Breaking News

Technology: the new paradigm in Zimbabwe banking?

by zfn
12 February 2013 | 4385 Views
What is different about Zimbabwean banks? Ours is the only country in Africa whose banks are not attracting foreign investor interest, why? Those who follow African markets could have noticed that in markets such as Nigeria, Kenya, Botswana and indeed the rest of the sub-region banking stocks are among the most traded by foreigners. The large population of the unbanked especially in rural areas and the high demand for bank credit by growing businesses are some of the factors that are attracting investors. Not so for Zimbabwe.
 
Besides the perceived high regulatory risks, management of some of our banks is often cited as a deterrent especially the structures where major shareholders still perform executive function. On operations, it can be argued that our bankers have failed to come up with effective innovative ideas to tap into the unbanked especially those in informal sector. They still have an obsession with expanding the branch footprints ostensibly to tap into cheap retail deposits even when there is evidence that the future in banking lies in relevant technology which addresses the market's needs.
 
Banks are not expected to reinvent the wheel. All they need to do is look around other countries for successful innovations, evaluate and remodel them for the Zimbabwean customer. Ecocash, which some banks are reportedly fighting against is not an original idea but was somehow sampled from Safaricom's M-PESA and was given a Zimbabwean flavour. Econet did its homework, the product is working and it somehow caught bankers flat-footed.
 
As the Ecocash/banks debate goes on, this week in this column we will venture into the first world and explore how innovators are changing the face of banking using cutting-edge technology that are based on the demands of the customer.
 
For starters there is nowhere in the world where bank charges are popular and in the US, for instance, some entrepreneurs have taken a view that consumers can enjoy a great banking experience without paying through the nose for it.
 
Take Green Dot Corporation as an example. What is striking about it is that it is a bank with 4.4 million active customers and not a single branch. Customers sign up online or in partner retail outlets.  While they do not offer their customers loans or other forms of credit, they do offer prepaid Visa or MasterCard cards that can be used online as well as everywhere else, including free access to an extensive network of ATMs.
 
According to The Economist's May 2012 Special Report: International banking, "for most retail banks, renting, equipping and staffing branches can easily account for 40-60% of their total operating costs." It will be interesting to see what portion of the new capital requirements for Zimbabwean banks will be applied to physical branches.
 
Zimswitch/Visa/MasterCard point-of-sale (POS) machines are not ubiquitous outside the major retail companies because of the expense and difficulty of setting up for smaller businesses. It is therefore basically cash or no-sale.
 
Imagine walking into your favourite coffee shop and having a waiter come up to you, greet you by name and ask you whether you are having your usual brew. When you are done, instead of waiting to get a slip with your bill, imagine opening an app on your iPhone or Android smartphone or tablet, authorising payment for your bill and walking out.
 
This scenario is not from a sci-fi movie script but a mundane daily occurrence in coffee shops across the US. What is particularly impressive about this service is that the merchant doesn't need to fill out a pile of paperwork with a bank or purchase expensive specialised POS equipment. All the merchant needs are a tablet/smartphone and the app.
 
It is also just as easy for the customer: download an app for your smartphone and be setup and ready to go in 5 minutes. This is the amazing offering of a company called Square that is re-inventing the point of sale. Just like with Green Dot, merchants and customers can sign-up and transact without ever visiting a Square office.
 
Many Zimbabweans are already proud owners of smartphones and the proportion of smartphone owners amongst active subscribers will only increase as they become cheaper. Econet has reported almost 2 million active users of its EcoCash platform. Is the leap from paying with something like EcoCash to a Square-like alternative unthinkable?
 
Clearly, poor lending practices are at the heart of many a bank's failure. In fact, many on the street would reckon that they would have done a better job if they had a seat on some of these credit committees. Peer-to-peer lending is a phenomenon that has taken off in a big way in the US and it offers depositors a seat on the credit committee. Prospective depositors/lenders logon to the website, review individual loan applications, and lend those with a risk profile and interest rate that suits them an amount that they are comfortable with being all or part of what the borrower is looking for. Lending Club, the biggest player in this space, has written more than $1.2 bln in loans this way.
 
For those budding entrepreneurs looking to raise capital without the expensive assistance of greedy investment bankers, crowdfunding is an attractive alternative. Kickstarter, the leading US crowdfunding business, has raised more than $450 million since its founding in April 2009. More than 28 000 of the projects it has funded were for entrepreneurs who were looking to raise less than $10 000. The project promoters make a presentation that is posted on the Kickstarter website with details of their project, how much cash they are looking to raise and what they are offering funders. Prospective funders review the project and make pledges online with their credit cards to the extent that they are interested. Institutional venture capital has all but disappeared from Zimbabwean capital markets and raising small amounts outside family and friends for start-up projects is almost impossible. Perhaps a Kickstarter-like platform is the solution.
 
One can make a reasonable case that here in Zimbabwe, far away from California's Silicon Valley, this kind of innovation is a pipe dream several decades from implementation. As the banks scramble to meet the new $100 million capital requirements, are they going to roll out more branches and continue business as usual or will they take a closer look at what's happening in the developed world? Globally, banks have shed more than 500 000 jobs since 2008 (more than 150 000 in 2012 alone) and the blood-letting is not over with UBS announcing an additional 2 000 job cuts in 2013 just last week. Are Zimbabwean banks going to buck the trend and hire more bankers?
 
Some of the developments in technology have caught the attention of our bankers with the Bankers Association of Zimbabwe last week making an unprecedented compliant to the regulator that Econet and its Ecocash platform have not been playing nice. Clearly banking is changing, and it's not incremental this time around, it's a paradigm shift!


Paradigm Banking


Disclaimer:
All articles and letters published on Bulawayo24 have been independently written by members of Bulawayo24's community. The views of users published on Bulawayo24 are therefore their own and do not necessarily represent the views of Bulawayo24. Bulawayo24 editors also reserve the right to edit or delete any and all comments received.

Source: zfn

Could there be war if Grace Mugabe becomes President?

Yes
75.61%
No
8.94%
Who cares?
15.45%
246

Comments

Latest Classifieds (Click Here For More)

News Updates

Email:

Latest News

The End of Mugabe and Mujuru, rise of Mnangagwa

by Itai Mushekwe | 23 October 2014 | 250 Views

Macheso 'infected' husband with STI just before wedding day

by Staff Reporter | 23 October 2014 | 456 Views

Mnangagwa escapes death by a whisker

by Staff Reporter | 23 October 2014 | 1005 Views

Woman launches new political party - A NEW political party, the Afric...

by Staff Reporter | 22 October 2014 | 1160 Views

Tillage starts at a slow pace

by Staff Reporter | 22 October 2014 | 883 Views

Salaries dominate govt expenditure - Public sector salaries continue t...

by Staff Reporter | 22 October 2014 | 1385 Views

Gun shot in Canada parliament building - Video

by Staff Reporter | 22 October 2014 | 1267 Views

Veld fires kill nine people

by Staff Reporter | 22 October 2014 | 1710 Views

Man threatens to kill dad over money from rent - A disobedient son wen...

by Staff Reporter | 22 October 2014 | 1776 Views

Dr Simba Makoni Leave Dr Grace Mugabe Alone

by Suitable Kajau | 22 October 2014 | 4282 Views

Msipa demanding answers from Mugabe - HARARE - Respected Zanu PF elder...

by Staff Reporter | 22 October 2014 | 4541 Views

'Grace Mugabe a liar' - HARARE - Opposition leader Simba Makoni has br...

by Staff Reporter | 22 October 2014 | 2938 Views

State must have nothing to fear - Dzamara - Over 150 people today turn...

by Itai Dzamara | 22 October 2014 | 2570 Views

'I saw a vision of me ruling the heavenly kingdom' says Grace Mugabe

by Staff Reporter | 22 October 2014 | 4438 Views

Woman says she steals for a living, Magistrate left speechless

by Leonard Ncube | 22 October 2014 | 2471 Views

Cyclist kills pedestrian - A cyclist has been fined $400 for hitting a...

by Staff Reporter | 22 October 2014 | 1452 Views

Mother of Pistorius's girlfriend insists she did not want 'revenge'

by Staff Reporter | 22 October 2014 | 1706 Views

Uniting the Ndebele People - The Mzilikazi Cultural Association, MCA i...

by Mzilikazi Cultural Association | 22 October 2014 | 1516 Views

'Insecure' man locks wife in bedroom until he returns from work

by Staff Reporter | 22 October 2014 | 3673 Views

Wrong Ndebele spellings in Coca-Cola Ads - After launching its "Share...

by Staff Reporter | 22 October 2014 | 3739 Views

Duo arrested for sodomising boy (10) - A 10-year-old boy has allegedly...

by Staff Reporter | 22 October 2014 | 1959 Views

Update from Africa Unity Square - Live Update - This live update is fr...

by Africa Unity Square | 22 October 2014 | 5214 Views

BREAKING: Cops in riot gear chase people from Africa Unity Square

by Concerned Citizen | 22 October 2014 | 5772 Views

Dr Grace Mugabe's tours breathes hope

by Tawanda Museve | 22 October 2014 | 3398 Views

Matebeleland pressure group - cum political party takes Zanu PF war to...

by Tongai Zwayisa | 22 October 2014 | 3111 Views

Power cuts disrupt Sadc conference in Vic Falls

by Staff Reporter | 22 October 2014 | 1659 Views

Ebola vaccine trials in West Africa by January says WHO

by Staff Reporter | 22 October 2014 | 892 Views

Zimbabwean woman and her 3 children die in horrific car crash in Austr...

by Staff Reporter | 22 October 2014 | 3074 Views

Entertainment

Zim representative in the Big Brother Africa survives eviction - Zimba...

by Staff reporter | 20 October 2014 | 2319 Views

Grace Mugabe's political comedy takes ZTV hostage - For the past two w...

by Staff reporter | 20 October 2014 | 4614 Views

Oliver Mtukudzi to deliver lecture at Musica 2014 - Zimbabwe's interna...

by Staff reporter | 19 October 2014 | 1323 Views

Gezha maoko - Ladybee (Official Video)

by Staff Reporter | 19 October 2014 | 2302 Views

Matebeleland Music & Arts Festival - Sivala umnyaka ngengoma lapho sit...

by Staff Reporter | 17 October 2014 | 1648 Views

Obediah Matulana releases Christmas DVD - Bulawayo-based musician Obed...

by Staff reporter | 16 October 2014 | 1880 Views

Grace Mugabe honoured in song - Dancehall outfit Final Warning has rel...

by Tawanda Marwizi | 15 October 2014 | 2350 Views

US firm makes money off Zimbabwe concept - United States transport sh...

by Staff reporter | 14 October 2014 | 2952 Views
iBlog

The Zero-day Vulnerability Cve-2014-4114 Impacting All Versions Of Microsoft Windows

new microsoft windows zero-day vulnerability - cve-2014-4114on tuesday, october 14, 2014, isight partners - in close collaboration with microsoft - announced the discovery of a zero-day vulnerability impacting all supported versions of microsoft win... Read More
SecNews 16 October 2014 ago

Obviously, Windows Xp Has Nothing More To Offer

With no support from the manufacturer, windows xp no longer receives antivirus updates, which provoked an increase in the number of attacks on xp users. according to avast company, windows xp systems are attacked 6 times more often than the devices r... Read More
Sergey 12 June 2014 ago