Banks and the EcoCash Factor

Hate it or love it mobile banking is a growing revolution in the art of financial intermediation within Africa and beyond. In Kenya a significant chunk of its Gross Domestic Product is wired through the conduits and innovations of mobile banking. To the financial forecasters this resembles a renaissance of a new phenomenon which will overtake the traditional means of financial intermediation that has been largely defined by banks.  

  

In Zimbabwe there has been a raging debate about EcoCash (a mobile banking platform of Econet Wireless Ltd) and its impact on the traditional banking methods. Probably driven by envy, bankers have argued that EcoCash is loosely regulated and there is need for monetary authorities to rein in. Seeing through the eyes of the bankers EcoCash is an appendage of a new world order whose intention is to ensure a banking apocalypse. To the bankers EcoCash is an apostate whose achievement can only be measured by the collapse of the traditional banking systems.
The recent spat between EcoCash and the Bankers Association of Zimbabwe clearly points out to the fact that there is one party which is uncomfortable with the other. The question comes down to whether the bankers are justified in taking a hard stance towards EcoCash.
EcoCash in itself has a potential clientele of eight million people as represented by the total mobile subscribers of Econet Wireless. This is against less than three million account holders which fourteen banks can fight for. Therefore it is unjustified if banks cry foul over the threat of Econet taking over their customers.
Moreover Ecocash has been extensively used as a money transfer scheme as opposed to transactional purposes. It has an edge over banks considering its large agent network. To shrug off such competition banks should have considered low cost massive branch distribution network. Considering such issues EcoCash was already a winner way before the bankers raised their voices.
EcoCash is backed by the second largest company (by capitalization) on the Zimbabwe Stock Exchange against a number of banks which are struggling to meet the recent capitalization levels as prescribed by the Reserve Bank.  This gives it an edge in the event of any structural adversities. This means an individual is better exposed if EcoCash fails compared to a situation when an individual is exposed to a bank which has failed to meet the 25 million capital mark.
The fact that banks had to wait for EcoCash to be a household name and only cry foul at such a time clearly points out to the fact that bankers do not subscribe to the basic fundamental concept of innovation. Only CABS reacted with the TextaCash product whilst others waited for 2013 to shed their tears. Now the banks are paying the price of failing to innovate and no level of envy will discourage EcoCash because every argument falls to their favour and as long as they have a giant company like Econet on their back the product is here to stay. The clear message which EcoCash has sent out to the banks is INNOVATE OR DIE!