Over the past week, the Commercial Bank of Ethiopia has been thrust into the spotlight due to a shocking incident—what can only be described as a “virtual robbery.” This occurrence, within one of the country’s leading financial institutions, has left us all astounded. What is particularly astonishing is that this audacious act took place during a time when most individuals would typically be at home, resting and sleeping. How did news of the system’s failure spread so rapidly? Within a mere 12 hours, millions of birr were drained from the bank. This event has brought to light a couple of critical observations.
Firstly, it highlights the inherent risks associated with online systems and technologies, reminding us that complete trust should not be placed in them. However, the most crucial revelation lies in the desperation displayed by people, particularly the youth, who are in dire need of money.
It appears that the moral and ethical values we believed were deeply ingrained in our society have reached an alarming low. Shockingly, it was university students, who one would expect to uphold moral standards, that dominated this unfortunate frenzy of embezzlement. What’s even more disconcerting is that many of these young individuals reportedly squandered the stolen funds on unproductive indulgences such as clubs and drinks. This begs the question: Where is the younger generation headed? What has driven our youth to become so unscrupulous?
Undoubtedly, my heart goes out to the parents who find themselves in this predicament. Some parents have even had to return the ill-gotten gains to protect their children from further disgrace and legal trouble. It is disheartening to think that these same parents must have once proudly boasted about their children’s admission into university, unaware of the moral decay that awaited them.
While I do not wish to dwell excessively on the moral and ethical values of today’s youth, I feel compelled to shift our focus to the state of our banking sector. Recent events have left me questioning the trustworthiness of our banks. Personally, I would hesitate to deposit significant amounts of money or savings into a bank following this incident. Moreover, considering the high inflation rate, I would not recommend keeping substantial cash holdings in a bank.
In a previous article, I briefly discussed the state of banks in Ethiopia, and the recent incident has prompted me to delve further into the matter.
There are two aspects of the banking sector that I find perplexing. Firstly, the rapid proliferation of banks is concerning. Secondly, their focus on superficial differentiating factors stands out. From my perspective, the primary distinguishing characteristic among our banks seems to be their names, often targeting specific ethnic or religious groups. However, in terms of service differentiation, I have observed limited variation, if any.
This raises questions about the rationale behind the growing number of banks and the lack of substantial differentiation. Moreover, it saddens me to see that bank officers, typically young individuals, bear the brunt of the responsibility for attracting customers and encouraging them to open accounts and save. Their pleas for even a modest savings deposit of 50 birr reflect a disheartening reality that fails to promote productive financial habits.
At times, I contemplate whether our banking sector truly requires a wake-up call in the form of robust competition. Could it be high time for international competitors to enter the Ethiopian banking industry and shake things up for the benefit of both customers and banks themselves? I strongly believe that strong and genuine competition is the catalyst for growth and improvement.
