Introduction of Bancassurance

CHAPTER ONE INTRODUCTION 1. 1 BACKGROUND INFORMATION OF THE RESEARCH Bancassurance is the selling of insurance and banking products through the same channel, most commonly through bank branches selling insurance. The sales synergies available have been sufficient to be used to justify mergers and acquisitions. Some of the sales synergies come through the extensive customer base that banks have. Some come from opportunities to sell insurance together with some banking products. For example, banks generally insist on life insurance for mortgage borrowers.

Although borrowers are not obliged to buy insurance from the lender, many do as it is an easy option. Credit cards and personal loans create opportunities for banks to sell protection insurance and the knowledge a bank has of its customers’ finances Bancassurance has become significant. Banks are now major distribution channels for insurers and insurance sales constitute a significant source of profits for banks. The latter partly being because banks can often sell insurance at better prices (i. e. higher premiums) than many other channels, and they have low costs as they use the infrastructure (branches and systems) that they use for banking. What has not happened to any great extent, at least in Britain, is the merger of banks and insurers to form integrated Bancassurance companies. Bancassurance covers a wide range of detailed arrangements between banks and insurance companies. In all cases, it includes the provision of insurance and banking products and services from the same source or to the same customer base. Also, because there is a wide diversity of strategies available, there is no standard model for Bancassurance.

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The appearance and development of Bancassurance has been one of the most significant competitive developments in the retail financial services sector in Europe, USA, Japan, India, Korea etc. Many banking institutions and insurance companies have found Bancassurance to be an attractive – and often profitable – for instance, Banks selling products of their insurance subsidiary exclusively, Banks selling products of an insurance affiliate on an exclusive basis and Banks offering products of several insurance companies as `super market’ as a complement to their core businesses.

By adding this system to the existing Banking services, banks can provide wider ranges of products and service in addition to the current products such as deposits, loans, and investments. Insurance companies, on the other hand, provide better products through bigger channels via the banking network of branches. In this light, the need for life insurance products to go with the banks’ growing number of product options and increased awareness among customers about the need to get adequate cover for future financial stability, would give the bank a competitive urge as well as establish a rewarding business relationship with customers. . 2 STATEMENT OF THE RESEARCH PROBLEM To date no commercial bank in Ghana has launched a Bancassurance product. Hence a fair majority of the Ghanaian population are not aware of this particular product. Also, SCB has embark on a lot of initiatives to improve the level services rendered to their and bancassurance is not an exception. Furthermore, the extent of the coverage of the bancassurance product depends on the effectiveness of the channels of distribution. It is against this background that this research is proposed with the following objectives. 1. 3 OBJECTIVES OF THE RESEARCH

Over the last few years various dynamics of the macro economy have changed resulting in major changes in the Bank’s business. Over the period interest rates and inflation have been on a consistent downward and upward trend respectively. As a strategic shift, the bank has to create and sustain a one-stop-shop for her customers. This is where Bancassurance strategically fits. Integration of the financial service industry in terms of banking, securities business and insurance is a growing worldwide phenomenon. Banks are the key pillars of Ghana’s financial system.

The public has immense faith in banks. Share of bank deposits in the total financial assets of households has been steadily rising. Banks have enormous retail customer base. Banks world over have realized that offering value-added services such as insurance helps to meet client expectations. Competition in the Personal Financial Services area is getting `hot’ in Ghana. Banks seek to retain customer loyalty by offering them a vastly expanded and more sophisticated range of products. Insurance distribution helps to increase the fee-based earnings of banks to a considerable extent.

Internationally, insurance activities contribute significantly to banks’ total domestic retail revenues. Banks can put their energies into the `small-commission customers’ that insurance agents would tend to avoid. Banks’ entry in distribution helps to enlarge the insurance customer base rapidly. This helps to popularize insurance as an important financial protection product. Bancassurance helps to lower the distribution costs of insurers. Acquisition cost of insurance customer through banks is low. Selling insurance to existing mass market banking customers is far less expensive than selling to a group of unknown customers.

Experience in Europe has shown that Bancassurance firms have a lower expense ratio. This benefit could go to the insured public by way of lower premiums. The specific objectives of the study are; •The degree of awareness created for Bancassurance by the bank to the public. •The extent of improvement on value added services rendered by the bank to its existing customers. •To study the sales trend of Bancassurance since it was launched in November, 2007. •The effectiveness of channels of distribution of Bancassurance products by the bank. •Project future growth of Bancassurance patronage by SCB customers. 1. CONCEPTUAL DEFINITION OF TERMS •Bank / SCB – Standard Chartered Bank Ghana limited •DSR – Direct Sales Representative •BO – Bancassurance Officer • PoS – Point of Sale •PIN – Personal Identification Number •ATM – Automated Teller Machine •VC – Value Centre •CRM – Client Relationship Manager •CSO – Customer Service Officer • PFC – Personal Financial Consultant •CSR – Customer Service Representative •CRO – Client Relationship Officer •NSP – National Service Person 1. 5 LIMITATIONS AND SCOPE OF THE RESEARCH The expected data for the research is extracted from the wealth management Value Center of SCB (GH) Ltd.

The data to be used is wholly comprehensive information obtained from the sale of bancassurance. The target customer base for Bancassurance can be summarized as follows; 1. Existing lower and middle-income customers 2. New to bank Customers 1. 6 ORGANIZATION OF THE STUDY This study is organized into five distinct chapters. Chapter one deals with the introduction which is made up of background information of the research, statement of the research problem, objectives, conceptual definition of terms, limitations and scope of the research and finally the organization of the study.

Chapter two reviews the relevant literature of the research. Chapter three dwells on methodology. Statistical analyses of findings and discussions are captured in chapter four. The fifth and final chapter covers the conclusions, suggestions and recommendations of the research. CHAPTER TWO 2. 0 LITERATURE REVIEW INTRODUCTION Banks are the key pillars of Ghana’s financial system. The Public has immense faith in banks. The Share of bank deposits in the total financial assets of households has been steadily rising. The emphasis of this research is placed pon whether awareness created for Bancassurance by the bank to the public is increasing or not and the improvement on value added services rendered by the bank to its existing customers. The main objective of all financial institution is to provide adequate and sufficient financial services to the citizens of the country. Dr. Paul Acquah, governor of bank of Ghana, said in the chronicle dated Tuesday, April 12, 2007 “It would have been a wonderful idea if we didn’t have to pay interest on the money we borrow. I am sure every borrower would love it”.

SCB has been a key player in the borrowing of money to customers since it registered its presence on the soil of Ghana. SCB and Enterprise Life Assurance Company, the two premier bank and insurance institutions in Ghana respectively, joined hands to formally launch bancassurance in Accra in November, 2007. The landmark event brought together several dignitaries including the deputy minister of finance, the commissioner of insurance, key customers, management and staff of both companies and the media. Commenting on the event, Mr.

Francis Mills-Robertson, executive director of consumer banking Ghana, said “SCB Ghana is the first franchise in Africa to launch bancassurance and we remain focused as the right partner to lead the way in delivering innovative products and services to our customers. ” Bancassurance is a business distribution model where the bank designs, develop and distributes insurance products in partnership with an insurance company. This partnership will combine the best of insurance and financial expertise to give greater flexibility, security and investment options to customers.

SCB has over the years been awarded for its best-in-class products. 2. 1 HISTORICAL BACKGROUND INFORMATION OF SCB 2. 1. 1 THE EARLY YEARS SCB was established as a result of a merger in 1969 between standard bank of British South Africa (Founded in Port Elizabeth in 1862) and Chartered Bank of India, Australia and China (Founded by royal Charter in 1853). SCB is the world’s leading emerging markets whose headquarters is in London. Their business however, has always been overwhelmingly international.

The moving force behind the Chartered Bank was a Scot, James Wilson, who made his fortune in London making hats. James Wilson went on to start The Economist, still one of the world’s pre-eminent publications. Nine years later, in 1862, the Standard Bank was founded by a group of businessmen led by another Scot, John Paterson, who had immigrated to the Cape Province in South Africa and had become a successful merchant. Both banks were keen to capitalize on the huge expansion of trade between Europe, Asia and Africa and to reap the handsome profits to be made from financing that trade.

The Chartered Bank opened its first branches in 1858 in Calcutta and Mumbai. A branch opened in Shanghai that summer beginning Standard Chartered unbroken presence in China. The following year the Chartered Bank opened a branch in Hong Kong and an agency was opened in Singapore. In 1861 the Singapore agency was upgraded to a branch, which helped provide finance for the rapidly developing rubber and tin industries in Malaysia. In 1862 the Chartered Bank was authorized to issue bank notes in Hong Kong.

Subsequently it was also authorized to issue bank notes in Singapore, a privilege it continued to exercise up until the end of the 19th Century. Over the following decades both the Standard Bank and the Chartered Bank printed bank notes in a variety of countries including China, South Africa, Zimbabwe, Malaysia and even during the siege of Marketing in South Africa. Today SCB is still one of the three banks, which prints Hong Kong’s bank notes. 2. 1. 2 Expansion in Africa The Standard Bank opened for business in Port Elizabeth, South Africa, in 1863.

It pursued a policy of expansion and soon amalgamated with several other banks including the Commercial Bank of Port Elizabeth, the Colesberg Bank, the British Kaffarian Bank and the Fauresmith Bank. The Standard Bank was prominent in the financing and development of the diamond fields of Kimberly in 1867 and later extended its network further north to the new town of Johannesburg when gold was discovered there in 1885. Over time, half the output of the second largest goldfield in the world passed through the Standard Bank on its way to London.

In 1892 the Standard Bank opened for business in Zimbabwe, and expanded into Mozambique in 1894, Botswana in 1897, Malawi in 1901, Zambia in 1906, Kenya, Zanzibar and the Democratic Republic of Congo (D. R. C. ), in 1911 and Uganda in 1912. Of these new businesses, Botswana, Zanzibar and the D. R. C. proved the most difficult and the branches soon closed. A branch in Botswana opened again in 1934 but lasted for only a year and it was not until 1950 that the Bank re-opened for business in Botswana. EXPANSION IN ASIA

In Asia the Chartered Bank expanded opening offices in, Myanmar in 1862, what is now Pakistan and Indonesia in 1863, the Philippines in 1872, Malaysia in 1875, Japan in 1880 and Thailand in 1894. Some 34 years after the Chartered Bank appointed an agent in Sri Lanka it opened a branch in 1892 to take advantage of business from the tea and rubber industries. During 1904 a branch opened in Vietnam. Both the Chartered and the Standard Bank opened offices in New York and Hamburg in the early 1900s. This made Chartered Bank the first foreign bank to be issued with branch license in New York. 2. 1. 3 THE IMPACT OF WAR

The end of the First World War offered opportunities for expansion: this is when the Standard Bank set up a branch in Tanzania shortly after British troops occupied the formerly German administered Dar es Salaam in September 1916. Both banks survived the inter-war years but the world trade slump led to the closure of operations in the Canary Islands, Liberia, the Netherlands, and Equatorial Guinea. Disaster struck the Chartered Bank’s office in Yokohama, Japan, when an earthquake in 1923 killing a number of staff destroyed it. The Second World War particularly affected the Chartered Bank when numerous Asian countries were occupied by Japan. . 1. 4 THE POST WAR YEARS After the Second World War many countries in Asia and Africa gained their independence. This led to local incorporation in some countries, particularly in Africa. Other operations such as those in Iraq, Angola, Myanmar and Libya were nationalized, while in Indonesia the Jakarta office was destroyed in an attempted coup d’etat. In 1948 the Chartered Bank opened in Bangladesh and during 1957 it acquired the Eastern Bank. The Eastern Bank gave the Chartered Bank a network of branches including Aden, Bahrain, Beirut, Cyprus, Lebanon, Qatar and the United Arab Emirates.

The Chartered Bank also entered into a joint venture to form the Irano-British Bank, which opened for business in 1959. The bank grew rapidly and had 24 branches when it was nationalized in 1981. By the mid 1950s the Standard Bank had around 600 offices in Southern, Central and Eastern Africa. Its network grew substantially in 1965 when it merged with the former Bank of British West Africa, which had some 60 branches in Nigeria, 40 branches in Ghana and eleven branches in Sierra Leone in addition to operations in Cameroon and Gambia.

Despite these acquisitions and expansion into new countries such as Mexico, South Korea and Oman (1968), both the Standard and Chartered Bank networks were comparatively small. Both viewed the future with some trepidation as the need to protect them from acquisition became ever more apparent. 2. 1. 5 Standard Chartered PLC International 1969 the decision was made by the Standard Bank and the Chartered Bank to undergo a friendly merger thus forming Standard Chartered PLC. It was one year later that the descendants of the “Chartered Bank of India, Australia and China” were finally permitted to open a representative office in Sydney, Australia.

Standard Chartered subsequently acquired the UK based Hodge Group, in which it already had a minority shareholding, and the Wallace Brothers Group. The Hodge Group brought to Standard Chartered an extensive network of UK offices specializing in installment credit and industrial leasing. After a period of rationalization its name was changed to Chartered Trust Limited. Standard Chartered bank’s operations in Jersey emerged from the integration of other Hodge Group businesses with those of Wallace Brothers Bank (Jersey), Limited. SCB decided, after the merger, to expand the Group outside its traditional markets.

In Europe a number of offices were opened including Austria, Belgium, Denmark, Ireland, Spain and Sweden as well as several major cities in the UK. Standard Chartered also opened offices in Argentina, Canada, Colombia, the Falkland Islands, Panama and Nepal. In the USA a number of offices were opened and three banks were acquired. These included the Union Bank of California, which gave SCB a presence in Brazil and Venezuela. The opening of a branch in Istanbul in 1986 was overshadowed by a far more dramatic event when Lloyds Bank of the UK made a hostile take-over bid for SCB.

SCB won its right to remain independent but entered into a period of considerable change. By the late 1980s SCB already had considerable exposure to third world debt. To this were added provisions against loans to corporations and entrepreneurs who could not meet their commitments. SCB reviewed its operations and decided to focus on its core strengths of Consumer Banking, Corporate & Institutional Banking and Treasury in its well-established operations in Asia, Africa and the Middle East. This led to a series of divestments notably in Europe, the United States and Africa.

During this time staff numbers were reduced; businesses not considered core were sold or closed; associate holdings disposed of; unprofitable branches closed and back office functions consolidated. In addition expensive buildings were sold with the proceeds reinvested in the business, and the senior management team was radically changed and strengthened. 2. 1. 6 STANDARD CHARTERED IN THE 1990s Even within this period of apparent retrenchment, SCB expanded its network, re-opening in Vietnam in 1990, Cambodia and Iran in 1992, Tanzania in 1993 and Myanmar in 1995.

With the opening of branches in Macau and Taiwan in 1983 and 1985 plus a representative office in Laos (1996), SCB now has an office in every country in the Asia Pacific Region with the exception of North Korea. In 1998 SCB concluded the purchase of a controlling interest in Banco Exterior de Los Andes (Extebandes), an Andean Region bank involved primarily in trade finance. With this purchase SCB now offers full banking services in Colombia, Peru and Venezuela. In 1999, SCB acquired the global trade finance business of Union Bank of Switzerland. This acquisition makes SCB one of the leading clearers of dollar payments in the USA.

SCB also opened a new subsidiary, SCB Nigeria Limited in Lagos, acquired 75 per cent of the equity of Nakornthon Bank, Thailand; and agreed terms to acquire 89 per cent of the share capital of Metropolitan Bank of the Lebanon. 2. 1. 7 STANDARD CHARTERED TODAY Today SCB is the world’s leading emerging markets bank. The new millennium has brought with it two of the largest acquisitions in the history of the bank with the purchase of Grindlays Bank from the ANZ Group and the acquisition of the Chase Consumer Banking operations in Hong Kong in 2000.

These acquisitions demonstrate SCB firm committed to the emerging markets, where we have a strong and established presence and where we see our future growth. 2. 1. 8 GLOBAL TRANSACTION SOLUTIONS “International trade is your business. Making it go faster is ours. We provide services that ensure prompt payment for your letters of credit and documentary collections”. As part of SCB’s global transaction solutions to Corporate and Institutions, SCB provides Cash Management, Securities Services and Trade Services through its market networks in Asia, Africa, the Middle East and Latin America.

This includes the provision of expert processing of documentary transactions to help customers get goods or funds faster. The following world-class services also are available: integrated superior cross-border and local services, efficient transaction processing, reliable financial information, innovative products, world-class clearing services. To add to the above, SCB has an international network that supports its customers anywhere they do business like Supply chain financing, receivables services, letter of credit confirmation, exporters, importers. SCB possesses more than 140 years of experience in Trade Finance.

SOLID NETWORK To enable its customers capture global opportunities, SCB are present in 56 countries, in addition to extensive network of overseas banking partners and correspondents. QUALITY – WORLD CLASS “The quality of our operational capacity in international trade is evidenced by the ISO quality accreditation we have obtained around the world” by the chairman of SCB PLC. 2. 1. 9 CORPORATE RESPONSIBILITY “At SCB we recognize we have an impact on the economies, communities and on the environment in which we operate and a responsibility to address this impact.

We also recognize that through our business activities we can contribute to sustainable development Climate Change, selling our products responsibly, tough economic or political conditions are just some of the environmental and social issues faced by an international bank like Standard Chartered. We believe that by facing up to challenges such as these and by addressing them as part of our everyday business life we can make our brand stand out from our competitors”. In line with the above, Standard Chartered committed $ 5 million as an initial contribution for the relief efforts in the Asian Tsunami disaster.

In Thailand, SCB is helping to build a boarding school for 400 children orphaned by the Tsunami. SCB is actively working to spread the understanding of HIV and AIDS around the world. 2. 1. 10 FINANCIAL PERFORMANCE SCB over the years has been making strong financial growth in its various markets. The SCB group delivered another strong performance in the year 2005 with a record profit before tax of $3 million, up 16 percent, increase from $2,158 million in 2004. Return on equity rose from 20. 1 percent to 24. 4 percent. Cost income ratio improved to 57. 4 percent.

Earning per share saw an increase from 125. 9 cents to 137. 4 cents. ACQUISITIONS AND ALLIANCES The SCB group made several acquisitions in 2004. In august, it acquired 100 percent of advantage limited (‘Prime Credit’) a consumer finance business in Hong Kong, and increased its share in Standard Chartered bank Nepal Limited from 50 percent to 75 percent. In November, the ground entered into a consortium agreement with PT Astra International Tbk (‘Permata’) an Indonesian commercial bank. The Group’s effective interest in Permata on 31 December 2004 was 31. 55 percent.

It has been accounted for as a joint venture. In December 2004 the Group acquired from ANZ part of its project finance business, a team of specialists and portfolio of loan commitments amounting to $1. 26 billion. Together, this acquisition contributed $8 million to profit before tax. 2. 1. 11 STANDARD CHARTERED BANK GHANA SCB Ghana Limited has been in operation since 1896, when it was known as the Bank of British West Africa. The Bank is 80% owned by Standard Chartered PLC, and the remainder of the stock is owned locally and traded on the Ghana Stock Exchange.

SCB Ghana Limited is the oldest bank in Ghana, and ranked first of all the banks with a 35% market share. SCB provides a wide range of services in the consumer, corporate and institutional banking sectors, including comprehensive trade finance and cash management services, and foreign exchange products through treasury operations. There are 19 branches and two agencies located in the main regions of the country. These are fully computerized, and automated teller machines are located at most branches.

SCB was awarded the Best Foreign Bank in Ghana: in Euro money Magazine’s Award for Excellence in 1998 and 1999. The currency of Ghana is the Cedi (SWIFT Code GHC), which is allowed to float against all currencies. SCB has a brand promise “The right partner” and a strategic vision “Leading the way in Asia, Africa and the Middle East” SCB employs over 70,000 people in over 950 locations in more than 50 countries in the Asia Pacific Region, South Asia, the Middle East, Africa, United Kingdom and the Americas.

It’s one of the world’s international banks with a management team comprising 80 nationalities. It’s also listed on both the London Stock Exchange (in the list of top 25 companies, by market capitalization) and Hong Kong Stock Exchange. The core business areas are Consumer banking (Retail banking) and Wholesale banking (Client Relationships & Global Markets). SCB has five main values, which it does not compromise on. They are; Responsive, Trustworthy, Creative, International, Courageous.

SCB has been recognised in several ways in Ghana; some of these recognitions are the Bankers Magazine award for the best bank in Ghana (2003), euro-money Award for the best Bank in Ghana (2003), best bank in product innovation – 2003, CIG award for most socially responsible bank in Ghana (2003 / 2004), Ashanti financial services award for overall best bank in Ghana (2003), best IT bank (2004), global finance magazine award for best bank (2004 / 2005). Also, euro-money award for best bank in trade finance (2005). Within SCB Ghana, Consumer Banking division is organized into four main value centers.

A value centre is a discrete, end-to-end business, accountable for developing its own strategy for delivering profit performance and managed to maximize profit. Resourced and managed essentially independently. 2. 2 SOURCE OF FUNDS The bank depends largely on the following sources of to fund its operations: internally generated fund through product / services offered to customers, Bank of Ghana (Excess reserves), donor pool fund (London & other branches across the world) 2. 3 SALES CHANNELS OF BANCASSURANCE A sale is a key driver of any business.. Sales forms the core of the two most important initiatives of the consumer bank in SCB . 3. 1 Integrative Distribution Model. There are three main channels under this model. They are; Branch Staff This involves distribution through the branch network: insurance products are displayed in banking halls and business offices of banks across the country. It’s a productive way to reach simple products to large, mid-market and low-end of bank customers. Branch staff will play two key roles; branch tellers and front office staff will be mainly responsible for providing referrals to the bancassurance officers who will close the sales. Bancassurance Officer

This involves distribution of products through specialists with platform bankers identifying prospects who are then contacted by the specialists. Generally, specialists are Representatives/Agents of insurance company. Productive way to reach complex products to bank’s affluent customers. BOs are representative/Agents of the insurance provider who will be located in the branch. They are insurance experts trained to receive all referrals from the branch and close the deals. The will also be responsible for all the administrative processes till policies are issued to customers. Direct Sales – DSRs

Under this model Bancassurance products, will be sold through direct sales representatives. As one of the leading banks in the country Standard Chartered Bank introduced direct sale to render first class services to the general public at their convenience. This approach is to relieve customers of the burden of waiting in long queues in branches. SCB believes banking services should start at your door step. An SCB aim is to render customers free consultation on their investment decision making. 2. 4 A BRIEF STRUCTURE OF SCB – GHANA 2. 5 PRODUCT / SERVICES OFFERED BY WEALTH MANAGEMENT VC OF SCB. . 5. 1 Deposits (Liabilities) Products Deposit products allow the customer to lodge sums of money with the bank. To the Bank, these are liabilities as we have to pay the customer at some agreed time after they have placed their funds with the Bank. Except for Current Accounts (in general), all liability products give interest to our customers. The deposit products offered by SCB are; savings plus account, current account, access 24/7, fixed deposit, call account, premium savings, my dream account, money builder account, higher education fund, foreign currency deposits (FCA & FEA) . 5. 2 PRODUCT DESCRIPTION Savings plus account It is a multi-tiered interest bearing account, the purpose of this account is the need to save for future expenditure, young children, rainy day, standby funds. Same of the target markets are individuals aged 18 and above, clubs, societies, associations, NGOs, sole proprietors, partnerships, individual joint accounts, minor accounts. The main features and benefits of this account are; initial deposit – GH? 100, minimum Balance – GH? 100, It has a tiered interest rates, that is, earn higher interest as your deposits grow.

The customer has access to half-yearly statement facility, easy deposit & withdrawal facility, that is, a maximum of 4 withdrawals per month (excluding ATM withdrawals), visa electron card, free SMS & phone banking, standing orders, security for overdraft/Loan facilities. Current account It’s a non-interest bearing account with a cheque facility. The purpose of this account is the need for regular receipt and payment of funds, large volume transactions. The target markets for this account are individuals aged 18 and above, sole proprietors, partnerships, companies, clubs, societies and NGOs.

The main features and benefits are GH? 100 initial deposit, zero minimum balance, personalized cheque book, pay-in facilities, that is, cash/cheque deposit, salary credits, easy withdrawal facility, monthly/quarterly statements, visa electron card, free SMS & phone banking, standing orders, access to loans and overdraft facilities, monthly service fees (COT). ACCESS 24/7 It a non interest bearing account with a low minimum deposit. The purpose of this account is a need for a low cost account purely for transactional purposes, students, pensioners and employees of selected companies are the target markets.

The main features / benefits are; initial deposit – GH? 5 and there is no interest on this account and no minimum balance. Withdrawals are restricted to the ATM only, free SMS and phone banking facility, access to visa electron debit card and there are no monthly charges. Fixed Deposit It’s an investment vehicle whereby customers lock in a fixed amount for a fixed period at guaranteed interest rates. The purpose & target market are to earn higher interest on sizable liquid assets within a specific period.

It is for individuals (above 18), societies, and clubs, sole proprietors, partnerships, corporate bodies, NGOs and joint accounts holders. The main features / benefits are fixed investment period of 3 months and over, minimum deposit of GH? 500 and has no upper limit deposit amount, interest rates varies for the amount and period placed but interest is fixed for the period of the investment and has a roll-over option. It can be used as collateral for a loan or overdraft but can be rediscounted at any time. Call Account This is an investment account for an indefinite period, which may be withdrawn on demand.

The target markets are mainly for customers who wish to invest and earn interest on their funds not immediately required and also safeguard against unauthorized overdrafts on their account. The main features / benefits are to maintain a minimum threshold balance on current account of GH? 5000. There is no lower or upper limit on this account. The account is funded by a sweeping arrangements linked to current account with automatic transfers from or to current account when the balance exceeds or falls below the minimum balance. This is done with a standing instruction at a daily frequency.

Interest is calculated on the account balance daily and paid monthly. Premium Savings It a high yielding interest bearing account with a chequeing facility. The purpose is to save and earn higher interest for future expenditure on young children, rainy days and standby funds. The target market are individuals aged 18 and above, clubs, societies, association, sole proprietors, and partnerships. The main features / benefits are initial deposit of GH? 200 and a minimum balance of GH? 100. Interest rates are tiered, that is, you earn higher interest as your deposits grows.

Interests are calculated daily and applied monthly, cheque facility (optional), referees required, half-yearly statement facility, a maximum of 2 withdrawals per month, no visa electron debit card, free SMS & phone banking, standing orders and can use as security for overdraft / loan facilities. My Dream Account It’s a high yielding interest bearing account mainly for securing the future of young children. The purpose & target market are for future expenditure for young children, encourage and cultivate a savings culture in young children.

Also, for employees of reputable companies, self employed individuals with regular earnings and professionals. The main features / Benefits are initial deposit of GH? 100. Interest is multi-tiered (2% above current savings account rates). There is a minimum monthly contribution of GH? 20 and a minimum balance of GH? 300, Access to half-yearly statements and standing orders set up to facilitate monthly contributions into the account. It can be used as collateral for a loan or overdraft. Withdrawals are limited to once every 6 months.

Branded savings withdrawal book available but restricted to SCB branches only because it cannot go through the clearing process. There is no visa electron debit card but a free SMS and phone banking facility. Money Builder Account It’s a hybrid of savings and investment plan that allows you to save towards your dream expenditure for a minimum of 2 years. The purpose & target market are to build up funds to acquire a house, car or any intended future expenditure. It is for employees of reputable companies, self employed individuals with regular earnings and professionals.

The main features / benefits are a initial deposit of GH? 200 and a minimum monthly contribution of GH? 20. Interest is multi-tiered and is 2 percentage points above current savings rate. There is no lower and upper limit on investment of two years investment and has no ceiling. Standing orders set up to There is a minimum facilitate monthly contributions into account. It can be used as collateral for a loan or overdraft. Withdrawals are limited to 10% of total value per year and there are penal charges for withdrawals beyond limit.

Contributions into the account can be used to reduce outstanding balance on auto or mortgage loans. Higher Education Fund It’s a hybrid of savings and investment plan that allows you to save towards your child’s higher education for a minimum of 2 years. The intended investment is insured against the unexpected. The main purpose is to build up a fund to assure your child’s future education. Parents and Guardians who are employees of reputable companies, self employed individuals with regular earnings and Professionals are the target markets. The main features / benefits are an initial deposit of GH? 00 and minimum monthly contribution of GH? 20. Interest is multi-tiered and 2% points above current savings rate. It has a minimum investment and GH? 1,000 and maximum investment of GH? 10,000. There is a minimum tenure of two years and a maximum tenure of 25 years. A compulsory life insurance protection at customer’s cost to cover target investment is done on the account. Standing orders set up to facilitate monthly contributions into account. It can be used as collateral for a loan or overdraft; withdrawals are limited to 10% of total value of investment per year.

There are penal charges for withdrawals beyond limit. An optional school fees payment can be made on behalf of customers upon request. Foreign Currency Deposits (FCA & FEA) They foreign currency denominated non-interest bearing accounts with cheque writing facilities. The main purpose & target markets are for regular receipt and payment of funds in foreign currency. The accounts are normally opened in US dollar, pound sterling or euro and they are for individuals aged 18 and above, sole proprietors, partnerships, companies, clubs, societies and NGOs.

Foreign currency account (FCA) is an account where funding of the account is mobilized exclusively from sources outside the country (i. e. transfers and offshore cheques). FCA accounts are not subject to bank of Ghana exchange control restrictions. Foreign exchange account (FEA) is an account where funding of the account is mobilized principally from sources within the country (i. e. cash, locally drawn cheques). FEA accounts are subject to bank of Ghana exchange control restrictions. The main features / benefits are an initial deposit of ? 00 or $ 200 or €200. Customers will have access to personalized cheque book and pay-in facilities – cash / cheque deposit, easy withdrawal facility but attracts a fee (5% of face value), monthly / quarterly statements, visa electron debit card, free SMS & phone banking. Also, it can be used as collateral to secure loans and overdraft facilities, monthly service fees (COT). Transactional Products & Services available Transactional Products enable the customer to access and perform various transactions (financial & non-financial) on his/her account.

They are; SMS banking, phone banking, visa electron debit card and other miscellaneous transactional products. Available Services Some of the services available at the counter are; balance inquiry, transaction inquiry, statement request, and cheque book request. The rest are; loan outstanding / repayments inquiry, early settlement of loan inquiry, rates and tariffs, personal Loans, product inquiry, account opening procedure, account closing procedure, general inquiries and complaints. Miscellaneous Transactional Products / Services

These are fee-based products that provide some extra convenience to the customer. They are; cashier’s order, this is, a financial instrument drawn by a bank as the drawer. It is an attractive means of settling money owing as it provides certainty that cheques will be paid upon presentation. Travelers’ cheques; it is a financial instrument issued by the bank and used by travelers for convenience and safety. Furthermore, there are standing order / standing instruction; these are customer request for regular payments of a fixed amount on specific dates to the same beneficiary at the same or another bank.

Other Products There are other products the bank offers aside those mentioned earlier on. These are; Secured Overdraft It’s a revolving credit line granted to a customer. Interest will only be charged on outstanding utilization on a daily basis. The main purpose & Target markets are for financing short term personal needs and supplement working capital and business needs. Customers who like to take advantage of imminent business or investment opportunities and thus will need a stand-by facility to meet their needs at a future time.

It is tailored to suit Individuals, Sole Proprietors and business people. The overdraft must be secured by any of the under listed assets: cash deposits (local & foreign currency), treasury bills, shares of reputable companies, 90% cash backed and a term of 12 months with an interest rate of base + 2% to 3% Excel banking it’s a package of service enhancements designed to retain and build relationships with upscale customers and meet their growing needs. The main purpose & target market are to provide a differentiated service delivery with easier and faster services to upscale customers.

Upscale individuals, high income executives and professionals with a minimum net salary of GH? 1,500, sole proprietors with a minimum balance of GH? 4,500, GH? 10,000 or GH? 20,000 in your current, savings or fixed deposit accounts respectively. The main features / benefits are a dedicated customer relationship manager, exclusive excel centers solely for excel customers, access to excel banking centers across Africa, dedicated excel tellers in all SCB branches, preferential pricing on loans and forex rates and monthly service fees of GH? 7. 50 for those who do not maintain minimum balance.

Also, free use of phone banking and SMS banking services, excel lifestyle privileges for instance airline loyalty programs, attractive excel tangibles and periodic gifts. Offshore Banking (International Banking) This is an opportunity to bank in multi-jurisdictions (Hong–Kong, Dubai, Singapore, Jersey) with a dedicated relationship manager to give expert support. The main purpose & target markets are to offer customers around the globe the advantage of banking in multi-jurisdictions with extended access to international products and markets.

This product is for upscale individuals, high income executives, professionals and sole proprietors. There is a minimum balance of $100, 000 or its equivalent to be maintained by customers. The main features / benefits are access to products and services available from each centre across the globe, treasury, investment and credit products and services. There is always a dedicated relationship manager located in your region, committed to help you achieve financial goals and maximize wealth. Access to 24 hour service internet banking. This gives you the privilege to enjoy the benefits of priority banking across SCB worldwide.

CHAPTER THREE 3. 0 METHODOLOGY AND FINDINGS Both descriptive and inferential statistics will be used in the analysis of data. For descriptive statistics, I will employ the use of frequencies, tables, and charts. Trend analysis and forecasting will be used to make inferences from data obtained for the research. 3. 1 RESEARCH AREA SCB is one of the major international banks in Ghana. The bank is staffed with qualified bankers and auxiliary staff. The consumer banking division is made up of SME banking, wealth management VC, unsecured lending VC and shared distribution.

The wealth management VC in conjunction with shared distribution is responsible for the sale of Bancassurance, which is the focus of this research. 3. 2 POPULATION OF THE RESEARCH Taking the aims and objectives of this research into consideration, the data to be analyzed is drawn from the branches, wealth management VC and bancassurance officers from November, 2007 to July, 2008. 3. 3 BANCASSURANCE PRODUCTS Products offered by Bancassurance are summarized below. But for the start SCB is selling only funeral support plan. The other products will be sold at a later date.

Whole life policies (Funeral Support Plan) This is a life insurance protection provided for the whole life with the sum assured including accrued bonus, payable only upon the death of the life assured. Or total policy account value payable to policy owner at the age of 100, the earliest. Endowment policies This policy provides payment of the face value of the policy and accrual bonus, if any, upon death of the life assured during a fixed policy term. Or total policy account value payable to policy owner upon end of the term. Term insurance policies The sum insured is fixed and renewable yearly.

It is a life policy for a specified period against death. Credit term life assurance Ordinary term insurance policy with fixed sum assured and is renewable yearly. The purpose is to cover clean overdraft facilities granted. Mortgage reducing term assurance Ordinary term insurance policy with sum assured that decreases in amount at periodical intervals. The purpose is to cover mortgage loans that are gradually being repaid. Refund of premium policies (PA) Personal accident protection for a fixed term of years, payable upon death or permanent disability of the life assured. 3. 4 SAMPLING PROCEDURE

Since randomization eliminates biasness and applying the principles of probability sampling, customers in the banking hall will sampled and interviewed with a questionnaire. Also, Wealth management VC of the bank keeps records and collect data on week-to-week bancassurance sales performance for a all 19 branches of the bank. 3. 5 HYPOTHESES OF THE RESEARCH On the basis of the objectives, the following hypothesis shall be tested. H0: There is a degree of awareness created for Bancassurance to SCB customers. H1: There is no degree of awareness created for bancassurance to SCB customers.

H0: There is an improvement on services rendered by the bank to its existing customers. H1: There is no improvement on services rendered by the bank to its existing customers. H0: There is an effective channel of distribution of bancassurance products by the bank. H1: There is no effective channel of distribution of bancassurance products by the bank. 3. 6 CHOICE OF METHOD Statistical methods shall be used to analyze the data collected for the research. •Pie chart is used to show the pictorial distribution of awareness created by branches and sales agents for bancassurance. Multiple bar charts are used to show the extent of improvement on value added services rendered by the bank to its existing customers on bancassurance. •Time series analysis is used to study the trend involved in the sale of bancassurance and projections shall be made on future bancassurance sales volume. CHAPTER FOUR ANALYSES OF FINDINGS AND DISCUSSIONS 4. 0 INTRODUCTION This chapter contains findings obtained from SCB branches and sales agents of bancassurance on weekly basis. It also analyzes the data gathered 4. 1 PRESENTATION OF DATA Table 4. 1 Branch/monthNov. ’07Dec. 07Jan. ’08Feb. ’08March ’08April ’08May ’08June ’08July ’08Grand Total Abeka6182847264521236220 Accra High Street393839574176839126490 Dansoman993161313124111127 Kejetia11712632114233100 Korle Dudor057146131413375 Kumasi Harper Road52634212155545713286 Legon013119514515375 Liberia Road6213044182838278220 Obuasi017305114233 Opeibea7484457424637184303 Osu0231222203825342176 Ring Road Central1928112312151380129 Spintex Road101882281724199135 Takoradi Harbour241113167161083108 Tamale0102100206 Tarkwa010321000016 Techiman01403300011 Tema03036181228274415210 Tudu0604469626626113341

Grand Total1263783464483014994144381113061 Source: Bancassurance sales report July 2008 – SCB Table 4. 1 Indicate the actual monthly bancassurance sales numbers from November, 2007 to July, 2008. Based on weekly data obtained, which were accumulated into monthly data from bancassurance sales report July, 2008 of SCB. This data covers branch bancassurance sales from November 2007 to July 2008, bancassurance agents’ sales for the same period and bancassurance sales target for each branch from November 2007 to July 2008. STATISTICAL ANALYSIS OF DATA Figure 4. 1. 1 BANCASSURANCE SALES AGENTS PERFORMANCE

Figure 4. 1. 1 Specify the pictorial distribution of the branches sales performance of bancassurance since it inception in November, 2007 to July, 2008. DISCUSSIONS OF ANALYSIS The data collected shows that the bottom five branches are Tamale, Techiman which are actually doing 0%, Obuasi and Tarkwa branches are also doing 1%. and Korle Dudor which has done 2%. The top five branches that are doing well are High street branch with 16% followed by Tudu branch with 11%, Opeibea, Kumasi Harper road and Liberia road branches are following closely with 10%, 9%, 8% respectively.

This is shown in the pie chart of figure 4. 1. 1 This indicates that High street and Tudu branches are educating more of their customers than the other branches. In other words, the awareness created to High street branch (16%) customers is higher than the other branches. Tudu branch is following with 11% bancassurance awareness creation to its customers. On the contrary, Techiman and Tamale branches have created a 0% each of bancassurance awareness to their customers. Table 4. 2 Branch Sales Agents CRMPFCCSOCSRCRONSPTotal Abeka -1530- – 60105 Dansoman 151530- 60135 5 Harper Road- 45451515120240 High Street 3060301590240 15 Kejetia -15- 15- 6090 Korle Dudor -151515- 3075 Legon -1515 — 3060 Liberia Road 3015301560165 15 Obuasi- 1515- -3060 Opeibea House 3030- 1560150 15 Osu 3030- 1560150 15 Ring Road Central 3030- 1560150 15 Spintex Road 301515- 60135 15 Takoradi Harbour- 1530- – 3075 Tamale- 15- — -15 Tarkwa -151515 -3075 Techiman 1515 -30 Tema- 304530- 90195 Tudu -151515- 60105 Total 405435225909902250 105 Source: Bancassurance sales report July 2008 – SCB Table 4. 2 Show the actual performance of bancassurance sales agents in each branch of SCB. Source; Bancassurance sales report July, 2008 – SCB). Figure 4. 2. 1 Table 4. 3 Figure 4. 2. 1 Indicate the pictorial distribution of bancassurance sales agent’s performance from November, 2007 to July, 2008. DISCUSSIONS OF ANALYSIS Figure 4. 2. 2 shows the sales agents performances. The national service persons (NSP) have taken a convincing lead of 44% and followed by customer service officers (CSO) with 19%. The client relationship officers (CRO) are at the bottom with only 4%. This shows that the national service persons are creating a lot of awareness to SCB customers than the other sales agents in the bank.

Table 4. 3 Branch/TargetActualBudget Abeka2201080 Accra High Street4911908 Dansoman119720 Kejetia97504 Korle Dudor76684 Kumasi Harper Road2862016 Legon91504 Liberia Road2331296 Obuasi33504 Opeibea3071800 Osu1761224 Ring Road Central981044 Spintex Road131792 Takoradi Harbour108504 Tamale6108 Tarkwa16324 Techiman11324 Tema2101440 Tudu3521152 Grand Total306117928 Source: Bancassurance sales report July 2008 – SCB Table 4. 3 Signify the bancassurance budget (target) as against the actual performance of each SCB branch. (Source; Bancassurance sales report July, 2008 – SCB). Figure 4. . 1 Figure 4. 3. 1 Indicate the pictorial distribution of bancassurance sales budget (target) as against the actual performance from November, 2007 to July, 2008. DISCUSSIONS OF ANALYSIS Looking at figure 4. 2. 3, it shows a multiple bar chart of branch sales target and the actual sales done. All the branches are far below their budget. This tells us that there is no significant service improvement in the services delivered by branches of SCB based on data collected even with the introduction of bancassurance. TIME SERIES ANALYSIS OF BRANCH BANCASSURANCE SALES From Table 4. 1

Let Y be the total number of branch bancassurance sales in each month and X is the number of month. MonthXYXYX2 Nov. ‘07012600 Dec. ‘0713783781 Jan. ‘0823466924 Feb. ‘08344813449 Mar. ‘084301120416 Apr. ‘085499249525 May ‘086414248436 Jun. ‘087438306649 Jul. ‘08811188864 Total36306112551204 ?X = 36 ? Y = 3061 ? XY = 12551 ? X2 = 204 n = 9 Using the normal equations; ? Y = na + b ? X and ? XY = a ? X + b ? X2 Substituting the above summations into the normal equations, we shall have 9a + 36b = 3061…………………. (1) 36a + 204b = 12551……………… (2) Solving them simultaneously, we get =319. 644 and b=5. 117 The trend equation in the form, Y (t) = a + bx will be Y (t) = 319. 644 + 5. 117x. Since November ’07(X) = 0, then in November ‘08, that is, X =12 months. The branch total bancassurance sales shall be Y (12) = 319. 644 + 5. 117(12) = 381. 048 DISCUSSIONS OF ANALYSIS Assuming a constant growth for the trend equation above, that is, Y (t) = 319. 644 + 5. 117x. The projection for bancassurance sales in November 2008 shall be 381. 048. November 2008 is used because bancassurance was launched in November 2007 therefore November 2008 makes it exactly one since the launch.

Taking the expectation of bancassurance sales figures of November 2008 into consideration, the sales agents and SCB branches have not created enough awareness of bancassurance to SCB customers and to the general public. CHAPTER FIVE SUMMARY, CONCLUSION AND RECOMMENDATION 5. 0 INTRODUCTION This is the final chapter of the research. It begins with a brief summary of the research findings followed by conclusions and recommendations based on the data obtained for the study. 5. 1 SUMMARY The research attempted to find out the degree of the awareness created for bancassurance by SCB to its customers.

Also, it examined the extent of improvement of services rendered by the bank to its customers after the introduction of bancassurance in November, 2007. Furthermore, the study focused on the effectiveness of the channels of distribution of bancassurance products used by the bank and finally time series analysis is used to project future sales volumes of bancassurance. Hence, sampling units were selected from all the 19 SCB branches using simple random sampling, that is, as and when the customer walks into the banking hall a bancassurance form is giving to him/her after the bancassurance product is explained to him/her.

The data collected were grouped into frequency tables and analyzed by using charts; namely pie charts, multiple bar chart and Time series. However qualitative descriptions were mostly used. 5. 2 CONCLUSION With reference to the objectives and the hypotheses of the research, the following conclusions were made; •Almost all SCB branches are not creating much awareness of bancassurance to their customers with the exception of High street, Tudu, and Opeibea branches which have done 16%, 11% and 10% respectively •There are six (6) bancassurance sales agents in each of the 19 branches of SCB; namely PFCs, CSOs, CROs, CRMs, NSPs and CSRs.

The NSPs are creating much awareness of the bancassurance product to SCB customers with 44% than the other sales agents. They are followed by the CSOs and PFCs with 19% and 18% respectively. The CROs are the least with 4%. •It was established that the NSPs had only one aim, that is, to sell bancassurance products. Unlike the rest of the sales agents who had other responsibilities. •All the branches are far below their budget (target). This tells us that there is no significant improvement in the services delivered by branches of SCB based on data collected even with the introduction of bancassurance.

Though, they are all below the budget (target), High street and Tudu branches are doing a bit better than all the branches of SCB. •It was established that the bancassurance budget (targets) were unrealistic. •It was discovered that the bancassurance sales volume will be 381. 048 policies in November, 2008. •It was discovered that it is only one product of bancassurance that is being sold by SCB currently where as the other 5 products are not yet launched. 5. 3 RECOMMENDATION

The following recommendations have been made based on the data used for the study for considerations by the bank and other banks who may switch to bancassurance in future. •Bancassurance must be sold by every member of a particular branch and not for only a select few. In so doing everybody gets involved in the sale of bancassurance. •Or a dedicated team who will be selling only bancassurance and also be measured solely on the product every month should be task to handle the product and be accountable for the sales performance of the product. Being the first to introduce bancassurance into the Ghanaian market, all the product should have being launch at the same time so that customers will be allowed to choose from a range of products that meets their needs. •Publicity of the product must be done massively in both the print and electronic media. •Bancassurance should be made compulsory for all SCB customers both existing and new to bank. •Further studies could be done on the introduction of bancassurance into the Ghanaian market. 5. 4 LIST OF REFERENCES 1. Annual report and accounts (2006), financial performance of SCB 2.

Annual report and accounts (2006), awards won by SCB 3. Review (2006), historical background information of SCB 4. DSR Induction Workshop (2008),products offered by SCB 5. DSR Induction Workshop (2008),services offered by SCB 6. The chronicle, Tuesday April12, 2007, “borrowing money and paying interest” by Dr. Paul Acquah. 7. Bancassurance sales report July 2008 by business intelligence unit – SCB. 8. Product knowledge, liabilities 2007 revised , a brief structure of SCB 9. Launching of bancassurance at Accra International Conference Centre, Mr. Francis Mills-Robertson – executive director consumer banking division – SCB


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