Ghana’s central bank plans to integrate Business Model Analysis (BMA) into its supervisory frameworks. This initiative aims to help supervisors identify vulnerabilities in banks at an early stage, ensuring their stability, safety, and long-term soundness.
BMA, the Bank of Ghana (BoG) Governor, Dr. Ernest Addison indicates can help a central bank understand a bank’s business model and the risks it poses.
Further, a well-designed and comprehensive BMA approach provides banks with the basis to understand, analyse, assess the sustainability of their business models, enhance proactive, forward-looking operations, and strategy evaluation, he noted.
Speaking atthe 28th National Banking and Ethics Conference in Accra under the auspices of the Chartered Institute of Bankers(CIB), Dr. Addison disclosed that “Going forward, the Bank is incorporating Business Model Analysis (BMA) as a key component of its supervisory frameworks to enable supervisors identify banks’ vulnerabilities at an early stage and helps to ensure their safety and soundness.
We have recently issued an exposure draft of our methodology for assessing the viability of banks business model to the industry, which we will soon finalise for adoption. Business model analysis has the potential to enhance bank supervision and make it more effective, proactive and forward-looking, and would be our next examination thematic review next year.”
Acknowledging the prominence digital banking is gaining, the central bank governor indicated that it’s associated risks have become imminent, stressing that data privacy and security risk, cyber threats and the consequent potential liabilities and reputational risks pose significant danger to financial stability.
This, he adds has required intensification of efforts to establish robust cybersecurity frameworks across the sector.
“In view of this, the Bank recently launched the Financial Industry Command Security Operations Centre (FISOC) to improve cybersecurity resilience in the banking sector. In addition, banks are being encouraged to invest in advanced technologies and capacity-building to keep pace with the rapid digital transformation, while maintaining comprehensive cybersecurity frameworks to prevent breaches and ensure data privacy.”
According to the BoG boss, the path to resilience requires collaboration, innovation, and, most importantly, an unwavering commitment to ethical principles, urging “Let us work together to fortify our banking sector, to anticipate and navigate the risks on the horizon, and build a financial system that serves as a pillar of strength for Ghana’s economy.”
The theme for this year’s National Banking and Ethics Conference, Resilience in the Financial System: Navigating Horizon Risks, to the governor is timely and central to safeguarding the stability of the financial system amid rising external risks.
Due to increased interconnectedness, the domestic economy is faced with heightened external risks, hence the need for increased preparedness to anticipate, adapt, and respond to emerging challenges in the financial sector. Horizon risks such as technological disruptions, climate-related vulnerabilities, and economic shifts are realities that require strategic foresight and proactive regulation, he noted.
The Bank has implemented decisive regulatory reforms to bolster the financial sector, focusing on enhanced risk management, stricter capital requirements, improved corporate governance, and reinforced transparency and market discipline.
To promote responsible banking, the Bank has recently issued directives on sustainable banking principles, climate-related financial risks, outsourcing practices, and cyber and information security. These measures aim to ensure a more robust, resilient, and future-ready financial system.
By Eugene Davis
