activities of the
business. Profitability is measured with income statement. This is essentially a listing of income

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and expenses during a period of time (usually a year) for the entire business. Profitability can
either be accounting profits or economic profits.

However as seen in the discussions above, it does not always result in positive growth. The
management of organisational growth through infrastructure must be combined with effective
new infrastructures. There should be good policies in place to effectively manage the human
resources in order to mitigate demotivation. Human resource needs constant motivation to
perform. The human needs and wants are constantly insatiable. For the human resource to
effectively deliver it needs to constantly be motivated. Customer service is also a key to
succeeding in the banking financial environment where virtually all the banks offer similar
products. The key to succeeding and taking the lion’s share of the market is customer service
among the competition. Opening of new branches may be a key to give access to customers in
every area in the society however without excellent customer service, none will enter any of the
locations and the bank with the best service will always attract the best of customers and get their
businesses and eventually be the most profitable. Also if the customers enter the banking hall
they need human beings to serve them and if those humans are not well motivated and are also
not thought to know that the customer pays their salaries the customers may not receive the best
of service and eventually may not stay and may go banks where the staff are well motivated and
understand and desire to offer the best of service to their customers.

Archiving growth and profitability comes with so many challenges among few which the study
discovered as: acquisition of multi-skilled labour, staff needs management, resource acquisition,
and strategic alliance formation, managing customer relationship and customer complaints
management and resolution, effective fraud prevention and management and the determination
of business success. Based on the above challenges relevant recommendations and suggestions
were given.

In conclusion, banks face numerous problems and challenges in effectively managing growth and
profitability though some of these problems can be mitigated and managed, others are inevitable
being human institution.

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 REFERENCES

1. Valentina Flamini et al., 2009

2. http://www.inc.com/encyclopedia/organizational-growth.html (19th May, 2012)
3. http://www.modernghana.com/news/169055/1/traditional-banks-facing-stiff-competition-
survey.html 7th July, 2012
4. http://www.imf.org/external/pubs/ft/wp/2009/wp0915.pdf 7th July 2012
5. Al-Haschimi (2007
6. Gelos (2006)
7. Barclays Bank Advanced Operations Management Participant WorkBook
8. http://www.gipcghana.com/gc100/rankings.php?
data=fsd54fsfdpoli3kuldhuwdfh678&cm=14&yr=2008 7th July, 2012
9. Barclays Sanctions Training/ Emerging Markets Relationship Manager Module, February
2009
10. Barclays Emerging Market AML policy August 2007
11. Michele Jensen, 2012
12. http://www.ghanabusinessnews.com/2009/06/16/barclays-bank-loses-gh%C2%A2469m-
to-fraudsters-loan-defaulters-in-2008-survey/
13. Barclays Bank monthly Newsletter November 2010-June 2012
14. Kazanjian, Kirk; 2007 Exceeding Customer Expectations)
15. Maund, 2001
16. Torrington and Hall (1998)
17. Sterlington Kofi Horsoo

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18. Kablan (2007)
19. Mostafa (2008)
20. http://humanresources.about.com/b/2009/10/22/reduce-employee-turnover.htm
21. http://www.missouribusiness.net/sbtdc/docs/reducing_employee_turnover.asp
22. The Conference Board CEO Challenge 2011 survey.
23. The next decade in global wealth among millionaire households, Deloitte, May 2011.
24. New Rules: The Crisis Has Changed Consumer Behavior, David Calhoun Chairman and
CEO,
25. The Nielsen Company.
26. The United States in 2020 A Very Different Place, Nielsen, 2009.
27. Deloitte analysis; The Federal Reserve Survey of Consumer Finances 2007; The Federal.
28. Reserve Balance Sheet of Households and Nonprofit Organizations 2008–2010;
29. Flow of Funds Overview, Bank of Japan 2011; Investment News; Spectrem Group.
30. www.accenture.com

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 APPENDIX I

QUESTIONNAIRE

GROWTH STRATEGY CHALLENGES AND ITS IMPACT ON PROFITABILITY

WITHIN THE BANKING SECTOR A CASE STUDY OF BARCLAYS BANK OF GHANA
EXPANSION PROGRAMME FROM 2006-2008

The researcher is conducting a study on Growth Strategy challenges and its Impact on
Profitability within the Banking Sector in Ghana. A case of Barclays Bank of Ghana Expansion
Programme from 2006-2008, and would be grateful if you could help in providing information to
this effect by responding to the following questions. All data provided by you shall be used
purposely for academic endeavour and kept strictly confidential.

Please do not write your name:

Personal Information

1. What is your age?

a. 18-29 b. 30-39 c. 40-49 d. 50-59 e. 60- above

2. Gender?
a. Male b. Female

3. Marital Status
a. Married b. Single c. Divorced d. Widow/Widower

4. What is your highest educational level attained?

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 a. Basic School b. JHS d. Secondary/Vocational/Technical e. Tertiary (Poly-
technique/University)

5. What is your occupation?

a. Student b. Self-employed c. Government worker d. Private sector employee
e. other

Customer Relationship with Barclays Bank

6. Are you a customer of Barclays Bank?

a. Yes b. No

7. Would you consider opening an account with Barclays in future?

a. Yes b. No c. Not sure

8. If yes to question 7 above, have you enjoyed your relationship with Barclays?
a. Yes b. No c. Maybe d. Not sure

9. What do you like about your relationship with Barclays

a. Customer service b. Products c. Ease of access/Number of branches and Locations
d. Loan structure and processing e. The brand name f. The charges as compared to
other banks

10. What do you dislike about your relationship with Barclays Bank?
a. Customer service b. Products c. Services d. Loan structure and processing
e. The brand name f. The charges as compared to other banks g. Loan
repayment terms

11. How easy or otherwise was it to open an account with Barclays

a. Very easy b. Easy c. Quite Okay d. Difficult f. Frustrating

12. What processes of the account opening process excited you

a. Documentation requirements b. Timing of opening of the account c. Minimum balance
for opening account d. Packages included in the accounts. E. None

13. What processes of the account opening did you not like
a. Documentation requirements b. Timing of opening of the account c. Minimum balance
for opening account d. Packages included in the accounts. E. None

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14. Have you taken a loan from Barclays before?

A. Yes B. No

15. When did you take the loan?

a. Before 2000 b. Between 2001-2004 c. Between 2005-2008 d-Between 2009-2012

16. If No to question 14 above would you consider taking a Loan from Barclays in future?
a. Yes b. No c. maybe d. Not sure

17. If yes to question 14 above, What type of Loan did you take
a. Staff loan b. Barclay Loan c. Scheme Loan d. Customer car Loan
e. Customer Mortgage Loan f. Other (Please specify) ……………………..

18. How easy or otherwise was it for you to take a loan from Barclays

a. Difficult b. Very difficult c. Easy. Manageable

19. How many times have you taken a loan from Barclays Bank
a. Once b. Twice c. Three types d. More than four times

20. Do you like the repayment terms

a. Yes b. No c. Somehow. D. Not sure
21. What do you dislike about the repayment terms?
a. Number of yrs. for repayment b. Insurance percentage c. Interest rate d.
Percentage deducted as Loan fees

22. Would you consider taking a loan with Barclays Again?

a. Yes b. No c. Maybe d. Not sure

23. Do you Like the Expansion Done between 2006-2008

a. Yes b. No c. Don’
24. What do you Like about the Expansion
a. Ease of Access/Closeness b.
Wide Network

25. Would you consider taking a loan with Barclays again

a. Yes b. No c. Maybe d. Not sure

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 26. Do you Like the Expansion done in 2006-2008
a. Yes b. No c. Don’t Care

27. What do you Like about the Expansion?

a. Ease of Access/Closeness b. Wide Network c. Job Openings d. Customer Service e.
Scheme/Barclay Loans f. Business Loans g. Fixed Deposits h. Account Change/Interest
Charges

28. What should Barclays do to Retain Customers

a. Improve Customer service b. Loan Rates/ Interest rates c. Complaint management
improvement d. Make account Opening a bit friendly. E. Technology improvement for
service

FOR STAFF ONLY

1. What is your age?

b. 18-29 b. 30-39 c. 40-49 d. 50-59 e. 60- above

2. Gender?
b. Male b. Female

3. Marital Status
b. Married b. Single c. Divorced d. Widow/Widower

4. What educational qualification did you enter Barclays with?

a. Secondary/Vocational/Technical b. Polytechnic qualification c. First degree d.
Maters (MSc, MA, MBA)

5. What is your current educational qualification?

a. Secondary/Vocational/Technical b. Polytechnic qualification c. First degree d.

Maters (MSc, MA, MBA)

6. When did you join Barclays Bank?

a. Before 1990 b. Between 1991-1996 c. Between 1997 – 2000
d. Between 2001 – 2005 e. 2006 to present

7. Why did you join Barclays?

a. Salary b. The brand name c. Had no Job d. I was poched

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8. What qualification did you enter Barclays with?
a. Basic School b. JHS c. Secondary/Vocational/Technical d. Tertiary (Poly-
technique/University First degree) e. Masters (MBA/MA/MSc others)
9. What is your current qualification

10. What is your current Grade ?

a. Contract b. B1 c. B2 d. B3 e. B4 f. B5

11. How long have you acted in your current role?

a. Less than 1 yr b. between 1 and 2yrs c. between 2yrs and 4yrs d. 5yrs -6yrs
e. 6yrs-10yrs f. above 10yrs

12. Have you gained a promotion before

a. Yes b. No

13. If yes how long did it take be4 your first promotion?
a. Less than 2yrs b. Between 2yrs & 5yrs c. Between 5yrs & 10yrs d. Above
10yrs

14. Have you thought of leaving the bank?

a. Yes b. No

15. How soon?

a. As soon as I find a new job b. In the next one yr c. between 2yrs and 5yrs d. Till
I retire

16. Why would you want to leave?

a. Conditions of service b. salary c. the working environment d.
progression e. Please specify

17. Have you regretted joining Barclays Bank?

a. Yes b. Somehow c. No d. Not really e. Other (please specify)
…………..
18. What Should Barclays do to retain staff?
a. Salary should be as Market Rates b. Performance assessment should be more
Objective c. Improve Promotions Management d. Re-define job roles. E.
Retirement benefits improvement f. Staff Loan rates should reduce

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CXIX
APPENDIX II

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CXXII
The figures above are the financial statements of Barclays Bank between 2006 and 2011.

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29.

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