MOBILE financial services are taking Zimbabwe’s banking sector by storm, riding on a high mobile penetration rate and the cash crunch.
As cash shortages persist, the banking public is increasingly finding mobile financial services more convenient and less risky than those of traditional banks.
In the absence of a lasting solution to the country’s cash challenges, it would probably be worthwhile to explore how mobile money can be exploited to ease matters.
These factors, combined with the increasing in formalisation of the economy, will lend credence to the growth of mobile money ahead of traditional banking services.
As such, traditional banks should brace for tough competition from mobile financial services providers.
Banks really have to shape up.
Data from Postal Telecommunications Regulatory Authority of Zimbabwe and the Reserve Bank of Zimbabwe, including a 2015 Finscope Survey, reveals that mobile money has established its place in the financial services space.
The stats also show the immense potential mobile money services have to transform banking in Zimbabwe.
The phenomenal growth in transactional volumes recorded by mobile money since dollarisation is an indication that this payment platform is increasingly gaining popularity.
In 2016 mobile money payments accounted for 81,2 percent of all electronic payment transactions.
Other platforms, namely POS, ATMs (3,4 percent), RTGS (0,8 percent), Internet transactions (0,3 percent) and cheque transactions (0,1 percent) handled the balance.
The increasing popularity of mobile money is notwithstanding the fact that it continues to lag behind RTGS in terms of transactional value.
In 2016, RTGS pushed transactions worth US$48,1 billion, or 77 percent of all payment values, while mobile banking stood at US$5,8 billion, or 9,4 percent of payments.
These statistics largely reflect the preference of mobile money for small transactions as it can easily reach the unbanked population.
Importantly, ZIPIT mobile banking is a formidable force that threatens to dislodge the dominance of RTGS transactions.
Finscope attributes the increase in financial inclusion – a measure of the proportion of the banked population -from 60 percent in 2011 to 77 percent in 2014 to the various mobile banking services spawned by the three mobile operators – Econet, NetOne and Telecel. GetCash is now in the mix.
These operators are relentlessly innovating and improving their payment platforms.
It is reported NetOne will soon be relaunching OneWallet.
The Finscope survey estimates that 45 percent of the country’s adult population (3,25 million) was registered with mobile money platforms in 2014, which compares favourably with 2,1 million, or 30 percent, of the adult population with bank accounts.
Therefore, an opportunity exists for mobile financial services to tap into the 55 percent market that is currently unexplored.
Of the registered mobile money users, 80 percent use it to remit money, whilst 46 percent use it for transactional purposes such as paying bills and making purchases.
Of the adults who claim to remit money, 83 percent use formal channels like banks, mobile money, and other money transfer options like MoneyGram, Mukuru and Western Union. Only nine percent still use bank remittances, while 17 percent claim to use informal channels like buses.
What is more interesting is that 74 percent of the unbanked professed that they don’t even need a bank account.
The increase in the mobile telephone subscribers from three million in 2009 to 12,6 million as at September 30, 2016 has created a growing market for mobile financial services.
Service popularity has been fueled by high mobile penetration rate, the ubiquity of mobile money agents, limited sign up requirements and the significant distrust with traditional banks.
Also, the growing number of mobile agents from about 1 000 in 2010 to 33 000 bears testimony to the ubiquity of mobile money, which provided enhanced outreach beyond traditional banking networks.
Most customers search for convenience and ease of transactions.
This is why mobile banking products such as EcoCash (Econet), OneWallet (NetOne), TeleCash (Telecel), Textacash (CABS), Mobile Banking (CBZ), GetCash Wallet (GetCash), and Mobile Moola (FBC) are gaining popularity.
These products have arguably taken the lustre from Visa and MasterCard.
More importantly, as revealed by the Finscope survey, the said mobile products have gained increasing popularity among low-income workers who prefer their salaries to be paid through mobile payment platforms.
This has also seen more corporates subscribing to mobile money.
Persistence Gwanyanya is an economist, banker. founder and CEO of perconAdvisory, head of financial advisory portifolio of Zimbabwe Business Arts and Hub, and executive member of the Zimbabwe Economic Society. Feedback:firstname.lastname@example.org, WhatsApp: +263773030691 and blog percyconadvisory.com