Tinashe Makichi
More than a decade ago, opening a new branch of a bank was a sign of dominance and growth. Marketing executives and PR personnel had all the bragging rights after announcing that their respective banks had a strong presence in all corners of the country.
Back then, the catchphrase, “spread tentacles or footprint”, was trendy.
Fast-forward to 2019. Banks are downsizing or rather making their operations leaner and more efficient, according to the same professionals who blew horns in yesteryear for opening new branches.
Breakneck changes in technology have resulted in the innovation of smarter banking platforms that have effectively extended banking hours, as the use of plastic money has become a global phenomenon.
Technology has also allowed many banks to make huge savings on stationery and cash in on convenient services rendered on various platforms.
The Zimbabwe financial services sector has been hugely transformed over the past decade, with modern technology giving traditional banking an innovative, seamless, and controlled structure never experienced before.
Mobile and internet banking has become the primary point of contact for banks as seen in 2018, with more than one million users in Zimbabwe having increasingly become reliant on quick digital solutions, like online wallets, for banking.
This move towards mobile and internet-based banking has come at a cost. Risks associated with fraudulent activities by support staff in IT departments of banks and the absence of a human face who can fully interact with customers are but some of the downsides of this new trend in banking.
One of the biggest challenges of online banking in a developing country like Zimbabwe, where it is estimated that nearly 85% of the adult population is not formally employed, is job cuts.
Several banks, including multinational ones, have over the years been trimming their branch networks despite posting huge profits. Some have cited a slowdown in economic growth for this development while others have merely responded to technology changes.
For regulators like the Reserve Bank of Zimbabwe, new banking platforms have closed the gap between the banked and the unbanked. Official figures show that growth in mobile telephone penetration has also pushed the level of financial inclusion upwards.
Jesimen Chipika, the RBZ deputy governor, said last month that the government wants the overall level of access to financial services to hit the 90% mark by next year, from the current 64%. The central bank also wants to increase the proportion of banked adults to 60% in 2020. from 30% recorded five years ago.
“Innovations such as mobile banking, digital finance, psychometric credit scoring models, biometric technology, value chain financing, group lending, micro insurance, micro business, and housing loans, etc, are increasing access to the usage and quality of finance for low-income clients,” Chipika said during the Financial Inclusion Forum held in the capital recently.
But for labour unions, it is a different story altogether. Peter Mutasa, the president of the Zimbabwe Banks and Allied Workers Union (ZIBAWU), says the invention of new technologies has positives for banks, but poses a massive threat to labour security and the economies of developing nations, especially in Africa.
“The fourth industrial revolution has come as a challenge to the banking sector, especially on the labour side,” Mutasa says. “As a union, we will be holding a congress in July this year where we are going to put out strategies on how to save jobs in the banking sector on the back of the coming of technology. It is a fact that some jobs in the financial services sector will be deemed redundant.”
He says the impact of technology on labour has encouraged some banks, like the Standard Chartered Bank of Zimbabwe, to export jobs to other countries at the expense of the country’s economy.
Mutasa notes that most developing economies are now losing out on taxes because of the exported jobs. Standard Chartered Zimbabwe recently torched a storm over allegations of exporting local jobs through closing some of its local departments in return for outsourcing processing to various centres supporting the bank’s markets across Africa, Asia and the Middle East as part of its international strategy.
Business Times is informed that the outsourcing services have seen StanChart retrenching since 2014. Four years ago, the bank announced its intention to close six branches in Zimbabwe and retrench about 100 employees. There was speculation at the time that the bank was considering divesting.
“As you are aware most developing economies, mostly in Africa, are dependent on taxes for development but some banks have been retrenching almost yearly, while at the same time exporting jobs to other countries. This has deprived developing countries of taxes among other things,” says Mutasa.
“This means we are going to engage policy makers and make sure something is done. It is unfortunate that retrenchments are being done by banks not to save business, but to reap more profits,” Mutasa claims.
Contacted for comment, Stanchart head of corporate affairs, Lillian Hapanyengwi, said the bank’s international strategy to outsource processing to various centres has been in place for many years.
“Hubbing select operations enables Standard Chartered, and many other multinational companies, to streamline internal business processes and efficiencies, and most importantly, deliver an enhanced and consistent level of service to our retail, commercial, and institutional clients,” Hapanyengwi explains.
“Standard Chartered has taken the conscious decision to continue to maintain our long-standing commitment to doing business in Zimbabwe. With a history of over 125 years, we remain committed to the long-term interests of our staff and customers in Zimbabwe, and to continuing to facilitate the development and growth of the economy,” she adds.
Another leading financial institution, BancABC Zimbabwe, announced its intention in 2017 to slow down on branch network expansion while opting for agency banking. Steward Bank has also slowed down on the brick and mortar model of banking.
In neighbouring South Africa, Standard Bank last week announced its intention to close 91 branches in the country by June 2019. These changes is expected to impact approximately 1,200 jobs. The bank says the move is part of a plan to realign its retail and business banking delivery model to the changing needs of customers in the face of a rapid adoption of digital banking products and services.
However, this change in scenario is likely to create different opportunities for people working in the financial or banking sector. Leading finance and trading firms in developed countries are already seeking employees who are adaptive to market trends and have dynamic knowledge or are keen on technologies, like machine learning, automation, and cloud computing. This indicates that the future of mobile banking in Zimbabwe is likely to thrive on techno-commercial skill.
