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NewsDay

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Phasing out withdrawal slips: Implications,possibilities

Opinion & Analysis
Presenting the January 2014 Monetary Policy Statement, acting RBZ governor Dr Charity Dhliwayo expressed concern about the Zimbabwean economy increasingly becoming “a cash economy”.

Presenting the January 2014 Monetary Policy Statement,  acting Reserve Bank of Zimbawe (RBZ) governor Dr Charity Dhliwayo  expressed concern  about  the  Zimbabwean economy increasingly becoming  “a cash economy” in spite of the central bank’s efforts aimed at promoting electronic means of payment.

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Against this background, she urged the banking sector “to ensure that all clients be issued with bank cards and adopt strategies to encourage wide use of the same”.

So a few days later, when CBZ Bank signalled the intention to phase out manual withdrawal slips, it appeared to be a  direct response to the RBZ’s call.

“In our endeavour to improve service provision and risk mitigation to you our valued customers, we advise that CBZ Bank will be phasing out the use of manual cash withdrawal slips by individual clients from banking halls,” said the bank in a Press statement.

“All cash withdrawal transactions by individual customers will be effected using an ATM card on: CBZ ATM machines, branch POS machines, CBZ in-store ATM machines, merchant POS machines as ‘cash back’ and other ZimSwitch platforms. We, therefore, request clients without ATM cards to visit the nearest CBZ branch before February 22 2014 to apply for their ATM card,” said the bank.  This article explores the impact of the move and its possibilities.

Service provision The move means that customers will no longer have to spend precious time completing manual withdrawal slips, but for this benefit to be sustainable, the bank must increase the number of service points and reduce customer contact time, otherwise queues will become longer as customers wait to be served by tellers. However, the fact that tellers will no longer have to process withdrawal slips (by verifying customer details, numerical correctness as well as stamping and filing) should help speed things up. Cost-saving The phasing-out of withdrawal slips will enable the bank to make a cost-saving in terms of stationery since it will no longer incur printing costs. Hopefully, the bank’s cost savings on this line item can ultimately translate to lower transaction costs for customers.

Risk mitigation Usage of ATM cards instead of manual withdrawal slips means criminally-minded tellers will no longer have the opportunity to forge customer signatures and post unauthorised debits to customers’ accounts since verification/identification and authorisation will now be based on a personal identification number code.

Increased usage of cards Since more customers will now have cards, the move to phase out manual withdrawal slips should encourage increased usage of ATM cards at the designated points outside banking halls such as merchant POS machines and in-store ATM machines for shopping and cash-back purposes.

With several channels such as branch and in-store ATMs, merchant POS machines and other ZimSwitch platforms, any of these is likely to be within easy reach of customers at any given time, hence less traffic in the banking halls.

Sweating existing assets In March 2013, CBZ Bank — with the technical support of Spark ATM Systems of South Africa — invested significantly in the rolling-out of a network of offsite, in-store ATMs in retail outlets, service stations and hotels. The bank invested $400  000  to source ATM hardware and software as well as training personnel and expected to spend $1,5 million to roll out  a batch  of ATMs as the bank  looked forward  to installing  machines over three years.

The impact of mobile money products such as EcoCash on the transaction banking landscape has often been seen as threatening such investment, rendering the return on investment (ROI) sub-optimal. The move by CBZ to phase out manual withdrawal slips means the bank can sweat those existing technological assets and improve its ROI. Partly solving the change problem Transacting using plastic cards instead of cash means that customers can pay any amount they want without having to worry about the change problem, which has been a menace since dollarisation of the economy in February 2009.

Conclusion As at December 2013, the POS density stood at 400 machines per million, which the RBZ noted falls short of the world average of 1 300 machines.

The RBZ targets POS density of 600 by year end, as well as a POS machine for every till machine within five years and the move by CBZ  goes some way in ensuring the achievement  of this  goal.