The RBZ has issued an ultimatum for all banks to submit financial inclusion plans for the next 3 years withing the coming four months. Finally, the banks come out of their straight jacket cocoons.
We have already predicted that regulation is the next disruption and this is beginning to tell. I would have been happier if those in telecoms (POTRAZ) would understand this, get it over and done with (net neutrality, Infrastructure sharing, Internet governance etc), so we can move on.
Firstly, while Econet has been accused of resisting products from startups, the banks have played their part in refusing to adopt and support products from the same. How many projects have we heard of that failed because the banks were not happy with them? Case in point
How many projects have we heard of that failed because the banks were not happy with them? Case in point is Charles Nyachowe’s Vantage UEPS (Net1) biometric POS, through which registrations could be done in full, remotely, solving a real headache for banks.
Another example is Afrocoin’s tablet till point POS and NFC tag based transactions initiatives. Shouldn’t banks have taken this opportunity while mobile money was in its infancy? All these products had the idea of taking banking beyond the brick and mortar, but the approached banks simply ignored these in favor of the MNO based inclusion options which they had to fight to the teeth for.
To this day, banks are still considered this upper-class utility that most citizens are really reluctant to associate with. In this economy, who has the time to visit the banks anyway when most businesses have gone informal with an estimated (and disputed) $7,5 billion in the informal sector? Are the banks not interested in this money?
At the same time banks have not done enough to manufacture products that cater for all class of people. Chequing accounts have been out-fashioned almost completely by plastic money. The RBZ has not been surreptitious about it either with the maximum cheque value pegged at a mere $200 for individuals.
The result we saw was the mobile money avalanche that catapulted EcoCash to the forefront in terms of financial inclusion and being a household name and at the same time putting a dampening air over the banks already struggling with lack of public trust from the high failure rate that saw the fall of Trust, Afrasia, Royal, Allied, Barbican and so on.
This new development basically tells the banks “come out of those glass buildings and provide people with banking wherever they are”. This is a victory for mobile money, mobile banking, agency banking; startups in financial services; the list is endless.
Why should banks be closed overnight while technology allows for 24 hours? Why should EcoCash (and the rest) be the providers of mobile money when the money sits in the banks? Shouldn’t these products have been the banks in the first place?
The overall deposits keep falling yearly and banks keep waiting for the customer to come to them when there are options to provide banking to the deepest of roots kumachonyonyo. Banks can’t continue to talk bout Econet’s infrastructure and USSD, they have to think beyond that and technology has already proven that you don’t need the MNOs.
South African banks have started virtual mobile networks and invested in payments platforms beyond the POS device in Spar and the outdated dumb ATMs at every corner. We do need these basics, but the banks must go beyond that.
Without even focusing on the complicated products, you have, for example, the card-based products that can’t even receive funds sent via RTGS.
Surely banks want to hand out a card to my mother in rural Kotwa, but I can’t send her funds via an RTGS transfer from my account. The banks couldn’t even come up with an agnostic card so they were more than happy to let the Mobile Operator, Telecel create one for them.
I know CBZ, POSB, Steward, ZB have been on an agency banking rollout but there is a difference between financial inclusion, products and service and taking the bank out of the brick and mortar and putting it aluminium and cardboard.
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6 comments
Whilst financial inclusion is a noble cause, the a RBZ should ensure that banks and clients are not exposed to Money Laundering activities as banks lower the bar. A case in point is those agencies hired by Steward Bank to open accounts at the shopping centres. The whole process lacks Know Your Customer (KYC) basics. For example I was approached by one energetic youngster offering to open an instant account for me. And here are his responses to my questions.
Copy of ID: he will take a photo of my ID and he or Steward Bank will give to a commissioner of oaths who will certify in my absence ( red flag)
On proof of residence: I need my landlord or parent to write me an affidavit ( he had copies of forms) that I stay with them and the same commissioner will certify ( again in my absence).
The first culprit is Steward bank for cutting corners and the commissioner of oaths should be arrested for fraud or forgery.
For God’s sake the writer of this article has just alluded that 95% of the money is in the informal sector and you are busy raising red flags? Really? Go to Magaba right now and ask them proof of residents, proof of income bla bla and tell me if you will get even a single customer!
This editorial contains many inconsistencies and false statements. For example, the author claims that deposits at banks have been declining – the opposite is actually true whereby deposits have been increase at a substantial rate. Further, the author is uneducated about the extent to which banks have progressed in offering 24/7 financial inclusion offers. The banks have jointly deployed thousands of agency sites to provide non-banking site services. Also, the author claims that RTGS cannot be sent to cards – the opposite is true.
Whilst this writer agrees that there is much scope for improvement, it is irresponsible and misleading to publish reports as inaccurate as this one.
I beg to differ John strongly in fact. Case in point: CBZ has this card account which is like a mobile wallet account. All transactions are based on this card but you cant do an RTGS transfer into the card account. The card account is like a virtual account backed by a group trust acccount. Check with CBZ.
Secondly, most, if not all bank agents close after hours. Thats like a few hours more than the normal banking hours but still not 24/7. Almost all banks have some sort of mobile banking app that mainly allows you to pay bills and the like but if you are holding cash right now after hours and your bank account is not funded, how are you going to send that money to anyone. The only option since the agents are closed and Ecocash is most likely closed is Steward bank’s deposit taking atms. Havent really seen one though. Tetrad bank had those ITMs but then again they are closed.
The deposit situation is relative. movement from US$4,7bn to US$5,3bn against about 5 FIs closing, huge NPLs, decreased profitability (US$50,8 million in the fourth quarter of 2014 to US$4m in Q1 2015) and banks holding or hoding more liquid assets rather than investments is not real growth in deposits, its just more cautious banking.
You sir have just said he is wrong without giving us your own facts. Typical attitude ye vanhu vakawanda just saying you are wrong and ‘uneducated’ without offering an alternative narrative. I also think that banks are not open enough from my experiences with them from childhood. I had a Zimbank Kiddy Bank account btw
Spot on Victor. At this late stage we shud not even be talking about financial inclusion, we shud be talking about ECONOMIC INCLUSION. The difference is that economic inclusion means basically e-commerce. The mobile wallets shud as a necessary next step be heavily involved in e-commerce.
Short of legislation, Zimbabwean banks will never play ball. They will never adopt true economic inclusion. By setting up lots of agency outlets they think this is financial inclusion ; IT’S NOT.
Zim banks are simply not interested in e-commerce. For example, our company applied to connect as a merchant on vpayments via CBZ bank. All forms application etc done! Weeks later, we are still waiting for a connection. On the other hand it took us one week to open a non resident bank account in a SADC country plus 2days to connect up as a merchant on an overseas payment processing platform. Yes all the forms, IDs etc were submitted electronically to the satisfaction of the foreign banks! This is reality outside Zimbabwe.