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Tawanda Musarurwa

Senior Business Reporter

In recent months, mobile money platforms have been under the cosh, taking the heat for contributing to the assault on the local currency by facilitating speculative activities.

As such, the central bank has put a number of restrictions on how mobile money platforms operate. While mobile money was largely seen as the future of the financial services industry, recent measures could give traditional banks an opportunity to recover lost ground.

Earlier in May, the Reserve Bank of Zimbabwe (RBZ) directed that banks holding mobile money trust accounts are now only allowed to let their account holders pay into those trust accounts and have to enforce the know-your-customer standards of the banking system.

And just last month, the apex bank introduced a policy that limits mobile wallet users to only one account per individual. Accordingly, mobile money operators were directed to close all multiple accounts owned by individuals.

Other restrictions that have hit mobile money platforms in recent months include limited mobile money transfers to a maximum of $5 000 per day, the banning of mobile money agents, merchants restricted from making payments from their wallets, and the requirement for bulk payments to be approved by regulatory authorities for limited use.

Business is already feeling the impact of the mobile money restrictions and most players and their clients have resorted to use of cash (both Zimbabwe dollar and United States dollar), as well as increased use of traditional banking transactions.

Analysts at market watchers Morgan & Co say the shift from mobile money to traditional banking systems is now almost inevitable.

They however, do not rule out mobile money firm’s capabilities to find alternative growth avenues.

“These moves have inadvertently given an opportunity for traditional banks to regain market share as most businesses return to conventional banking channels. While it comes as a reprieve to traditional banks, they have not been complacent in the drive to leverage off technology. At the same time, tech companies such as Cassava can still recalibrate their existing infrastructure to offer other services in addition to mobile money,” said the analysts.

Prior to these latest developments, Zimbabwean banks were slowly losing their grip on the financial services sector.

To highlight the extent of growth of mobile money platforms in recent years, RBZ figures showed that mobile wallets accounted for 84,8 percent of all transaction volumes and 22,6 percent of value in the last quarter of 2019.

The data also shows that the number of active mobile financial services registered subscribers stood at 6,54 million during the fourth quarter of last year, up from 6,32 million recorded in the third quarter.

That’s just under half of Zimbabwe’s population, and it’s no mean feat if one takes into cognisance the high levels of financial exclusion that the country recorded prior to the emergence of mobile telecommunication companies’ mobile money platforms.

But banks have, of late, invested in IT infrastructure to create alternative or online banking systems that can at least match mobile money offerings.

Added Morgan & Co: “What this means, however, is that the race is on for local banks to pick up market share from mobile money platforms. Most of these banks have invested heavily in IT systems that are aimed at “bringing the bank to you”.

“CABS (a subsidiary of FINSEC-listed Old Mutual Zimbabwe), FBC Bank, Steward Bank, ZB Bank, CABS, CBZ Bank First Capital Bank and many other unlisted banks have launched digital banking channels that are facilitated by web portals and mobile apps.

“However, the value enjoyed by banks and clients alike is also enhanced by financial services players that have evolved into one-stop-shops for financial services. Major listed players with such breadth in the sector include FBC Holdings, CBZ Holdings, Old Mutual Zimbabwe and ZB Financial Holdings. We also opine that economies of scale will further work to the advantage of banks with huge market share.

“These mainly include CBZ Holdings with 22 percent market share, Stanbic with 15 percent, and CABS with a 14 percent share of the market share.”

However, for local banks it’s not just a case of catching up technology-wise, but they have to address legacy issues such as the huge amount of physical properties spread across the country that have almost become an unnecessary but significant cost.

In this regard, a number of banks in the country have closed down some physical branches to operate digitally and this is a step in the right direction, which has also been incentivised by the Covid-19 pandemic.

With mobile money firms skidding on a slippery regulatory environment on the one hand and traditional banks upping their digital game on the other, the scene is set for a bruising battle on who will eventually dominate the local financial services industry.