- 20 Marks
Question
DigiCash Ltd a new microfinance company has developed a unique mobile application (App) that enables customers to register, make deposits, and withdrawals. The App is also used to grant small loans to customers and for the collection of loan repayments. The company has also installed a toll-free hotline that enables customers to make enquiries and for various forms of customer services. Thus, customers do not need to visit the offices of DigiCash. The owner and Chief Executive Officer (CEO) of the business, Joe Maxwell, and other executives can remotely log into the systems to monitor operational activities and track employeee performance. The App is also used for internal communication, meetings, and various forms of collaboration since the App has a direct interface with the firm’s accounting and HR systems. The employees use the App as the main medium for exchanging both corporate and personal files. The CEO is concerned that customers and other service providers may not patronize the App. He is also concerned about security risks.
a. Describe five (5) technology-related challenges that DigiCash Ltd is likely to encounter with the introduction of the App. [10 Marks]
b. Discuss five (5) measures that the company can implement to improve patronage of App and DigiCash’s services. [10 Marks] [Total: 20 Marks]
Answer
In the Ghanaian microfinance sector, regulated under Act 930 and BoG directives, apps like those from MTN MoMo or similar fintechs face similar issues. DigiCash’s setup mirrors post-2019 digital shifts, but risks echo those in the banking cleanup.
a) Five Technology-Related Challenges (10 Marks, 2 Marks Each):
- Cybersecurity Vulnerabilities: Remote access and file sharing expose the app to hacking, potentially leading to data breaches; aligns with BoG’s Cyber Directive 2020, where weak encryption could cause losses like in past fraud cases.
- Integration Issues with Legacy Systems: Interfacing with accounting/HR systems may cause compatibility problems, leading to data inconsistencies and operational disruptions, common in Ghana’s transitioning fintechs.
- Scalability and Performance Bottlenecks: As user base grows, the app might face slowdowns or crashes due to insufficient server capacity, impacting reliability in high-traffic scenarios like loan disbursements.
- Data Privacy and Compliance Risks: Handling personal files and financial data without robust controls risks violating data protection laws, attracting BoG penalties similar to outsourcing non-compliances.
- Dependence on Internet Connectivity: Rural users in Ghana may experience downtime due to poor network coverage, hindering app usage and exacerbating digital exclusion post-DDEP.
b) Five Measures to Improve Patronage (10 Marks, 2 Marks Each):
- User Education and Training Campaigns: Launch awareness programs via SMS, community workshops, and demos, highlighting ease of use, as done by Access Bank Ghana to boost mobile banking adoption.
- Incentives and Promotions: Offer bonuses like fee waivers or interest rebates for app users, encouraging trials and aligning with competitive strategies under BoG’s financial inclusion goals.
- Enhance Security Features and Transparency: Implement biometrics, two-factor authentication, and regular audits, communicating these via app notifications to build trust, per BoG’s security directives.
- Partnerships with Telcos and Agents: Collaborate with MTN or Vodafone for better integration and agent networks, expanding reach in underserved areas and improving accessibility.
- Feedback Mechanisms and Continuous Improvements: Integrate in-app surveys and updates based on user input, ensuring the app evolves, similar to Stanbic Bank’s iterative digital enhancements for customer retention.
- Topic: developing and building a channel strategy
- Series: APR 2023
- Uploader: Samuel Duah