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Steward Bank Targets to be Zimbabwe’s First Digital Bank
Steward Bank, one of Zimbabwe’s leading financial institutions, has announced its ambitious plan to become the country’s first digital bank. The bank believes that fintech is an opportunity to improve not just product delivery but also end-to-end processes of banking, as well as deliver additional services such as credit scoring based on advanced data analytics.
Leverage Fintech for Younger Customers
Steward Bank’s strategy is to leverage fintech to better engage younger customers, who make up a significant portion of Zimbabwe’s population. The bank recognizes that technology provides an opportunity to reduce the cost of bricks and mortar operations and cash-handling, and build more lower-cost, data-driven banking relationships.
Fintech Adoption in Zimbabwe
According to recent data from the Reserve Bank of Zimbabwe (RBZ), banks have invested heavily in POS devices, with 1,121 devices per 100,000 people in 2018. This indicates a strong preference for digital transactions. The number of commercial bank branches has also reduced significantly, from 7.7 in 2014 to 5.4 branches per 100,000 adults in 2018, as banks move towards agent banking models.
Lack of Collaboration Hinders Fintech Growth
Despite the potential benefits of fintech, there is a lack of collaboration between banks and fintech companies in Zimbabwe. Many fintechs have reported that when they pitch innovative ideas to banks or mobile money operators, the larger player goes away and builds their idea in-house rather than collaborating with an external partner.
- This has led to a culture of secrecy and mistrust, which inhibits collaboration.
- Fintechs are often discouraged from pitching new ideas due to the fear of being copied by bigger players.
- Interoperability and shared services are critical for the growth of fintech in Zimbabwe.
Zimswitch and ZSS Lead the Way in Interoperability
Zimswitch, which began operating in 1994 with just six banks on the platform, has had some success in operationalizing a system of interoperability. The Shared Services Scheme (ZSS) has also accelerated the interoperability process by including mobile money operators on their platform.
Fintech Generates Opportunities for Low-Cost Agent Networks
Fintech generates opportunities for low-cost, wide-scale agent networks to extend financial access and improve service delivery at the last mile. The Reserve Bank of Zimbabwe has highlighted agency banking models as a priority for financial inclusion, but these models will only work if cost-effective.
Microfinance Sector Needs Fintech Innovation
The microfinance sector in Zimbabwe continues to play a large and important role in the financial sector, particularly in the context of financial inclusion. However, the level of borrowings within the microfinance sector is low relative to the need for borrowings.
- Fintech has the potential to alleviate some of these challenges.
- Zimbabwe’s MFIs have begun to make the required investments in technology, including electronic disbursement and repayment of loans, as well as updated digital Management Information Systems (MIS).
Conclusion
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Steward Bank’s plan to become Zimbabwe’s first digital bank is a bold step towards embracing fintech innovation. The bank recognizes that fintech is not just a threat but an opportunity to improve its operations and engage with customers in a more effective way.
- Collaboration between banks, fintech companies, and mobile money operators is critical for the growth of fintech in Zimbabwe.
- Interoperability and shared services will help banks to innovate faster and extend financial access to more people.