Opinion

When a customer is inferior

During the banking storm of 2004-2006, a depositor would go to a branch of a troubled bank and would meet a notice that the said institution has been placed under curatorship for a period of six months.

The period would be extended over and over again and if there were no chances of reviving that institution, it was allowed to go under leaving depositors counting their losses.

Over half-a-dozen financial institutions went under as monetary authorities embarked on a crusade to rid the banking sector of financially underweight firms. Confidence in the sector hit an all-time low and returned when the country embraced the multicurrency regime in 2009.

Even those who used to bank their forex under their mattresses are today opening foreign currency accounts (FCAs).

The central bank has also come with a domestic nostro settlement platform. Depositors who had money electronically transferred into the “local” FCA have been facing challenges withdrawing the money at some banks as they insist that there was no physical cash deposit.

The banks say the money could be converted to local currency at the prevailing auction rate.

Here lies the challenge.

Firstly, banks allowed depositors to open FCAs. The depositor opened that account with a reasonable expectation of withdrawing their money in cash once it has been transferred to his or her own account.

Secondly, there is a domestic settlement platform which banks should use to settle the transactions in the back office which banks have not been using. For a bank to tell a client that they cannot withdraw money from the FCAs sound like taking a customer for a ride especially if the said customer was not told when opening the account that he or she would not be able to withdraw the money if it had been deposited electronically from local companies other than international organisations and NGOs.

Monetary authorities insist that transactions should be done outside the public glare and the money is there. Central bank chief John Mangudya recently accused banks of contaminating “banking with politics”.

“You do not need to settle offshore. It is settled domestically but given value as a back office transaction.

Settlement is not a negotiating tactic where a customer of a bank is told that there is no money. That is not banking.”

Mangudya said the cash is there in the bank, the “money is in the nostro”. Statistics from RBZ showed banks were holding FCA balances of nearly US$1bn as at October 31, made up of cash at bank (US$393,265,049) and nostro balances of US$573,101,628.

If the system is not working, banks should have the guts to tell the central bank that “it won’t work” rather than nodding endlessly in meetings with the regulator and fail to implement that.

It’s not only in FCAs where depositors are getting the short end of the stick. A local bank is telling its customers to pay ZWL$100 in cash to renew their debit cards.

A rational bank would have debited the cost from one’s account. Why demand cash when the economy is going cashlite?

What is clear from this created chaos is that real banks will emerge and the fly-by-night institutions will be left with battered images after losing the trust necessary in the creation of brands. 

Kevin Plank, American billionaire businessman and philanthropist, has some advice for those companies that ride roughshod over their customers saying brands are all about trust. “That trust is built in drops and lost in buckets,” he said.

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