Following the adoption of ICTs by a number of financial institutions in Zimbabwe over the years as well as an upsurge in the number of deposits, most banks seem to be embracing the concept of Agency banking.
According to the 2017 Monetary Policy, deposits went up 6% as at 30 September 2016 to US$6.51 billion as at 31 December 2016 as most people opened bank accounts in 2016 due to the prevailing cash crisis which has left only the formal banking system as the most reliable mode of transacting. This has somehow threatened most financial institutions’ capacity to deal with the huge numbers of depositors as evidenced by long winding queues at most banks.
By TechnoMag Reporter
Zimbabwe has been battling a massive cash crisis over the years and the introduction of bond notes has worsened the crisis as the precious green back vanished from the picture leaving only the once loathed funny money in circulation.
Banks are coming up a myriad of initiatives to improve on efficiency and Agency banking is one of them. Recently, the Zimbabwe Building Society (ZBS) announced that it would intensify rolling out its Agency banking initiative in a bid to complement its service delivery channels. Agro financial concern Agribank also hinted on supporting and initiating an Agency banking system that would cater for its huge clientele from across all its branches dotted around the country.
Agency banking or Third party banking as it is known in Kenya has a number of advantages for the depositor ranging from cutting the distance traveled to get to a banking branch as well as reducing the congestion associated with most brick and motor branches in Zimbabwe.
The issue of financial inclusion and access to formal financial services is no longer a big issue in Zimbabwe as quite a sizable number of people are now banked, the greatest challenge is in accessing the money or hard cash.
Briefing Journalists in the capital recently, Agribank Chief Executive Officer Sam Malaba said the bank would continue investing in ICT systems to embrace the technological change as customers want to transact 24/7, accessing banking and financial services at their convenience.
It is an undoubted fact that Agribank has hugely invested towards its agency banking drive as evidenced by the purchase of an additional 2 500 POS machines from the already existing 1000 machines. According to the Kenyan Agency banking model, a bank agent is usually equipped with a EMV certified P.O.S. terminal with which they can process withdrawals and deposits after the consumer swipes their EMV certified bank debit or credit card.
The biggest threat to Agency banking in Zimbabwe is the prevailing cash crisis. Rolling out a comprehensive Agency banking network without adequate financial backup throws the whole agency banking frenzy down the drain. According to economic experts, Zimbabwe requires not less than $ 1 billion to avert the prevailing cash crisis.
The big question for financial institutions intending to go the Agency banking route is how liquid are their coffers and how are they gonna finance these initiatives in the absence of cash considering a number transactions they will be conducting are cash based.
Implementing Agency banking before addressing the cash crisis is typical of putting the cart before the horse scenario.
The funny part is that already some of these banks pushing for agency banking are failing to service the few clients they have in town as most depositors spend nights outside banking halls waiting to make the next withdrawal.
First, banks and government have to come up with a solution to the cash crisis if the agency banking model is to work. A number of industrialists have of late been calling for adoption of the rand as the main currency. This has however faced widespread criticism from government authorities who believe the move would be an act of surrendering our sovereignty to the South Africans.
Randification could be a step in the right direction for Zimbabwe and financial institutions pursuing Agency banking could push for the rand adoption as it has more advantages for the local economy and their vision at large.