POSB in pursuit of higher financial inclusion goals

By The NewsDay | Oct 22, 2015 | 4 Min read

THE Monthly Financial Sector Bulletin (MFSB)is always on the lookout for interesting channel development initiatives in the financial sector

THE Monthly Financial Sector Bulletin (MFSB)is always on the lookout for interesting channel development initiatives in the financial sector, so when the People’s Own Savings Bank (POSB) recently announced that its services would now be available at TM, Pick n Pay and Meikles Mega Stores, we got curious and sought to find out more about what the bank is doing. Despite being a savings bank, POSB appears to be holding its own and competing head-to-head with mainstream commercial banks, some of whom it is seen as hungrier and more aggressive than. For instance, the bank achieved a profit of US$5,46 million for the half year ended June 30, 2015, which was the third highest in the sector, yet its asset and capital bases are much lower than all the banks. Incidentally, POSB was one of the very few banks to declare a dividend for 2014.

Financial Sector Spotlight by Omen Muza

In this instalment, NewsDay financial columnist Omen Nyevero Muza (ONM), who also edits the MFSB, speaks to Admore Kandlela (AK), the POSB chief executive officer, about the bank’s recent strategic alliance with Meikles Financial Services (MFS) in the context of the bank‘s broader multi-channel strategy.

ONM:Congratulations on your new strategic alliance with Meikles Financial Services through TM, Pick n Pay and Meikles Mega Stores. What services are available at My Cash Kiosks? Is it just cash? AK: Thank you. This strategic alliance is positioned to bring added banking convenience to our customers. Services available at My Cash Kiosks include cash deposits, cash withdrawals, bill payments (Zesa prepaid, DStv etc), remittances, balance enquiries and cellphone banking (CellBank) activations.

ONM: POSB has a 34-strong branch network and over 110 Zimpost Agency Offices. What’s the strategic imperative of going into the retail store, for an institution already with a significant footprint of its own? AK: One of our medium to long-term goals is to achieve 100% POSB geographical coverage by 2018. Thus, we have taken a deliberate strategy to widen our footprint and bring the banking service closer to the people. The ultimate goal is to have a POSB agent within convenient reach for our customers. The extended footprint will undoubtedly enhance both customer convenience and financial inclusion to the general populace.

ONM: Is this channel development initiative taking you to locations you are not already in, or exposing you to new customer segments altogether? AK: Both. We have given priority to establishing outlets in locations we are not already in and this allows us to also tap into new customer segments.

ONM: In absolute numbers, how many new locations has this strategic alliance opened up for POSB? AK: The alliance will open up 68 new locations for POSB by the end of the year. So far 27 locations are now providing banking services.

ONM:Given the need to ensure that the customer experience at agent level remains at a standard which is acceptable to the bank, are you deploying any staff in-store or providing any form of training to the agents? AK: POSB does not have any staff in these locations; instead, the bank provides training to MFS’s frontline staff so they are better equipped to serve our customers.

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ONM: What are some of POSB’s key considerations when developing new products or channels? AK: Customer expectations, affordability and accessibility are some of our key considerations when developing new products. As we look at new agency channels, we look at experience and stability of the merchants and also the foot traffic in the outlets.

ONM:You are on record as saying that strategic alliances, out-of-branch delivery channels, and innovative products should get you where you want to be in the future. Where does POSB want to go, if I may ask? What’s your vision? AK: POSB’s vision is to be a world-class savings bank catering for all. A key focus goal that will be pursued by POSB, in the realisation of its vision, is that it will be a well-capitalised, profitable and financially inclusive savings bank serving the majority of the population by 2018.

ONM: What form is the bank’s channel development activity likely to take in the near future? AK: We are pursuing similar alliances with other organisations including SMEs with a view of enrolling them on our agency banking model.

ONM:What’s your view on the significance of the physical bank branch, against the background of the current trend to focus on out-of-branch or electronic-based delivery channels? AK: By their nature, physical bank branches are capital-intensive and costly to run. This is the major reason why most banks are downsizing their branch network. Agency banking or electronic banking channels are cost-effective and fairly easier and faster to implement and do not close doors to the public.

ONM: Customers of three other banks can also access services at My Cash Kiosks. What’s your take on the view that facilities such as My Cash Kiosks are a welcome form of infrastructure-sharing, which enables banks to compete on the basis of product and service innovation rather than infrastructure? AK: Surely, infrastructure-sharing is noble and that is the way to go. Infrastructure-sharing would translate to lower costs, competitive and affordable products for customers as well as enhancing financial inclusion.