ZIMBABWE’S turn to mobile banking is a welcome development, but has also been pushed by a general lack of confidence in the banking sector and the economy at large, economist Eric Bloch has said.
This comes after the Reserve Bank of Zimbabwe (RBZ) reported, in its May 2013 monthly economic review, mobile and internet-based transactions had for the first time surpassed card payments after registering a 28, 3% growth in the month of May as more account holders turn to the convenience of mobile banking.
The bank said the value of mobile and internet-based transactions rose from US$283,6 million in April to US$364 million in May 2013, while the total value of card-based transactions rose by 1,3% from US$328,2 million in April to US$332,6 million in May 2013.
In value terms, cheque transactions for the period decreased by 7, 2%, from US$16, 6 million in April 2013 to US$15, 4 million in May 2013.
Bloch, a Bulawayo based analyst, told Zimbabwe Independent’s businessdigest Zimbabweans were generally cautious of keeping their hard-earned cash in banks for fear of losing their money to possible changes in economic policy, including a currency change.
“People are actually very afraid of losing their cash due to currency change because of a general lack of confidence in the banking sector,” he said.
As elections draw closer, more Zimbabweans fear a hurried return of the Zimbabwe dollar and subsequent hyper inflation after President Robert Mugabe has indicated plans for the controversial move.
The latest RBZ figures show that despite broad money supply levels surpassing the US$4 billion mark for the first time in the multicurrency era, to close the month under review at US$4,02 billion, annual growth in broad money actually decelerated to 12,23% in May 2013 after strengthening in April 2013.
“As a result, people move to mobile banking which is less risky compared to the traditional banking,” he said.
Bloch said mobile banking has managed to tap into cash that has been circulating outside formal banking through the mobile wallets.
He said the growth in mobile booking is an indication the economy is catching up with international trends where people are moving away from traditional brick and mortar.
Economist John Robertson said mobile banking volumes have exceeded card payments because more people have easy access to the service.
He said as such, banks need to adapt to international trends and attract new customers.
“We are living in very rapidly changing times and the main indication is that transactions are now being made on mobile phones, so I think the old banks have to catch up with these new banks and new technology,” he said.
Robertson said the growth in mobile and internet banking was a result of the continence of mobile banking.
Analysts have previously predicted bank fees and charges are expected to soften with a growth in mobile and other alternative forms of banking.
However, the charges remain high, but have reduced from the traditional banking charges which have for a while accounted for most of banks’ income prompting government intervention I the form of ceilings on all charges early this year.
Robertson said while mobile banking charges are not necessarily cheaper, it remains more convenient than traditional banking.'