Adapt or perish, banks warned over the growth of mobile money

Adapt or perish, banks warned over the growth of mobile money

HARARE, December 14 (The Source) – Zimbabwe banks need to adapt to the country’s changing economic landscape or risk losing out to mobile money operators as the economy continues to informalise, according to a United Nations survey.

The Making Access Possible (MAP) survey carried out by South African think-tanks — FinMark Trust, Centre for Financial Regulation and Inclusion (Cenfri) and the United Nations Capital Development Fund (UNCDF) — showed that declining income and employment levels have resulted in the reduced use of formal financial services and formal banking services.

Cenfi Technical director Hennri Bester said banks share of financial inclusion was declining while presenting the survey’s findings on Monday.

“The banking system is in real trouble, it has lost a lot of ground. Financial inclusion in Zimbabwe is not about credit or savings it is about payments and the banks have been tied down by the ankle when it comes to payments,” he said.

The survey showed that while the number of people with bank accounts had increased to 30 percent of the country’s seven million adult population from 24 percent in 2011, there had been rapid decrease in the use of bank accounts.

Dormant bank accounts have increased from four percent in 2011 to 25 percent in 2014.

The emergence of mobile banking services such as EcoCash, One Wallet and TeleCash on the domestic market has also created alternative platforms where people transact and save their money.

Bester said although retail banking was declining fewer people used fewer money lenders.

“Micro Finance Institutions (MFI’s) do not rate in Zimbabwe. They are just too small you cannot build a financial inclusion strategy on MFIs. It’s a no go because people do not trust them at all,” said Bester.