Zb Financial Holdings (ZBFH) is closing in on re-admission to the VISA platform as part of broader efforts to re-establish its international banking relationships, according to the group’s CEO.
The bank’s nearing re-accreditation to the platform is a significant move as VISA is arguably the world’s biggest payment intermediaries, facilitating transactions between merchants and cardholder banks.
Group CEO Ron Mutandagayi, said they have since adopted a widely accepted set of policies and procedures intended to optimise the security of credit, debit and cash card transactions.
“The group is making satisfactory progress towards the re-launch of VISA cards. Substantial work has been completed towards meeting the Plastic Card Industry Data Security Standards (PCIDSS), a pre-requisite for VISA accreditation,” he said.
The return to VISA is one of ZBFH’s biggest moves on the international milieu following the financial services group’s removal from the United States’ Office of Foreign Assets Control (OFAC) sanctions list in October 2016.
The OFAC sanctions had virtually crippled the bank’s capacity to process international transactions as well as accessing effective lines of credit from multilateral financiers.
But that has changed over the last couple of years. Last year the group said it had managed to regain use of most of its foreign correspondent banking accounts post-sanctions.
Correspondent banking works through an agreement between a foreign and a domestic bank where a correspondent account, usually referred to as a vostro or nostro account, is established at one bank for the other bank. This form of banking typically involves the two banks establishing reciprocal accounts with each other.
These accounts are established to enable the domestic bank to make payments or money transfers on behalf of the foreign bank.
These correspondent accounts enable banks to handle international financial transactions for their customers that ordinarily require foreign currency exchange, such as those that commonly occur between exporting businesses in one country to an importer in another country.
And in addition to the recovery of those correspondent banking relationships and restoration to the VISA platform, the group’s flagship ZB Bank has partnered with global payments provider, ZymPay Limited to facilitate digital payments.
ZymPay works with leading banks and financial services providers in Africa, Europe and Asia to facilitate cross-border payment of bills through digital innovation.
A rethink of correspondent banking
ZB Bank’s partnership with the United Kingdom-headquartered cross-border payments enabler show the bank is taking an innovative approach to correspondent banking.
In a 2016 study, global research firm McKinsey & Company Financial Services predicted that money transfer operators (MTOs) would redefine correspondent banking
“Tomorrow’s cross-border payments will go beyond utility models based on legacy systems and old-school correspondent banking. They will adopt future-proof digital technologies and industry standards that promote cross-country integration and greater transaction efficiency.
“Such moves can help banks redefine their international networks, reduce the need for manual intervention in investigations and reconciliation, and deliver customer value throughout the transaction cycle.
And the ZB Bank-ZymPay partnership is one such move.
“ZymPay offers a platform that will aid individuals living in the diaspora to pay for basic services, like an electricity bill or school fees back to their home country. This partnership will offer our schools, universities and colleges a secure digital payment solution that ensures that fees are paid on time, directly into the ZB account with all reference details available,” said Mutandagayi of the partnership.
“The solution eliminates the middle-man in the process and affords the sender further value through the 7 percent incentive from the Reserve Bank of Zimbabwe.”
Secures $30 million in lines of credit
In another major strategic development in respect of the group’s foreign ties, ZBFH said it has secured $30 million for on-lending from its regional partners, with a third of these facilities ready for drawdown.
“The group has been able to mobilize a total of $30m in credit lines with regional banking partners of which $10 million is now at draw-down stage while the balance of $20 million is at finalization stage,” said the CEO.