Ecocash onslaught: Can banks compete?

AN inevitable war is simmering between Econet Wireless and some banks regarding Ecocash’s domination of the financial payment system.

Report by Lance Mambondiani

The revolutionary mobile phone wallet launched in 2011 is changing the way customers view banking. Ecocash has dispensed the need for a physical interaction with a bank for basic services, threatening the survival of the entire sector.

With more than 1,7 million users, moving approximately $100 million monthly through its accredited agents, Ecocash – already the largest payment platform – is predicted to become the country’s biggest bank.

Some banks have been unhappy with the mobile network operator’s (MNO) unregulated dominance.

The mobile wallet revolution

In developing countries with a low banking and high mobile phone penetration, mobile wallets have clear benefits.

They can bring basic payment services to the unbanked increasing bank deepening and economic activity particularly in the rural areas.

Ecocash is believed to have invested $50 million into its product, employing 5 000 people and transforming the lives of ordinary people and small businesses.

In Kenya, M-Pesa (launched by Safaricom in 2007) has over

30 000 agents, 14 million users moving an estimated $1 billion transfers monthly or 70% of all transfers in the Kenyan market.

Another successful example is SMART Money in the Philippines (launched by SMART in 2 000), with over nine million wallets, connected to 9 000 ATMs, over 4 000 cash-in/cash-out centres, 15 partner banks and 95 000 agents.

People can survive without bank accounts?

The unfolding reality worldwide, particularly in developing countries, is that mobile phones and the Internet are causing a significant shift in bank practices and their distribution models.

Banks have to wake up to the fact that the phone will become the day-to-day bank account of the near future.

The average banker may dismiss this as immaterial, but the bank account worldwide is slowly unhinging from the traditional “brick and mortar” banking model which spells a massive “disruption” of the Zimbabwean financial sector. Banking is no longer somewhere you go, it’s something you do.

The success of mobile wallets such as Ecocash and M-Pesa is an inevitable shift which seems to prove, or at the very least suggest that people need banking, but they don’t necessarily need banks. The best way to deliver banking products may not necessarily be in the branch, but wherever and whenever a customer needs to pay for a kombi, pay their Zesa bill or send money to their parents in Mutorashanga. Customers can do this without opening a bank account or suffer extortionate bank charges.

The reliance by banks on a branch as distributional mechanisms to deliver utility values means retail banking is slowly becoming inadequate to deliver products to the customer.

Is it possible for banks to compete?

Customers prefer Ecocash because it’s cheaper, faster and has no long-term commitment. It is entirely incredulous to suggest that banks, already suffering the burden of $100 million capital requirements, can spare some cash to compete with the country’s largest MNO throwing its money into the e-payment platform.

Without a doubt, charges levied by Zimbabwean banks are exorbitant.

They may, however, reflect inefficiencies in the entire economy and in turn a fatally unprofitable banking sector. The supposition that banks charge exorbitant fees to shore up their capital could be less cogent and perhaps dishonest.

To regulate or not to regulate

While the attempt by banks to fight competition and innovation is inevitably folly, whether or not the mobile money platform should be regulated and if so how, will remain a very relevant and legitimate question.

The contestations between Econet and the banking sector will need to be addressed and the regulatory environment may need further clarity not least to protect the consumer.

Different countries have adopted different approaches, in the Philippines, MNOs can perform banking functions, while in South Africa, the process is entirely bank-led except for agents. In the US, MNOs are required to register as money service businesses, while in countries such as Japan, MNOs are required to deposit money in a bank account.

Whatever the outcome, the appropriate approach will need to balance advancing financial inclusion for the unbanked with ensuring stability and soundness of the country’s financial system.

Lance Mambondiani is a Development Economist and a Zimbabwean Banking Expert.

He is a Guest Lecturer in International Finance & Development at a UK University. Contact email .

Twitter @DrMambondiani

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  1. No doubt tht Ecocash is taking bt th only issue is tht their charges ar stil a bit high and also they charge both ways, ie th sender and th reciever. In terms of fast and efficiency ecocash is fast bt the agents ar not efficient.

    1. Wel said Vin T, Ecocash agents are so passive and it appears as if you are asking them to give you cash freely yet its your money, did they undertook a formal training? they operate as if they are working in a government office were patience and endurance are prerequisites!!

  2. its vry fast, convenient, bt isnt ecocash tapping into bank domain? banks are already grapplin wth capital requirements, nd low deposit base. pple employed with banks maybe laid off in the longrun

  3. Ecocash is more convinient for a lot of people than banks but their charges a bit too high.

  4. Every one is happy w eco cash n banks can’t compete w it. Kwangosara kuti vachipe vanhu ma loans to completely blow away these banks.

  5. I beg to differ on the point that eco-cash services are cheaper than banks. Comparing with my *Bank*, CABS, transction costs are charged @ 1% whilst this transfer system chaeges an average of 5%. Very expensive from my view though it is very convinient. There is need to rationalise their charges to truly capture the market of individuals like me.

    1. m sure yu r aware that ther r no monthly charges on ecocash, dnt be short sighted

    2. Thank you

      Ecocash is very convenient but very expensive more expensive than banks. it is a good service to have. But surely shouldnt it be registered in one form or another cause yes it is handling people’s monie s?

  6. How can I bank my money in these banks anongofuma avhara mari yacho hauzombo irecorver futi

  7. ecocash is doing well than other banks but some of their agents are nt trained on hw to handle trxs , i suggest if they can introduce daily minimum floats coz some are gud in cash in only when comes to cash out its problem. handeyi neEcocash

  8. Ecocash’s major advantage is that it is everywhere. Imagine 5000 branches of barclays banks dotted around the country including kwaChatikobo!

    1. Lol, kwaChatikobo here Wezhira?

    2. Wezhiramukaranga

      unonyepa iwe,kwaChatikobo hakuna iyozvo,nxa

  9. you need to understand that Ecocash and banks are in different markets. Ecocash is a money transfer system like western Union, Moneygram etc and more sophisticated and innovative, where as banks are deposit taking instutions.

    Whatever amount loaded on your ecocash account there is a corresponding balance in a trust account held with banks. Effectively the money on ecocash platform is a bank deposit in a trust account.

    verdict: they are competing on diferrent platforms and banks are just cry babies by saying ecocash is suffocating them. to all banks, its either you innovate or you dissappear like a dinosar.

    1. I support you Chindori Eco cash is just one of many things that a bank or an institution can do and I am surprised by this report and ots shallowness. Banks do not only depend on individuals as their customers but deal with businesses where large some of moeny are dealt with. I am pretty sure the reporter did not do sufficent research or does not understanding banking. Eco Cash I think is doing a good job and they tapped into something that no one was doing before in zimbabwe and I do not see them disturbing or taking business from people because people can still do toher business with backs such as paying school fees, opening accounts getting loans just to mention a few. The only problem is that our economy is still down and there is no enough business not only for our banks but even companies are folding. Its a very confusing article it need a rewrite.

  10. This article was sponsored by econet clearly with a bias of promoting ecocash, TN Bank doesnt own a single ATM to me that is worrying, does it mean every agent is awash with cash to give out to the transacting public? I doubt it and the figure of 100 million is exaggerated because this is not information that is easily monitored to come up with an average figure.

    This is typical econet to abuse the media to promote or defend it’s products, lets face it they want to rub shoulders with the likes of MPESA but the reality there is a liquidity crisis in the country which econet cannot solve alone, their approach right now is like someone who closes their eyes in the face of a lion attack.

    1. @guest. don’t be too emotional. Read widely on payment systems in general then you would understand my point. Do you know that Cabs has Textacash (powered by Telecel and Netone) which competes with Ecocash. The only problem with Textacash is that the market share of the two mobile operators is insignificant. How many of your Chinas are on these networks???????? ummmmm 1%. but your Chinas on Econet 99%.

      Ecocash is riding on the market share of Econet.

      Besides from an article published in the Herald on Monday, Ecocash will be available from all banks. then MOUs come into play and they share the proceeds. The econmy grows, jobs and opprtunities created.

      1. Mark my words econet is going to implode as a group one day, they stepped into too many products and their core competence is no longer known is it regular telephone calls , internet services, money transfer, life assurance, buddie beatz, the can be jack of all trades but master of none

  11. ecocash inodhura vakomana.

    1. EcoCash is convenient vakomana! Its worth the price!

    2. ndakazvitaura kare, Ecocash costs an arm and a leg.

  12. @guest. With your attitude you will achieve little. Do I smell PHD!?

  13. in the banking sector there is a lot of red tape to open an account from the high deposit fee to numerous paper requirements,proof of residents bearing a surname that one my ID,knowing very well that 70% of harareans are tenants and high bank charges puuuuuwoo ndatoneta nelist racho bt with ecocash its just my ID and i get free airtime dollar and mega convinience.Be innovative not just mourn

  14. Wezhiramukaranga

    /@Tarisayi, i dont have a CABS account but I am often send by a relative to transact there. I am telling you the 5% charged by ecocash is cheaper than the 5rand yu wil hike a taxi to town,and the hunger and frustration persisting while in que, its not about monetary expense chete hama yangu, but also the non-economical expenses which make Ecocash so so cheap

  15. Wezhiramukaranga

    @guest, yu have critical thinking capabilities my frend. Siyana naNelson uyo. Look at TN, they expanded so fast and going burst was imminent.,look what happened. Nelson mface, whatever business yu indulge in chero zvikafaya sei there is a time when you should pump the breaks even if continuous expansion will mean more mola,…that kind of expansion is unhealthy for a business. And one more point nelson,whats a PHD?, nothing but a piece of paper. Whats crucial is educatedness(like Guest is showing) not LEARNEDNESS like e phds yu r refering to. Hona vane maPHD kuponda kwavari kuita nyika nematertiary institutions. Nxa mhani, to hell with your PHD

    1. @Wezhiramukaranga. PHD in Zimbabwe means Pull Him Down!

  16. I have never forgotten how banks fleeced us during the hyper-inflation period. ECOCASH NDIZVO!

  17. Banks lost the plot a long time ago their customer needs and taste changed and they never noticed coz they were bzy scheming on how to maximise on bank charges. . . Ecocash came and overtook them by providing a service desired by the customers banks had neglacted and frastrated. So for nw banks shld create a unique product targeting bzness pple give them loans etc. . .bcoz econet ecocash has inspired us to change our world so we are now living in it

  18. banks shld capitaliz on giving loans… something ecocash will never do… afta all thats the basic function of a bank… they are nt doing that… so is there any logical reason to stay loyal to a bank when its nt serving serving its purpose… waste yo money on charges and transport to the bank when you hv ecocash closeby… wakambopinda busy recash afta business hours here… ndopaunozoona kuti ecocash vakuru

  19. Mabank haanyure,kuti upihwe loan wotombonanzva munhu kwete kubata munhu

  20. ecocash inodhura. charging $ 6 the sender and $ 6 the receiver per every $100 is tantamount to stealing!!!!

    1. MDEVA unonyeperei uchidaro. u pay $6 for $200. be factual ndiko kuti tikubelieve.Ecocash is far cheaper than mabank because haunazve mamwe macharges besides madhora dhora iwawo.Zvekuti vemabank vachashaya basa hazvina problem izvo.H ow many jobs were created right now ne Ecocash- plenty.Ini I bank neCBZ uye CBZ inomhanya neshasha Ecocash saka handichaende kubank uye handimiri muLine.Ivisit my bank pa 4n, thanks to Ecocash.I do all my transactions ndakarara pamubhedha ndichisika mhuri I have no time to waste ndichienda kutown futi, THANKS TO ecocash.CABS, STANDARD ,BARCLAYS fambai nenguva otherwise hatiuyiko.Ungavawanepi vanhu vakanaka kudai seveECOCASH?Former PTC (NOW ZIMPOST) yakadonha nekusada innovation and creativity.

  21. We should salute econet management. These ppl ar pasionate abt pple. If u want to check,jus try other competitors’ service,ndopaunoona kty Jesu idombo. Any busines wth a priority of serving the ppl wil simply bcm the ppls choice. Econet has tried by al means to meet our needs and we gladly pay them fo that. Bnks on othr hand ar nt ther 4 th ppl,u lend them mny ,tkng a risk nd they gv u 0% interest and tke money every mnth. They ar giants nw bt i knw of other giants who cldnt mk it to th 18th century!

  22. Wrong charge calculation – correct charge is 2% therefore total is $4 instead of your $12!

  23. manyanga kerekere we zaka

    banks shld not cry foul over Ecocash dominance in their región coz they lack innovativeness.imi munofunga kut delegation ye econet yakaronga ecocash yakanga yaonei? obviously loop econet capitalised on a mrkt opportunity available.likewise banks shld follow suit if they stil want it or ecocash batai mapenzi. strive and co muri madhara. sando dzenyu ecocash.rega ndimbototumira vatete mai Grace yechiponda chemukumbi paZibwowa apo ne ecocash. NMB ingazvigona?

  24. The Ecocash platform is great but the most of it`s agents are something.they are rude and always think that they are doing you a favour

  25. executives at banks should occupy themselves with innovations rather than crying faul. changamukai kani
    To ecocash we salute you you made life easier for the generality of the public now that every jack and jill have a celphone. Rega ndidombotumira mai vangu mai Sorobhi $5 yechigayo kuBhikita kwaChiremwaremwa uko. FBC,CBZ, nanaStanchart mungazvigonavo here izvo. itai tivone . customer is a king . itai zvinodiwa nevanhu mukunde

    1. CBZ yavepo pachirongwa shamwari in case u didnt know.Tavakunwa tese mapiritsi eECOCASH kuCBZ.vARI kumhanya neshasha ava uye vanopa maloan hobho hobho

  26. I think ecocash can still improve on its efficiency for example, I don’t understand why someone is required to produce a valid identity document so as to be able to perform cashin transaction. is it really necessary? I feel you only need to have a your cellphone with you to be able to cash in. one’s ID should be requested if one wants to cash out. gadzirisai ipapo . its causing unnecessary inconvenience to clients

    1. Icho ichokwadi rome.Chero munhu asina chitupa asi achida kudeposita ngaaregerwe aise mari yake.even ndisina 4n asi ndine number hapana dambudziko apa.

  27. Should we be shedding tears for these bankers?

  28. reduce the tariffs and introduce atms that simply work with the codes then you take over banking for good. the idea that you cant get money during holidays sucks with few agents open

    1. government must take over this econet its a profitable company we want to benefit also

  29. ecocash is perfect when one wants to transfer an amount say less than $200, beyond that u cry because the charges will be twice those of the banks.

  30. well who wouldnt want to take advantage of the situation? nobody can send it faster than ecocash until we have a good enough competator whatever they charge you will pay. as for banks vs ecocash, ecocash will come out tops kunyanya vanhu vanoita regular small amounts money transfer no qustions ipapo ecocash yakohwa pakuru! vawanda vanishandisa ecocash.

  31. governement kutora ecocash? are you made..ndipopainofira mari dzotanga kunyura.. and besides why not start their own platform why kutora yevamwe.. Hanti netone ndeyawo so whynot do netcash.. hahahahaha.. rave shavi kani rekungotora zvavamwe

  32. I can’t determine how do I subscribe to your blog

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