Imported software the cause of high bank charges according to Ministry of Finance

Valentine Muhamba Avatar
bank, charges

Deputy Minister for Finance Clemence Chiduwa, in a question and answer segment in parliament on Wednesday, said that the high bank charges Zimbabweans are facing are due to imported banking software.

“Bank charges on transactions that are being levied by our banks are on the upper side. We have engaged our banks and the primary reason they are fighting for high bank charges is because of the software system they are using. Most of the systems they are using are imported.”

Clemence Chiduwa via Business Weekly

The Deputy Minister is correct but in part. The primary driver for the escalating bank charges is of course the economic situation in the country. Bank charges like most things have been creeping upwards steadily. However, imported software is also a contributing factor, because banks have to get foreign currency in order to pay for the fees associated with getting various software.

An example of this is Steward Bank’s massive banking system upgrade that it undertook last month. The bank upgraded its core banking system to the Temenos T24 R19 which like most things that run complex processes doesn’t have a conventional sticker price.

Costs start before implementation

Before any institution onboards a system like the Temenos T24 their employees need to know how to use it. And as you may have already guessed there are fees associated with training staff to use it.

Now, we can’t say for sure that Steward Bank went this route but Temenos does have a learning pack for its T24 core banking which has 273 courses for versions R16 to R19 which has an annual membership cost of US$1 487 (1 225 Euros).

There are also migration costs which are charged going by the number to the number of records. According to ITQlick, if a business has its data stored on excel spreadsheets they may pay more and their migration might take a lot longer. The report goes on to say that involving a service provider like Temenos in your data migration is asking them to provide additional services which you will have to pay extra for. ITQlick estimates that it costs US$500 for migrating a thousand records and up to US$25 000 for a million.

Implementation is a whole a story on its own…

As for the actual cost of the system and all of the various features that are on offer, there are no exact figures available. But according to ITQlick it depends on the kinds of intergrations and the number of systems an institution requires.

Core banking systems aren’t the only thing financial institutions need

Beyond solutions like the T24, banks and other financial institutions need software to run a number of systems from ATMs all the way to mobile phone applications. More general software might include common programs you have on your computer like antiviruses, Microsoft Office and cloud storage. I am sure there are a bunch I left out but hopefully, it highlights just how resource-intensive banking is.

At this point, there will be those who will say that a locally made solution would be cheaper. But I doubt it to be honest. With the sheer number of complex processes that banks need to run every moment I think that even a locally made product would ask for around about the same as what is already on the market.

5 comments

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  1. Always off Topic

    Wait, does that mean that other banks outside the country don’t use similar software or that its somehow cheaper for them and only more expensive for us? I don’t understand the argument here.

    1. Valentine Muhamba

      Its only more expensive for banks in Zim because of the whole forex problem in the country. To pay for this software they have to get USD which as I am sure you can imagine is difficult to procure even for financial insitutions.

      In other countries, especially in Europe etc… They are likely able to pay in their local currency.

  2. Owen

    Yet we have software companies alot of engineers here in zimbabwe

  3. Blessing

    Zimbabwean institutions are obsessed with high cost international solutions. In another African country there is a Zimbabwean developed solution being run in 6 out of 7 of Financial Asset Management houses that are registered. We are deploying next in Rwanda and Kenya. Tanzania and Uganda next before year end. Local institutions wont even give you an appointment when they hear its a Zimbabwean solution.

    1. Curiosity Killed The Cat

      Hi Blessing – what is the name of this solution? I’m interested in learning more about it

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