Financial institutions hope to survive amid mobile banking [Citizen, The (Tanzania)]
(Citizen, The (Tanzania) Via Acquire Media NewsEdge) Dar es Salaam. Banks are teaming up with telecoms operators to serve customers regardless of locations and time bounds.
The availability of modern technologies has prompted financial institutions (FIs) to partner with mobile phone companies to provide services such as bank deposits, sending and receiving money, bills settlements, fees payments and balance enquiries.
Customers in rural and urban areas access financial services through their mobile phones.
Mobile banking has become a credible and the most preferred transaction mode. Up to 12 million mobile users made financial transactions in Tanzania in 2013, according to the third cycle of a FinScope survey.
There are more than 28 million subscribers, according to the Tanzania Communications Regulatory Authority.
The question is whether cooperation between mobile phones and FIs leads to mergers.
Tanzania Postal Bank (TPB) managing director Sabasaba Moshingi sees the partnerships as good moves. "But I don't think mobile operators and banks will merge. What is true is that banks and mobile phone companies have reached a point where they need each other."
He says technology has gone a step further, and with the introduction of cashless banking technology, TPB has rolled out point of sales and automated machines (ATMs) throughout the country and customers are accessing services easily.
Already TPB, Kenya Post Office Savings Bank and PostBank Uganda Ltd have teamed up to set up a converged ATM service for their customers which is expected to result in greater financial inclusion. The launch of this service took place on June 17, 2014 in Nairobi.
Under the umbrella of the Association of Savings Banks of East Africa (ASBEA), these banks have initiated an ATM service that will enable customers of the member banks to access money whether in Tanzania, Kenya or Uganda using their respective bank's debit cards.
The initiative comes at a period when research indicates that most of the nearly 150 million people in the region do not have access to formal financial services.
The ASBEA ATM service is also being launched at a time when East Africa is heading for a regional economic federation.
TPB is cooperating with M-Pesa, Airtel Money, Western Union and in making payments to the Tanzania Revenue Authority as well insurance payments. "We cover the full scope of financial transactions that make life better for Tanzanians," says Mr Moshingi.
He says TPB is now technologically driven where outreach and product roadmaps are highly dependent on evolving technologies.
In 2012, some stakeholders in the banking sector expressed their worries that mobile operators were threatening FIs especially from the mobile money banking technology. They argued that the technology would erode banks' liquidity, constrain their lending capacity. But Mr Moshingi says banks will remain competitive because a small section of the Tanzanian population is banked.
"Banks will continue to focus their operations in urban/peri-urban areas, margins will continue to be pressed in the short to medium term in regard to historic levels, but this may not necessarily deter new entrants. Inevitably, mobile money will continue to pose challenges," he adds.
Experts, however, have recommended that commercial banks partner or enter into joint ventures with mobile money operators.
The partnerships, apart from enabling banks to expand their physical reach into urban and rural areas, will also protect their interests.
Banks are proud that their strength is on loan issuance, of which telecoms cannot lend huge amounts of money to customers.
"Of recent we have seen Vodacom coming up with a new service dubbed M-Pawa which will enable customers to save as well as acquire loans from the mobile company. This is a new challenge that banks are facing and will most likely continue to face from mobile companies," notes Mr Moshingi
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