Zimbabwe: Of banks, Mobile Money and EcoCash

Many like myself are probably wondering about the future of Mobile Money in Zimbabwe. On one side we have EcoCash bullishly rolling out merchant after merchant gathering enough momentum to fully implement a system perhaps even more speedily adopted than M-Pesa of Kenya. On the other hand we have the banks under the banner of Bankers Association of Zimbabwe (BAZ) who are really just hopelessly unfocused on the best response to the ever increasing threat posed by the earlier.

Then somewhere in the middle is ZimSwitch’s Shared Services (ZSS) which believe or not is probably the next best contender in this domain after EcoCash. A reasonable percentage of the total airtime sales from all MNOs are driven through this emerging platform as an example. They estimate that over 25% of all MNOs airtime sales may be sold through their USSD platform by end of year. Boasting of 19 Banks and Financial member institutions backing, they seem to be driving in the right direction. Some exciting news will be coming from ZSS in the next few days with the launch of their vPayments platform. This site will update you on developments.

One would expect banks at any point, to have a Research and Development division that focuses on technology and the future, ahead of the current environment and its various banking and economic offering in order to prepare and warn the BAZ, rather than react to threats and opportunities such as Ecocash, which ultimately may be bigger than them. I am not sure this is so as clearly there has not been an organised and united response to Mobile Money overall, juxtaposed with efforts by MNOs combined. Leave for the emerging ZSS, banks seem to be at the mercy of any significant threat. To me this lies in several factors:

1. The ever competitive nature of banks. Banks will opt to invest  $3 Million in a Mobile Money system each (that can be provided or developed locally for no upfront payment but rather a revenue sharing arrangement). This investment would serve a mere 50,000 customers with absolutely no guaranteed Return on Investment. This is all so that they are first on the market with the product. As if that is not enough, the rest of the flock will not be outdone, falling head over heels into the same fallacy. It’s the same with Point – of – Sale Terminals in supermarkets and ATMs nationwide. On the same counter at a merchant, you will see three POS terminals all connected to Zimswitch from three different FIs. Wow!
2. The traditional nature of banks has been their worst plight. Bankers have refused, albeit unknowingly, to adjust to the ever-changing environment. Clearly it’s no longer a brick and mortar system that the general economies still require, but critical banking products that cater for the diversity of customer needs; banking on the go solutions to be more specific. It is no longer the four page forms that customers need to complete before they can open an expensive to maintain bank account. Where is biometric authentication and where are the self-service terminals? Links : Capitec Bank Case Study, What Makes Capitec Tick
3. Lack of innovation to embrace new technology that capitalises on emerging opportunities. Banks are the last to adjust their paradigm as regards any financial technology and people friendly legislation. The RBZ MOU Monetary Policy 2012 to me was crafted with the idea of protecting consumers from exorbitant banking charges and forcing banks to depart from their traditional mentality to modernised paperless banking. Clearly the RBZ governor sees more mileage in electronic methods of banking, a case proven by the RBZ licensing EcoCash
4. Rigidity in terms of developing smart partnerships with the emerging  micro – industry (including technology start – ups and microfinance institutions). Banks have their KYC and Operations and Procedures Manuals that have not adapted much since the early 80s. These blinkers disallow banks from thinking outside the box. If you want a relationship with any bank and you don’t fit into their predefined shoes, then you are not going anywhere. Partnerships are only starting to come up in Mining Equipment imports where banks would offer higher purchase agreements with SMEs.
5. There is of course the absence o – or at least invisibility of – a technology pioneering body or Technology Consultative platform for the banks jointly that would spearhead the research and development of ICT and technology in the banking sector. There are several solutions that are required as soon as yesterday such as an Automated Clearing House, full-fledged Credit Bureau, Cloud Services for real time off site system backup, Shared Services Policy, Collaborated Mobile Money (talking of which, whatever happened to the Competitions and Tariffs commission on the Econet Monopoly issue regarding their reluctance to offer USSD), Government policy etc.

There are various other factors but I feel these are more relevant to this opinion. To this day banks have decided each to launch their own product even as the pioneers have failed before them.

Some Banks’ Mobile and Electronic Banking Products

To add your company’s data please go here.

Zimswitch Shared Services…?  

In my opinion these guys have been rather slack in capitalising on opportunities that have been made for them. Whereas their ideology has been that of “interoperability” and connectivity amongst participants holistically, where participants in the electronic payments ecosystem operate fairly, that could be their greatest unbecoming. To that end they support ideas that are member friendly  (banks and financial institutions) while they themselves regularly gently suggest to banks what they could also offer. Their marketing again seems to be dependent upon their member banks, in parallel to the competition, EcoCash which has outright engaged the offensive.

Not many people actually know that EcoCash is actually a banking product for example (just like a savings or other account). It is offered by Steward Bank (TN) as part of their banking services. Their marketing however gives the impression that it is one, in itself. The corporate issues of Econet takeover of TN bank is a topic on its own, but the same could be true for ZSS. They need to invest in their own marketing and make the louder gong as clearly banks are the colloquial diesel engine – slow to warm. As opposed to banks buying POS devices or renting them, this would include ZSS themselves introducing the required technology into the market and increasing outlets at the same or faster pace as EcoCash is acquiring merchants.

While most of their products are offered through banks, and while Zimswitch itself is a product of the banks, they can take a bold step and offer non-conformist products such as an independent closed debit card system or Mobile Money Solution, if they so wish. Clearly they may be the banks’ proverbial Moses of the Econet Egypt if only they would stop fraternising with the EcoCash Pharaoh and take 40 years in the product development wilderness. It’s surprising that two or so years down the line some of their offering are still to be finished. To its ironical success, Zimswitch eventually got their USSD platform after Econet yielded to their persistent requests, thus the shared services where ZSS is basically an aggregator, or gateway through which member banks get through to the Econet USSD.

S1 of South Africa offers the ACI Payments technology through Zimswitch.

Some key ZSS services

And finally EcoCash

Clearly EcoCash has made more inroads than all banks combined in terms of providing convenient access to banking services previously unavailable to the majority of Zimbabweans especially because of geographical dispersion. By the use of mobile penetration and capitalising on the teledensity boom over the last few years, they have provided financial services to areas where banks could never have dreamt of setting up thus mopping up a larger quota of unbanked funds in circulation contributing to Government fiscus accounting. Dreaming is the word.

However in as much as they have done this great justice, in my opinion they could do more to improve. In my opinion there are several moves that could help:

1. Improve the menu. Simple things such as
   1. Shorten such steps as Send money, Registered Customer to “Send Money to Registered Customer”, not in as many words of course
   2. Add highlights such as Pay DStv to the start Menu. It could be very valuable sellable advertising space
   3. Improve the delivery channel
      1. It is about time EcoCash offered a mobile app for goodness sake. It could host some competition and have the best app developed for them in exchange for some expensive gadget. (I prefer full copyright and royalties.)
      2. Improve the pricing. Money transfer is generally expensive in Zimbabwe. Of course the competition is way behind so EcoCash can afford to do whatever it deems fit. There would be greater show of concern to its customers if Econet specifically and all MNOs generally if pricing was to be revised for data, mobile and value added services. (Where is CCZ, Affirmative Action and consumer services protection?)
      3. GPS agent locator. It wouldn’t hurt to know where your nearest agent is by simply using a GPS app on a smartphone
      4. Offer interest on balances in mobile accounts. While the banking regulatory authorities do not specifically impose interest obligations to deposit takers, it is in the spirit of good faith that indeed these accounts must attract interest on balances maintained in such accounts. That lobby is for a later date I suppose (perhaps aavaz.org will pick it up).

Yes… so what about the Consumer?

While this article looks at the service providers themselves, much needs to also be done for the consumer. The Consumer Council of Zimbabwe, Potraz and the Government at large do not seem to have a particular on-board appreciation of these products in as far as consumer vulnerability. The consumer is therefore left exposed to exorbitant pricing, spamming, invasion of privacy and other bothers which the average Zimbabwean does not understand or know they need to be protected from. Someone once proposed a Mobile and Electronic Funds Transfer standards and lobby association whose role would be to negotiate and balance off the interests of the public and service providers in a mutually beneficial manner.

To get in touch with the blogger please email to victor [a] techzim.co.zw