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TECHNOLOGICAL advancement will lead to low-cost banking for Zimbabwean financial institutions and their clients, a local securities company has said. According to a research note by IH Securities, the local banking sector is entering a phase of cost reduction, a situation triggered by mobile banking which was introduced by Econet. The banking sector is facing competition from the mobile communication service provider as people are now able to bank with EcoCashSave accounts.
“Mobile network operator Econet has demonstrated the capacity of mobile platforms to provide a low cost service allowing low income consumers access to financial services,” it said.
Research further shows that 44 percent of the Econet’s 8,8 million subscribers are now using the EcoCash platform
Feeling the need to up their game, IH Securities said the banking sector was increasingly adopting lower-cost forms of banking, including mobile banking, internet banking and point of sale transactions.
“Certain banks are proactively encouraging the adoption of these services by customers while greater adoption of the associated technologies by the population is increasing the demand for such services,” reads the research in part.
Mobile banking in particular is expected to gain traction on the back of the high level of mobile penetration in the country, now estimated at around 100 percent.
It said bank branches have historically been the grounds on which banks competed but would become less central to their strategies and competitiveness.
“We expect this to result in a decline in costs in the medium term. We expect the increasing efficiencies in the sector to help address the issue of high bank charges and high minimum balance requirements,” IH Securities said.
“Technology has necessitated banking for all segments of the Zimbabwean population, a service that was only availed to be upper class of the population.
“That would allow the banking sector to better service the lower income segments that form the majority.”
The research firm further noted that a more efficient banking sector could also reduce lending margins and compete more effectively for business from key local clients currently borrowing from regional players.
Online Reporter