Econet Wireless owned “tech bank” Steward Bank has recorded a loss of $26.3 million for the operating year ended March 2014. Econet Wireless announced this in a media release and the parent company is confident that Steward Bank “would soon turn to profitability”.
Although the loss indicates that Steward Bank is not out of the woods yet, the bank has done remarkably well to recover from the $24 million Half year loss recorded in August 2013. It’s not surprising that the recovery is tied to the launch of EcoCashSave and later on EcoCashLoans which the Econet CEO, Douglas Mboweni says will be the main revenue anchors for Steward Bank.
According to Econet, 1.5 million accounts have been registered under EcoCashSave and the bank is now processing more than $350 million in transactions a month.
Judging from the press release, it seems clear that the bank is restructuring primarily to move mobile money services at the forefront of their model and this explains the sad, but necessary retrenchments and branch closures. Commenting on these retrenchments, Mr Mboweni said Steward Bank is “unique and relied on innovation and technology and therefore did not require the level of staff that is ordinarily required by a traditional bank”.
Below is the full release from Econet Wireless on Steward Bank
Steward Bank, the wholly-owned subsidiary of Econet Wireless Zimbabwe, posted a loss of $26.3 million as the company continues restructuring away from traditional banking to focus on services related to mobile banking.
Econet Wireless CEO, Mr Douglas Mboweni, said he was confident that the bank would soon turn to profitability. He said the bank had played a critical role in the development and management of EcoCash, which is now processing more than $350 million in transactions a month.
“In terms of our strategy, the revenue model of Steward Bank was always going to be pinned on EcoCashSave and EcoCashLoan. We first of all had to get the money transfer services up and running before launching these other services. We have now launched these services in the last few months. By this time next year, you will see a very different Steward Bank.” Mr Mboweni said more than 1.5 million customers have opened bank accounts with Steward Bank using EcoCashSave. Some of the account holders were Zimbabweans in the Diaspora, who saw it as a convenient way to support their families at home.
The Econet Wireless CEO articulated that the business strategy of the Bank was unique and relied on innovation and technology and therefore did not require the level of staff that is ordinarily required by a traditional bank.
“It was not an easy decision, and we really agonised over this issue, but we realised that the bank would not be able to grow unless we restructured it to operate an innovation-led model. If the economy had been performing better, we may have been able to sustain some of these marginal branches, but it has not happened. It is something we regret, and we will try our best to create new jobs in other areas as we have always done.”
In terms of capital, Mr Mboweni said Steward Bank was in the top five most capitalised banks in the country and would receive more capital as required from Econet to allow the bank to develop more mass-market banking products.