In an age of technology, banks and other service providers are moving towards the latest innovative advancements to reach their client base.
More often, technology comes with efficiency and lower cost, thereby positioning itself as an obvious choice across industry.
However, government owned People’s Own Savings Bank (POSB) appears unfazed by the popular practice in what has been termed the golden age of technology, choosing to stick to that traditional brick and mortar model of banking.
POSB currently has 34 branches across the country and intends to add 52 in store branches countrywide in TM and Pick n Pay stores through a business arrangement with the retail group, POSB CEO Admore Kandlela said.
The move is apparently at tangent with industry trends.Other players are cutting costs associated with running branches, mainly rentals and staffs. Despite its huge branch network, POSB reported a US$1,25 million profit for the year ended 2014 and declared a US$300 000 dividend to government. POSB was among the 14 out of 19 banks that were profitable in 2014.
Receiving the US$300 000 cheque on behalf of government at his offices in Harare last week, Finance minister Patrick Chinamasa said POSB’s profitability was weighed down by the huge costs associated with running such a wide branch network.
“They are wider in branch network and that increases costs, but this is because they carry social responsibility,” said Chinamasa. “POSB has done what they could to remain afloat in a very difficult environment.”
The mobile banking frenzy hit the Zimbabwean market around 2011 with the birth of products such as Skwama and Textacash. Mobile banking was to later take a huge leap with the introduction of Econet Wireless’s Ecocash in 2012. Ecocash was to handle transactions worth US$2 billion in between inception in August 2011 and its 2013 half year results in August 2013, sparking a row with banks who demanded a level playing field on the mobile banking arena given that Econet owns what is now known as Steward Bank.
Whilst other banks are investing in mobile banking platforms and other online banking products, some are downsizing in terms of theory physical presence in branches, POSB is expanding in order to reach the masses in line with its vision to ensure financial inclusivity in line with its vision to be “a world class savings bank catering for all.”
Responding to the media on the bank’s outlook last week, POSB chairman Israel Ndlovu said the bank remains innovative with new youth products and the People’s Choice account. The People’s Choice account, mainly targeting the low income earners, has no monthly fee charges or minimum monthly balance requirements.
The bank is also offering salary-based loans mostly to civil servants.
Kandlela said on average, the banks’ non-performing loans ratio stands below the national average of 17% at around 15%.
He said most of the bank’s income is fee based.
“Because of the unattractiveness of corporate lending for now due to collapse of industry, we focus on small to medium enterprises and individuals who don’t make much interest money so we make money from the very minimal fees we charge for service provision,” said Kandlela.
He said, while the bank enjoys a wide customer reach because of its branch network, mobile products and online banking brings lot revenue, accounting for the major component of fee income.
“The US$0, 01 or US$0, 02 we charge actually makes money. It’s really value added products that makes money to us,” he said.