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Mobile Banking Weighing Down Traditional Banking Systems


In Zimbabwe, a country with over 100 percent mobile phone use, the nation’s biggest telecommunications companies, Econet Wireless Zimbabwe and Telecel Zimbabwe, through their EcoCash and TeleCash products, account for nearly 5 million users. (Courtesy Pho
In Zimbabwe, a country with over 100 percent mobile phone use, the nation’s biggest telecommunications companies, Econet Wireless Zimbabwe and Telecel Zimbabwe, through their EcoCash and TeleCash products, account for nearly 5 million users. (Courtesy Pho

Zimbabwe is among few countries in sub-Saharan Africa that has a large number of customers using non-formal banking compared to traditional banking.

Sub-Saharan Africa has become the bedrock of mobile banking, pushing its penetration over six times the global average of mobile banking users.

In Zimbabwe, a country with over 100 percent mobile phone use, the nation’s biggest telecommunications companies, Econet Wireless Zimbabwe and Telecel Zimbabwe, through their EcoCash and TeleCash products, account for nearly 5 million users.

With the emergence and steady growth of mobile banking, the big question is: What happens to traditional banks and banking, especially in the country where the near-collapse of the economy not only severely affected banking but the pockets of ordinary Zimbabweans?

Independent economist, Masimba Kkuchera, says although it was not mainly the fault of traditional banks, local people associate traditional banking with the dumped Zimbabwean dollar and the disappearance of their money around 2009.

Economist with the Labor and Economic Development Research Institute of Zimbabwe, Prosper Chitambara, says with low confidence in the banking sector, the major challenge for banks has been in drawing the estimated $8 billion circulating in the non-formal banking sector through various products, some created by these financial institutions.

Compared to traditional banking, customers say mobile banking is simpler. With a mobile carrier phone number and a mobile banking user account, users can deposit, withdraw and transfer money, pay bills and merchants for goods and services at the click of a button or through an agent at a convenient store anywhere in the country.

Traditional banks require bankers to be present at a location to conduct similar business but these institutions are able to provide financial assistance outside of these products.

Former Stanbic Bank employee, Professor Ngoni Chivishe, says with the surge of mobile banks, EcoCash in particular, some banks have expressed concern over regulations in the sector, as such products are working as non-traditional banks to avoid certain regulations.

Professor Chivishe adds that with the boom of new technologies, traditional banks, especially those in Africa, must start to move with the times.

Kuchera agrees, adding that some banking regulations have hindered traditional banks to follow suit with the mobile banking trend but there is need for banks to look at their cost-making structures and source money to begin implementing changes similar to mobile banking.

But some traditional bankers say they are not worried about the surge of mobile banking, as there is interest in merging some mobile banking platforms within their institutions.

Banc-ABC chief economist and banker James Wade says mobile banking for traditional bankers is a phenomenon that cannot be ignored.

Wade says though mobile phone companies were able to enter that market first, traditional banks are not far behind in moving to provide platforms to enhance their revenue and grow mobile banking customers.

Economists and bankers agree that regardless of differences in banking systems, the interest is to embrace new and emerging technologies and boost the economy while increasing liquidity in not only Zimbabwe, but Africa as a whole.

Report By Tatenda Gumbo
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