One of Zimbabwe’s leading advisory firms says robust growth in technology based payment platforms poses a serious threat to the earnings of already frail traditional banks.
In the Banking Industry 2015 Review and Outlook released today, Invictus Securities Zimbabwe said mobile money subscribers had doubled since March 2013, translating into a surge in the volumes of technology based payments, but posing “a threat to traditional banking”.
Fees and charges have become a major revenue earner for banks, as they grow increasingly cautious on lending, their traditional source of income.
Invictus however says income from transaction fees is coming under pressure as customers move to more efficient payment systems.
At the end of last year, mobile money subscribers rose to 7.3 million, from 5.3 million at the end of 2014. This number had been estimated at 2.2 million in March 2013.
“We foresee continued growth in mobile banking as it provides easy access to banking services and facilitates the ease of transferring money and making payments among other benefits, the same benefits that targets the financially excluded,” Invictus said.
“This poses a threat to traditional banking, through reduced transactional volumes and as a result decreased retail service fees. Mobile network operators were quick to respond to financial inclusion than banks. Transferring money and mobile payments constitute the biggest component at 72 percent for mobile money user services, the same core issues targeted by retail banking,” the report added.
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