Breaking News

Technology: the new paradigm in Zimbabwe banking?

by zfn
12 February 2013 | 3574 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

Should Zimbabweans be deported from the UK?

Yes
24.43%
No
73.28%
Not sure
2.29%
131

Read more from iBlog:

Yet Another Wave Of Digital Destruction Is Coming

Malware fever keeps on raging, taking sophisticated forms to wreak havoc around the worldwide web. even if your system is guarded thoroughly, you are ... Read More
SecNews 02 March 2014

Comments

News Updates

Email:

Latest News

Man stabbed on the buttock - A MAN from Douglasdale in Bulawayo who is...

by Staff reporter | 16 April 2014 | 294 Views

Zanu-PF determined to regain control of Bulawayo - ZANU-PF is seemingl...

by Lulu Brenda Harris | 16 April 2014 | 270 Views

I did not instruct war veterans to grab farms, says Dabengwa - ZAPU le...

by Lulu Brenda Harris | 16 April 2014 | 376 Views

Biti warns against the Zimdollar return - Former finance minister Tend...

by Mthulisi Mathuthu | 16 April 2014 | 566 Views

I was not hiding - Welshman Ncube

by Staff Reporter | 16 April 2014 | 587 Views

Mandaza castigate Zim opposition parties

by Staff Reporter | 16 April 2014 | 425 Views

Jacob Zuma booed

by Staff Reporter | 16 April 2014 | 1478 Views

Head-on collision, 4 dead - FOUR people died on the spot while one was...

by Staff reporter | 16 April 2014 | 3089 Views

Iranians abandons Zimbabwe project - Chitungwiza based textile manufac...

by Staff reporter | 16 April 2014 | 1636 Views

Bantu Rovers eye Dembare upset - Castle Lager Premier Soccer League (P...

by Bukhosi Mangena | 16 April 2014 | 901 Views

Tribalism is real in Zimbabwe - As we approach Zimbabwe's 34th indepen...

by Mbonisi Gumbo | 16 April 2014 | 3564 Views

Mat'land applicants get automatic entry to teacher-training program - ...

by Staff reporter | 16 April 2014 | 3178 Views

Scotland faces a Zimbabwe moment on currency options - The ongoing fin...

by Colls Ndlovu | 16 April 2014 | 2292 Views

Whither Zimbabwe at 34!

by Dr. Dumiso Dabengwa | 16 April 2014 | 1664 Views

New Dembare board chairman appointed

by Staff reporter | 16 April 2014 | 1765 Views

Woman threatens to remove pant in court

by Staff reporter | 16 April 2014 | 3271 Views

Wife bites hubby's manhood - A woman accused of biting a portion of he...

by Staff reporter | 16 April 2014 | 2904 Views

Police implicated in bribery scam - Police officers manning the Harare...

by Staff reporter | 16 April 2014 | 1769 Views

Man demands maintenance refund after DNA tests - A CHITUNGWIZA man who...

by Staff reporter | 16 April 2014 | 3084 Views

Chiyangwa caught on camera wearing a wig looking for his boyfriend - V...

by Staff Reporter | 16 April 2014 | 4545 Views

Air Zimbabwe flies with less than 30 passengers aboard - Air Zimbabwe ...

by Staff reporter | 16 April 2014 | 2818 Views

Slashed perks for bigwigs month end - All chief executives of State-li...

by Staff reporter | 16 April 2014 | 2038 Views

Gumbura's security guard acquitted -  Magistrate Victoria Mashamb...

by Staff reporter | 16 April 2014 | 1669 Views

MDC-T provincial chair wants Tsvangirai charged - Opposition MDC-T Man...

by Staff reporter | 16 April 2014 | 2039 Views

'Zanu-PF feeding us,' says MDC-T - THE opposition MDC-T party has cl...

by Staff reporter | 16 April 2014 | 2781 Views

Zanu-PF hawks eye Mugabe on post - With President Robert Mugabe's Zan...

by Staff reporter | 16 April 2014 | 2923 Views

Dembare boards calls an emergency meeting - SWEEPING executive and tec...

by Sikhumbuzo Moyo | 16 April 2014 | 1369 Views

Teachers start receiving their salary increments - TEACHERS smiled al...

by Pamela Shumba | 16 April 2014 | 3576 Views

Entertainment

Tuku Greatest Hits Concert postponed - Oliver Mtukudzi's Greatest Hits...

by Staff reporter | 16 April 2014 | 552 Views

'Corruption is betrayal of the values of the liberation struggle' says...

by Jonathan Mbiriyamveka | 16 April 2014 | 1279 Views

Stand Up comedian to record one man show in Zimbabwe - Daliso Chaponda...

by Staff reporter | 16 April 2014 | 739 Views

L'Vovo Derrango billed for Bulawayo show - THOSE attending the Zimbabw...

by Bongani Ndlovu | 16 April 2014 | 740 Views

Artist Profile - Interview with D2X

by Staff Reporter | 14 April 2014 | 1230 Views

Generations actor's Bulawayo show flops

by Showbiz Reporter | 14 April 2014 | 5062 Views

Mukanya gets 'wild' applause - Self exiled legendary musician Dr Thoma...

by Staff reporter | 13 April 2014 | 4790 Views

Freshlyground to perform in Zim's HIFA after insulting Mugabe - South...

by Arts reporter | 13 April 2014 | 3223 Views

Generations' actress draws big crowd

by Staff Reporter | 13 April 2014 | 4948 Views

Generations actress in Zimbabwe - GENERATIONS, a South African soapie ...

by Bongani Ndlovu | 12 April 2014 | 2791 Views

Farai & The Forest Dawn to rock Zim Achievers Awards

by Arts Correspondent | 11 April 2014 | 1702 Views
iBlog

Enemy Within Zimbabwe

zimbabwe is a country measuring approximately 390,757 sq. km with an estimated population of nearly 13.5 million people. the country is made up of 16 different tribes and authorised spoken languages as enshrined in the constitution. the truth is ... Read More
NativeAfrica 30 December 2013 ago

Galileo Is A Tool That Can Spy All Kinds Of Mobile Devices

hackers from italy said that they could hack any smartphone.there is a tool in the software market, that can spy the owners of devices running ios, android, windows phone, blackberry, as well as mac and pc. italian hackers from hacking team reporte... Read More
ITnews 25 January 2014 ago