The Future of Banking

Banking is changing fast. It has taken itself out of its traditional fit of branching. Mobile handsets held by millions of Ethiopians have now evolved to be branches in their own right. It however is doubtful whether Ethiopian banks recognise the changed face of their businesses. Many of them are still investing in constructing huge edifices with a budgetary outlays of millions of Birr.

Mobile banking is growing at an accelerated scale thus requiring professional assessment as to which way banks should be going in the not too distant future. Remittance money transfer, current account transactions and checking the balances of savings are being handled automatically, courtesy the development of technology.

This trend seems to continue even more widely and deeply. It obviously gives a clue of making space and of personnel becoming more and more redundant.

Balancing expenditure and economizing on capital outlays is one of the responsibilities of efficient utilization of resources. And this implies that any kind of development planning depends on careful planning of the use of resources.

I have a hunch that managers of banks and insurance companies may take it that investing in multi-storey constructions at the hub of the capital could be one way of promoting their business by implicitly assuring their clients that they are safe places to save money or to do their business.

Unconfirmed reports reveal that one of the fast growing private banks in the capital has a plan to construct a 40-storey structure in the middle of the metropolis. In fact, there are reports that City Hall officials could not respond positively to the request made by the bank. City Hall could have more pertinent reasons not to handle the request. But I have my own observations to  pose from the different perspectives that need the evaluation of well seasoned and professional planners.

Let us consider the need for staffing the bank with personnel in the light of the trend of mobile banking and share companies. It goes without saying that the rate of recruiting staff cannot be commensurate with the requirements of the bank.

Apart from the panoramic aspect of the capital, we cannot forget the structural construction aspect itself. Assuming that the private bank has decided to go forward and construct the huge building, the first of its kind in the capital, the contract will most probably be given to a expatriate company with vast experience in such engagements. The payment will not only be in foreign currency but all the fittings and accessories will also be imported from abroad. The duration of the construction itself will evidently take more time than any other building in the city, if not in the country.

As I have mentioned, the Mayor of the city may have his own justification not to reply to the request for land. But my own thoughts about building such a misplaced edifice, are that it does not require land for the actual building only. If the economy grows sustainably at the rate of double digits, we need to have parking areas both for clients and the bankers. Unless it is designed to have the parking lot underground, the edifice needs a large plot of land for parking.

Are the shareholders ready to own the extra land on a lease base with a fair price?

Banks may need building space at one place, but the future of banks may concentrate at the ground level offices at the different sites of industrial parks for the sake of the clients. Customers may not have to drive all the way to the tallest building for casual transactions.

Another aspect would be the automation of insurance services and the unreliable source of a constant and sustainable supply of utilities, both at the level of the bank and at the level of the City. One can imagine the problems to be faced should there be any power interruption at any time. The same could be said for water also.

I cannot forget the problem we sustained when we moved to our seven-storey office building in 1968. Enginners at AAWSA had told us the nearest water reservoir, located at the western end of the Prince Mekonnen Hospital, as it was then called, was not level with the building. Water always finds its own level. Hence, we had to acquire a pumping device to pump the water up to the seventh floor. Imagine the 40-storey building without water flowing in every bathroom.

Last but not least, one cannot forget that in case the requested plot of land is leased, there can be misappropriation costs or compensation for those to be evicted. Relocation of utility lines and pipes should also be considered. These all show that investing in such an edifice may not be justified in light of the future of banking.

Anyway, I trust you all had a Merry Christmas!

By Girma Feyissa

Published on Jan 11,2016 [ Vol 16 ,No 819]



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