Mobile Money: Zim banks moan about unfair competition from mobile operators

L.S.M Kabweza Avatar

CompetitionA report today by financial news and analysis service FinX says the Bankers Association of Zimbabwe have proposed that mobile money services be included in new banking reforms for the country. This, the bankers say, would create a level playing field in an sector facing significant disruption from mobile phone operators. The bankers have complained that the absence of such regulation will see their lunch eaten by the mobile operators as mobile is a cost effective way to reach the unbanked.

A bank executive who spoke to FinX anonymously is quoted in the report:

Cell phone companies are welcome to offer MMS but they should do it via banks. For example Ecocash is using various banking platforms and that is a noble strategy, but there is concern that banks have no guarantee that Econet will not steal their clients

Econet Wireless has registered significant success signing up users to its EcoCash mobile money service, managing to get some 1.7 million subscribers just a year after launch. The company also announced this week that at least US $100 million is being transferred from the country’s urban centres to rural areas through the platform. Last year, Econet acquired a local financial institution, TN Bank, primarily to drive the adoption of its mobile money service.

Service adoption and transaction figures from the only other mobile operator playing in the mobile money space, NetOne, are not clear. Indication in the market however is that the requirement by NetOne for subscribers to exchange their regular SIM cards for high capacity ones that have the MMT application, has held back adoption.

Telecel Zimbabwe, the third mobile operator in the country, launched an MMT service back in January 2011, but killed the service later in order to focus on their GSM network core service.

The majority of Zimbabwean banks interconnected through a national switching platform called Zimswitch Shared Services and have been introducing mobile money and banking services through it. Suggestions in the market however are that Zimswitch doesn’t yet have seamless MMT access to close to 60% of the mobile subscribers in the country (Econet’s subscribers).

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  1. tinma@n

    I see three possible “solutions”:
    – Banks quit being crybabies and innovate

    – Banks should lobby for EcoCash and similar services to be governed by the Banking (and other financial services) act(s) as they have an unfair advantage of no regulatory hurdles, yet offer banking services. Ofcourse collateral damage is the unbanked masses who are benefiting immensely from the services

    – Banks should establish smart partnerships with these mobile payment companies. Enter m/e-commerce. We need banks as potential merchants and banks want-in on the the m-commerce wave, interface with them… follow the reasoning

  2. James

    Banks have not got PCI compliance so they have left a huge gap for Mobile operaters, cos they cannnot offer customers VISA debit cards so how r people suppossed to bank an withdraw their money when they charged for accounts

    1. Tino

      NMB, Standard, FBC, Barclays all offer Visa or Mastercard debit cards…so I dont get your point.

      1. James

        None are Zim banks e.g. ur CBZ’s etc should all offer visa debit cards mastercards r credit an debit is pay as you go master card check out what PCI compliance is in the west mobile wallets a regarded as useless

        1. Optimus Prime

          ‘Local’ banks also offer Mastercards. I bank with Kingdom and I have a mastercard

  3. Welly Mbedzi

    these banks are so out dated they should learn from Eco Bank and try to be competitive, if you have used Eco Bank’s internet banking you should know what i mean by good service. Banks should give us convenient products…

    1. tinma@n

      Every one of them should learn from FNB.

  4. Clement W. Siby

    These is the most outrageous complaint i have heard in ages. I am in the IT sector and i have tried to engage Banks to embrace innovative IT solutions for banking and they have either been reluctant or downright opposed. Now that the ICT sector has moved on and innovated they cry foul. That is quite a shame.

    1. William Chui

      But how willing are the EcoCash and OneWallet guys to embrace your “innovative IT solutions”?????

  5. Clement W. Siby

    Why should punitive laws be enacted to go after new innovation, the services offered by products such as Ecocash are not only convenient but cost effective for the consumer, it is up to the banks to partner or compete. They have thus far benefited from charging exorbitant bank charges that have discouraged many from banking in a sector which was already plagued with a confidence crisis. They have been shooting themselves in the foot for a while now, they can’t turn now and seek protection of the law against innovation!

  6. Prosper Chikomo

    This is absolute nonsense, rubbish!!! These banks that are complaining are not the ones that were innovative enough and had the vision to launch a product like Ecocash. Why didn’t they launch it themselves? if they cannot compete they must surrender their banking licenvces and let innovative financial institutions like ENG Capital take over or let born frees run the banking industry.

    there is concern that banks have no guarantee that Econet will not steal their clients/blockquote>

    What clients does Econet, a telecomms business, steal from those banks?

    Every person who has a bank account is asked for a mobile phone number, are those same banks not afraid that they will be giving their clients to mobile networks?

    Econet also had more subscribers than any bank had account holders. so what clients do those banks think Econet can steal from them?

    What a disingenious argument. You can see for yourself the quality of management (executives) some Zimbabwean banks have. Uninnovative and uncompetitive, and always calling for more regulation of competitors when they cannot compete.

    This is the same reason why there is no venture capital industry in zimbabwe because because banks say “our clients will be stolen”

  7. Time

    hahah gotta love-hate Zimbabwe. When the big dogs feel their market share going because of their inertia, they call upon government to interveen. Look at that E10 fuel scandal where they’re trying to force us to buy it and service stations to sell it…

  8. Etcetra

    No wonder why this banker elected to remain anonymous. Most of these banks are older than the Mobile operators and for banks to fear “theft” of their clients is a laughable excuse which borders on clear lack of modern leadership, innovation and poor investments in IT Infrastructure by these banks. Why should clients stick around with banks that charge exorbitant percentages for every transaction inluding deposits and then advance the same at rates above 20% p.a ? These banks should wake up to reality and forget about yesteryears when people were made to feel proud for owning a bank account. It seems every common man on the ground knows the banking services they need but the banks are simply arrogant. There are plenty of opportunities for banks but they are simply out of touch with perceptions among the unbanked. What did Econet see in a remote field that 17 banks in that failed failed to see ? That should give a guiding answer to the Bankers.

  9. James

    A network provider cannot be a bank only in ZIM i guess, banks shoiuld be offering more facilities e.g. online banking, cards with NFC chip an pin etc…

  10. Chris Mberi

    Can someone help me clear one misconception that keeps appearing over and over again by answer this question: which banks charge deposit/withdrawal transaction fees higher than Ecocash for the common amounts of less than $200?
    At first glance, yes banks are cry babies but then, lets remember they operate within a regulated environment governed by the big RBZ and hence their innovation is limited within that environment in which CORE BUSINESS has been emphasized over and over again in the name of safeguarding depositors funds. I did not see anywhere where anonymous banker asked that new restrictive measures be applied to the mobile banking sector so as to create a level playing field. Instead all he could be asking is that new reforms take into consideration the emergence of this new banking system by relaxing regulation on banks so as to allow them to partner more transparently with too many restrictions. Remember it is regulation that dictates their core business, security and systems implementation thereby making it cumbersome for them to open up to new ideas and partnerships in fear of crossing the regulator’s path. I believe regulation is important but regulation should be relevant and forward looking. If we don’t push for that level playing field in 5 years time Zimbabwe will have one uncontrolable bank… TN bank

    1. Chris Mberi

      of course the stealing of customers part is crazy lol

      1. Elopay

        Hahahaaa! I find some of the topics very interesting. I believe econet has mover 7m customers or there about. How then do they still 1m customer from the banks….I think sometimes people are creating stories for us to enjoy and laugh and every time I read this one I can’t stop laughing.
        EcoCash has about 2m customers and instead of banks complaining they should target over 7m or so that are unbanked or under banked.
        We need to give customers options so that those who believes EcoCash is expensive they have alternatives.
        We as the writers needs to be very careful not to confuse our followers on “mobile banking” with “mobile money for unbanked”. These have very distinct target market.

    2. Tapiwa ✔

      Are you suggesting that TN bank doesn’t/won’t abide by the laws that govern the other banks? Or are you saying TN bank and Ecocash are the same legal entity?

      1. Chris Mberi

        Indeed TN, ecocash and econet are one entity with a huge advantage right now.

  11. Walter Mudara

    for the same amount of transfers, banks are probably charging more yet they are no match for the ubiquity and robustness of the ecocash service. To a normal person it is more sensible to go for a cheaper yet more reliable service,besides people have lost confidence in our banking sector. Time for taking customers for a ride is over, the banking sector should know it ngavaite serious

    1. Walter Mudara

      these 1.7 million people probably have accounts with several banks but they are running away from your poor services muchanyatsochema henyu hamusati matanga!

  12. Greg Kawere

    Does mobile money services need to be regulated as does internet banking and sea of other recent digital banking innovations to reach Zmbabwe’s shores.

    The answer is an emphatic yes, as Zimbabwe’s digital platforms for business become robust there will be need for regulation by the reserve bank, sec and other government bodies.

    This is not unique to Zimbabwe but a phenomenon that is global, that is the move towards regulation of new digital platforms. In the USA, UK, South Africa and other countries where digital platforms are widely used for business these same channels are regulated.

    Regulation is not there just to create a bureaucratic layer to hamper innovation and ease of doing business but to protect the ordinary citizens of the country from unscrupulous business practices that are rampant on these platforms.

    Plus more money into the fiscus that needs to be captured.

  13. ndozvinei

    this is just unbelievable, they cant satisfy clients so they want the clients to have few options so that they can still benefit even when they dont innovate

  14. Munyori

    Banks, especially Zim banks should stop complaining and innovate. For years they knew that the vast majority of Zimbabweans were not using banking services. Why did they not innovate to capture this market???? Gono akabvirira kudhara achivaudza achivayambira, and they ignored him, living in their sophisticated banking castles. In comes ECONET with a fantastic innovation, grabs 1.7m customers in record time, and the banks cry fowl. This is despite the fact that ECOCASH transaction charges are probably higher than normal bank charges – unfair as these charges may be, people will even pay a premium for convenient innovation. Banks must stop winging, and INNOVATE!!

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