Rethinking Banks' Growth Model Before Gobbled

Nov 5 , 2022
By ASSEGED GEBRMEDIHN

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Business leaders that have spent much of their careers putting on blinders need to adjust to the digital world. The way customers and business transactions are handled should flow with the dynamics. Although decades have passed since the global digital economy was unravelled, Ethiopia is stuck on manual services.

Company heads direct their employees to go for market share systems against competitors while focusing on a single portfolio. The current business performance indicates that new ways should be implemented. Enhancing an industry share from growing competition increases the market share, viewed from the vantage point of profitability and cash flow. Market share without using a disproportionate amount of inventory extends the duration of accounts obscured. This void would gradually lead the business to close as it can not satisfy customers.

The growth concept allows companies to maintain their strategic position as long as they meet their obligations and distribute dividends. An adequate capital with an effective strategy may help businesses survive in a particular economy; it is not guaranteed in times of uncertainty.

The 21st Century requires "rethinking growth" from every dimension of business.

Adequate capital, knowledge repository and technology are challenges for experts to develop the best growth model. Models in the globalization era have become obsolete and returned to shelves regardless of the time spent crafting them. Creating the same model as Bill Gates and Mark Zuckerberg would not cut it in the vigorous business world. It should be different.

The dynamics of technology imply that today's top practices lead to dead ends. Following a rapid change in the continent, particularly in East Africa, Ethiopia opened some of its services to foreign investors. It is a controversial policy move, and its rationale remains somehow debatable.

I understand and strongly support the government's intention, courage and determination. The central bank's role in having the country's best interest at heart is evident. Bankers and insurance firms should begin the search for the right merger, acquisition, and strategic alliance between domestic and international capital. Subsidiary banks, exchange agents and reinsurers have worked with domestic banks for over five decades to facilitate letters of credit.

It is time to consider freeing the banking industry from the directive that limits growth and minimum adequate capital ratio. The mindset of leaders, particularly the board of directors, should place more time and attention on growing regional markets than the usual focus on earnings per share and dividends. The industry's priority should be raising shares and increasing capital and how businesses grow their assets after mergers.

The antidote is rethinking growth before getting swallowed by the bigger fish. The Ethiopian financial sector's traditional methods are becoming purposeless as they persist in following the old models. Their business will not survive if their strategy fails and they cannot maintain customer satisfaction.

Rethinking is not just about acquiring new knowledge but advancing to the future. If not, no policy saves the sector from dying. It is crucial to rethink growth by giving special attention to customers.

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PUBLISHED ON Nov 05,2022 [ VOL 23 , NO 1175]

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