(a) The external environment of a bank refers to the outside forces and conditions that influence its operations but are largely beyond its direct control. These include economic, political, legal, technological, social, and competitive factors in the broader Ghanaian and global context. For example, in Ecobank Ghana, the external environment encompasses Bank of Ghana (BoG) regulations under the Banks and Specialised Deposit-Taking Institutions Act, 2016 (Act 930), fluctuating inflation rates, and competition from fintech firms like MTN MoMo.

The internal environment, on the other hand, consists of elements within the bank’s control, such as its resources, culture, structure, and processes. For Ecobank Ghana, this includes its organizational culture, employee skills, financial resources, and internal policies on risk management aligned with BoG’s Corporate Governance Directive 2018.

(b) Three factors of the internal environment:

• Organizational culture: This shapes employee behavior and decision-making. In managing a bank like Ecobank Ghana, a strong culture of compliance and ethics is crucial to prevent governance failures, as seen in the 2017-2019 banking cleanup where banks like UT Bank collapsed due to poor internal cultures.
• Human resources: The skills and motivation of staff directly impact service delivery. Effective HR management ensures talent retention and training, which is vital for operational efficiency and complying with BoG’s recapitalization guidelines post-DDEP (Domestic Debt Exchange Programme) in 2022-2024.
• Financial resources: This includes capital adequacy and liquidity. Maintaining strong internal finances is essential for meeting BoG’s Capital Requirements Directive (CRD) and sustaining profitability amid economic volatility.

Two factors of the external environment:

• Regulatory environment: BoG directives, such as the Liquidity Risk Management Guidelines, dictate operational standards. Their importance lies in ensuring compliance to avoid penalties or license revocation, as evidenced by the cleanup of undercapitalized banks.
• Economic conditions: Factors like GDP growth, inflation, and currency stability affect loan demand and default rates. In Ghana, post-DDEP recovery in 2025 requires banks to adapt to high interest rates, making economic monitoring critical for risk management and profitability.

(c) SWOT Analysis (Strengths, Weaknesses, Opportunities, Threats) is a strategic tool that can drive changes in Ghana’s banking industry by identifying internal capabilities and external possibilities for improvement.

• Strengths: Listing internal advantages, such as a bank’s robust digital infrastructure (e.g., GCB Bank’s mobile app), can lead to changes like expanding fintech partnerships to enhance customer reach and comply with the Payment Systems and Services Act, 2019 (Act 987).
• Weaknesses: Identifying issues like high operational costs can prompt changes such as process reengineering to reduce expenses, as seen in banks post-2017 cleanup adopting cost-cutting measures for BoG approval on recapitalization.
• Opportunities: External prospects, like growing mobile money adoption, can drive changes through digital transformation strategies, enabling banks to capture market share from non-bank competitors and align with BoG’s sustainable banking principles.
• Threats: Factors like cyber risks under the Cyber and Information Security Directive 2020 can lead to changes in investing in advanced security systems, preventing breaches that could erode trust, as in global cases like Barclays’ data incidents adapted to Ghanaian contexts.
• Overall integration: By combining these, SWOT can facilitate holistic changes, such as strategic mergers (e.g., Access Bank Ghana’s expansions), ensuring resilience and ethical practices in a dynamic economy.