Challenges Facing Rural Banks

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Challenges Facing Rural Banks. Presentation by: Atty. Arifa A. Ala 12 November 2013. Main Challenges. Stiffer competition Changing environment/market Building talents/expertise Building capital Strengthening management Common management issues. Stiffer Competition in the Market. - PowerPoint PPT Presentation

Text of Challenges Facing Rural Banks

  • Challenges Facing Rural BanksPresentation by: Atty. Arifa A. Ala 12 November 2013

  • Main ChallengesStiffer competitionChanging environment/marketBuilding talents/expertiseBuilding capital Strengthening managementCommon management issues

  • Stiffer Competition in the MarketBig banks start to serve rural areasEconomies of scale; wider network More expertise in marketing/launching productsMore innovativeMore competitive interest ratesImpact on rural banksLoss of customersLower margins

  • Changing Environment/MarketCustomers are more demandingTechnology is rapidly changing; increased IT risk exposureMore regulations

  • Building Talents/ExpertiseDifficulty in attracting and retaining pool of talentsBig players offer better compensation packagesMany professionals prefer to work in urban areasBetter career prospects in bigger institutions

  • Building capitalCompliance with capital requirementsExpansions require additional capitalChallenges in attracting investorsEspecially for financially-challenged banks

  • Strengthening ManagementThe need for -More active board and management oversightEstablishment of appropriate risk management system

  • Common Management IssuesIn some, management is confined to family members Limited technical capabilities and experience of people running the banks

  • Management IssuesLimited workforce results in-Overlapping FunctionWeak segregation of duties Conflicting functions

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