In an era where digital transformation drives competitiveness, Ghanaian banks and financial technology companies face a critical imperative to evolve. Despite notable advancements in recent years, the financial services industry in Ghana still faces significant technological gaps which pose a threat to the sector’s ability to deliver innovative services required to maintain a competitive edge.

It is essential that banks today leverage cutting-edge technology to streamline operations, enhance customer experience, and unlock new revenue streams. Digital transformation offers a pathway to operational efficiency, real-time data analytics, personalized banking services, and robust security frameworks.

The rise of fintech companies including modern challenger start-up banks and innovators has fostered a need for rapid digitisation within the traditional financial services industry. These new companies offer products and services very similar to traditional banks, but often in a faster and more user-friendly way. While fintech can potentially benefit consumers by increasing efficiency and potentially lowering costs, it also creates new competition for traditional banks that are facing pressure to compete on a global scale, adding complexity to an already intricate financial landscape.

During a recently held breakfast event for the financial services industry hosted by MainOne in Ghana, Business Development Senior Manager at Equinix, Adrian Mountstephens explained how banks have had to adapt and compete in a rapidly evolving landscape, all while navigating stricter regulations following the global financial crisis which occurred in 2008 and exposed how a global structure of banking built with inherent weaknesses can collapse and cause a catastrophic ripple effect around the world.

“The increase in risk and complexity led to stricter regulations and the banks had to respond to this crisis by tightening their grip on risk and finance globally and they now face stricter capital requirements and closer scrutiny than they ever have done before. We have since seen huge shifts in the technology landscape with the emergence of public cloud and Software as a Service (SaaS),” he said.

Charting the Course: Embracing Digital Transformation

The journey toward digital transformation is fraught with challenges. Key among them are:

1. Outdated IT Infrastructure: According to Deloitte's report on ‘Digital Transformation in Banking’, legacy systems pose a major hurdle for banks aiming to modernize their operations. The cost of maintaining these systems, combined with their limited capabilities, significantly impedes digital transformation efforts. Many Ghanaian banks operate on legacy systems that lack the agility and scalability required to support modern banking operations. These outdated systems are costly to maintain and impede the adoption of new technologies.

• Security Concerns and Data Domiciliation: In a Global State of Information Security Survey conducted by PwC, it was revealed that due to evolving technology, there is a growing importance of cybersecurity in the financial sector. The report highlights that banks face significant risks from cyber threats, which can compromise customer data and disrupt operations, therefore, ensuring the security of customer data is paramount. Banks face significant risks from cyber threats, and the regulatory requirement for data to be domiciled within the country adds an additional layer of complexity.

• Complex Regulatory Frameworks: Navigating the regulatory landscape in Ghana presents a unique set of challenges. Compliance with local and international regulations requires robust and adaptable IT solutions. EY's report, "Navigating Regulatory Complexity in Banking," discusses the challenges banks face in complying with local and international regulations. The report highlights that the regulatory landscape in Ghana is multifaceted, requiring banks to implement adaptable and compliant IT solutions.

During a panel discussion at the breakfast session themed ‘Accelerating digital transformation in the financial services sector’, industry experts proffered solutions to these challenges some of which include:

1. Infrastructure Upgrades and Development: Upgrading the existing IT infrastructure is critical for banks to support modern banking operations. Transitioning from legacy systems to advanced, scalable, and agile IT infrastructure enables banks to implement new technologies such as artificial intelligence, blockchain, and big data analytics. Cloud migration strategies can be adopted to leverage the scalability and agility of cloud-based solutions offered by providers like Amazon Web Services (AWS) or Microsoft Azure. These technologies allow banks to enhance their operational efficiency, quickly adapt to market changes and customer demands and improve customer experience.

2. Collaborative Approach to Regulatory Frameworks: Developing robust regulatory frameworks that are both comprehensive and adaptable is essential. Financial Institutions must work closely with regulators to understand evolving regulations and proactively implement IT solutions that ensure compliance with local and international regulations while maintaining operational efficiency. Investing in flexible and adaptable IT infrastructure like containerization technologies, can further aid banks in adapting to changing regulatory requirements.

3. Prioritize Data Security and Domiciliation: Banks must prioritise data security while complying with local regulations requiring customer data to be stored in-country. This can be achieved by implementing secure, locally compliant IT solutions that protect customer data from cyber threats. Solutions like data encryption and intrusion detection systems can be employed to strengthen cybersecurity measures. Collaboration with local data centre providers can ensure compliance with data residency requirements while maintaining state-of-the-art security.

4. Managed Services for Infrastructure Management: Outsourcing infrastructure management to third-party data centres or colocation providers allows banks to benefit from specialized expertise and advanced infrastructure without the burden of managing it in-house. This includes housing servers, storage, and networking equipment in secure, controlled environments provided by data centres such as MainOne’s Appolonia data centre which provides access to state-of-the-art security measures and reliable power and cooling systems. This reduces the costs associated with maintaining and upgrading in-house infrastructure while allowing banks to focus on their core business activities.

5. Strategic Collaborations and Partnerships: Collaborating with IT players and other stakeholders in the financial ecosystem can significantly aid digital transformation. Partnerships with technology providers, fintech companies, and regulatory bodies can provide banks with access to cutting-edge technologies, expertise, and resources necessary for digital transformation. It will also help them streamline operations through shared resources and help them stay competitive.

The Future of Ghanaian Banking

By embracing digital transformation, Ghanaian banks can position themselves to deliver a more inclusive and efficient financial services ecosystem for success in the competitive global landscape.

This transformation journey requires collaboration and technology providers play a crucial role. MainOne, an Equinix company, a leading provider of communications and data centre solutions in West Africa, is well positioned as a capable partner committed to enabling this transformation. The MDXi Appolonia data centre facility offers a secure, scalable, and compliant infrastructure that empowers banks to securely connect with a network of technology providers to accelerate their digital transformation strategies. The Tier III certified facility also offers Cloud solutions to enable Ghanaian banks to leverage the expertise and resources of technology providers through cloud-based platforms. This allows for easier access to cutting-edge technologies and eliminates the need for significant upfront investments in IT infrastructure.

Equinix's ownership of MainOne provides Ghanaian financial institutions with unparalleled access to global and regional markets. Equinix's extensive network of 260 data centres in 71 metros and 33 countries enables businesses to connect to a vast ecosystem of potential partners and customers, enabling them to expand their reach and seize new opportunities.

To learn more about how MainOne’s role in enabling digital transformation in Ghana visit www.mainone.net/ghana

About MainOne, an Equinix Company:

MainOne, an Equinix Company is a leading West African connectivity and data center solutions provider, recognized for delivering innovative services that empower digital transformation within West Africa and beyond. As an Equinix Company, MainOne is committed to accelerating the growth of digital economies by providing top-tier data center services, network connectivity solutions, and cloud services. The organization's objectives align with the overarching goal of enhancing Internet accessibility, reliability, and affordability for businesses and individuals. Learn more at: www.mainone.net