Towards paperless banking systems

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Webster Rusere

Enacy Mapakame
Zimbabwean banks have accelerated the switch to paperless transactions, but the rural people risk being left behind due to digital divide.

The country’s booming technological development is reflected in the rapid growth of mobile phone use, where every citizen virtually has access to a cellular phone, mainly smart phones.

But there is the other side of Zimbabwe’s booming technology sector that is less visible — that poor rural areas still lagging far behind towns and cities as far as broadband connectivity is concerned.

Mobile phone companies are under pressure to provide such services to the rural folk, but banks seem to have already taken off without those not yet connected.

But the Bankers Association of Zimbabwe (BAZ) is unfazed by this. The banking sector lobby group believes no one will be left behind, even when the evidence suggests otherwise.

BAZ president Webster Rusere, said banks were constantly reviewing their operations to enhance service delivery in line with the changing market trends.

“This also entails banks significantly investing in digital platforms such as mobile, point of sale (POS) and Internet banking channels to improve access to services by the banking public, including those customers who are in remote and rural areas.

“These developments are beneficial to customers because they no longer need to visit the bank for every transaction, but can access banking services from the comfort of their homes and offices, enjoying significant cost reductions in the process,” he said by email.

Electronic payment systems have gained popularity to become the dominant medium of exchange as cash-based transactions have decreased quite significantly over the last two years.

Electronic transactions

Over 90 percent of retail transactions are now electronic, while overall transactions processed over the National Payment System (NPS) has been increasing.

Government has also encouraged the use of plastic money for transacting as a measure to mitigate the cash shortages.

In light of this, most financial service providers in the country have moved from processing paper transactions, opting for digital platforms to check balances or carry out Real Time Gross Settlement (RTGS) transactions.

Rusere said: “By eliminating paper-based processes, banks are also making transactions more secure, easier and less costly to process, resulting in electronic services becoming a lot cheaper for the banking public.”

Commercial banks have been notifying their customers to register for online banking services as they are moving towards complete paperless transactions while others have since gone paperless.

Economist Persistence Gwanyanya, said local banks are on the right path as world over banks were moving from the traditional brick and mortar banking halls to digital services.

Failure to do so would be at their own peril and they risked losing the market.

“This is the right time to do so, Zimbabwe and the entire world is moving towards this direction,” he said by telephone.

“Those banks that lag behind will have themselves to blame, they will lose significant market share because we are moving towards digital platforms. It is also a faster way of transacting and very convenient and can be done anytime anywhere, which is what the market wants,” he said.

This also comes at a time when demand for internet and data services has been consistently growing in the country.

According to the Postal and Telecommunications Regulatory Authority of Zimbabwe (POTRAZ) internet subscriptions grew 3,7 percent in 2017.

Internet penetration rate has also been consistently increasing between 2009 and 2017 in line with the growing number of active internet and data subscriptions.

Internet penetration rises

Penetration rate for internet services has grown to 50,8 percent in 2017 compared to 5,1 percent in 2009 and is expected to continue on a growth trajectory.

“Demand for internet and data services in the country is expected to continue growing as the internet coverage, variety of services and the availability and accessibility of devices improves,” said POTRAZ in the annual sector performance report for 2017.

While cash-based transactions have decreased quite significantly over the year and mobile as well as internet based transactions crept up as financial inclusion started increasing and mobile banking became the norm, there is still a constituency that needs to be considered.

Concerns are that the internet penetration might still be low to support full implementation of a paperless economy especially in rural areas.

But Gwanyanya contends there is always a starting point and eventually everyone will catch up.

“Banks are simply saying we are moving towards this direction and even those in rural areas will have to follow suite. I believe it is a gradual process, which like any other gives provisions and mechanisms to accommodate everyone including those in rural areas,” he said.

And for banks, this digital platforms are fast becoming their cash cow.

Last year, in the period to September 30, 2017 cumulative net profit for the banking sector was $160,7 million from $111,3 million reported in the same period in 2016.

Of the total 19 banks, 18 recorded profits. Income was largely driven by fees and commissions arising from an increase in RTGS transactions, mobile banking and POS transactional volumes as banks moved away from the traditional banking model to more agency banking.

Retail transactions have also gone electronic with 70 000 POS machines now on the market. Government is targeting 100 000 POS machines by year end.

Overall, the sector has remained stable, despite the liquidity challenges and depleted nostro foreign currency balances.

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