Breaking News

Technology: the new paradigm in Zimbabwe banking?

by zfn
12 February 2013 | 5011 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

Does Prophet Magaya's anointing oil work?

Yes
17.34%
No
70.27%
Spiritual matters
12.39%
444

Comments

News Updates

Email:

Latest News

Junior cop sues Chihuri over dog's death - A junior police officer bas...

by Staff Reporter | 04 March 2015 | 515 Views

Granny murders four-year-old granddaughter - A 56 year old Tsholotsho ...

by Staff Reporter | 04 March 2015 | 435 Views

MDC-T rejuvenates Zvimba party structures - The Movement for Democrati...

by Staff reporter | 04 March 2015 | 513 Views

Zipra heroines were never rewarded - Thirty years on - the heroines of...

by Staff reporter | 04 March 2015 | 599 Views

Jacob Mudenda lifts ban on mobile phone use in Parliament - Zimbabwe's...

by Irwin Chifera | 04 March 2015 | 338 Views

Tsvangirai not ready to repay the controversial State Loan - Audio - ...

by Blessing Zulu | 04 March 2015 | 595 Views

MDC-T accuses Mudenda of double standards - The ejection of Zanu PF le...

by Staff Reporter | 04 March 2015 | 2228 Views

Radio licences: Jonathan Moyo beats Obert Mpofu - Information Media an...

by Staff Reporter | 04 March 2015 | 4122 Views

'No financial assistance until Zimbabwe clears arrears,' says IMF - Zi...

by Rumbidzayi Zinyuke | 04 March 2015 | 1592 Views

BCC servicing of water, sewer and roads at Emhlangeni - Photos

by Staff Reporter | 04 March 2015 | 2359 Views

Do you know where the word Sascam comes from? - SASCAM = "Salisbury As...

by Staff reporter | 04 March 2015 | 3201 Views

Joice Mujuru's response to Mugabe - Full text - Press Statement by fo...

by Joice Mujuru | 04 March 2015 | 4759 Views

Woman caned for sleeping with friend's hubby - Video - This video was...

by Staff Reporter | 04 March 2015 | 5104 Views

Zimbabwe premier soccer league top earners

by Sibhekisipho Fayayo | 04 March 2015 | 4525 Views

Tsvangirai steals Prof Welshman's property, forgets to change name - T...

by Staff reporter | 04 March 2015 | 4255 Views

Pastor impregnates 20 congregants -  A 53-year-old pastor from Ni...

by Staff reporter | 04 March 2015 | 4958 Views

Bosso raid Bantu again - HIGHLANDERS FC have fired goalkeeper Liberty ...

by Ricky Zililo | 04 March 2015 | 2489 Views

Chiyangwa's stands worth $2.1 million under threat - STEWARD Bank, the...

by Staff reporter | 04 March 2015 | 1916 Views

'Mujuru dismissal retrogressive' - Leader of the opposition in the Nat...

by Staff reporter | 04 March 2015 | 2465 Views

CIO agents arrested at Mujuru farm - As the savage assault on former ...

by Staff reporter | 04 March 2015 | 4652 Views

Mujuru bankrolls anti-Mugabe plot - Axed VP Joice Mujuru is now active...

by Staff reporter | 04 March 2015 | 4347 Views

Robert Mugabe's imaginary assassins - President Robert Mugabe clearly ...

by Tawanda Majoni | 04 March 2015 | 1814 Views

MISA Zimbabwe condemns new radio licence allocation as partisan - The ...

by Staff reporter | 04 March 2015 | 904 Views

Family members die after entering restricted room - A Family from Lala...

by Sukoluhle Ndlovu | 04 March 2015 | 3189 Views

Granny, 78, stumbles on bloody manhood in yard - AT FIRST granny Eliza...

by Staff reporter | 04 March 2015 | 2317 Views

Women gang up on baby daddy

by Gibson Mhaka | 04 March 2015 | 2956 Views

Entertainment

TV Programme Concepts Requirements - Dear independent producers,Thank ...

by Staff reporter | 03 March 2015 | 977 Views

Fireworks expected on the Easter Weekend in UK

by Staff Reporter | 03 March 2015 | 1128 Views

DStv annual price increase effective 1 April 2015 - MultiChoice Afric...

by Mafu Sithabile | 02 March 2015 | 3103 Views

Popular Zim dancehall chanter arrested for fraud

by Liberty Dube | 27 February 2015 | 4395 Views

Group pens song for Mugabe - A 7-member group from Acturus has release...

by Staff reporter | 21 February 2015 | 2046 Views

Mathias Mhere saga takes new twist - Gift Mahlupeka, who allegedly che...

by Staff reporter | 20 February 2015 | 10960 Views

Mlambos Express Band flies Matabeleland Flag - Mlambos Express Band po...

by Entertainment Reporter | 20 February 2015 | 3539 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

Time To Kiss Zimbabwe Goodbye Forever.

By israel dubethings fall apart at zanupf. brother turns against brother, sister betrays sister. the center cannot hold anymore. as the walls of oppression and discrimination collapse, matebeles must make sure that they do not find themselves lost i... Read More
myAfroTube 03 November 2014 ago