I have been in the banking sector for over 10 years majoring in Operations and Information Technology. I have endured the monotone of banking systems, operations, and procedures and straight jacket way of doing things for so long I can hop from bank to bank without the need for a learning curve for any task. I have seen new technology, products and services disrupt the status quo while banks resist the urgency to research and develop contemporary methods of satisfying the existing and potential customer base and attract new business.
I have given this background to try and justify my thinking in this particular discussion of the question:
Why does Zimswitch choose to be faceless? Why does Zimswitch operate in the background like a back office when as a matter of fact they ought to be out there at the forefront creating products and services?
For those who are not aware Zimswitch is the only independent Electronic Funds Switch in Zimbabwe. As a technology provider Zimswitch processes transactions through 4 main delivery channels namely Domestic debit cards, ATM, POS and EFT amongst member financial institutions; all settled via the National ZETSS (Zimbabwe Electronic Transfer and Settlement System.) system. It was formed in 1994 by a consortium of 6 Financial Institutions with its major milestones since then including:
- Joining almost all major Financial Institutions and Mobile Financial Institutions as the preferred Transaction Processing Technology partner
- Straight Through Processing and Real-Time settlement (not Real Time Gross Settlement RTGS, which is delayed to twice a day)
- VPayments (Its version of online virtual Payments)
- ZIPIT (Zimswitch Instant Payment Interchange Technology)
- Regional (SADC) integration (Ongoing)
For Zimswitch, it is not so much what they can do (which is a lot by the way), but how they can package it differently. They ought to tranform from being a technology provider to being a service provider. From being a bankers back office to being its own front office.
To best understand the opportunity cost let us explore the succulent low hanging fruit that exist for their exploration and exploitation:
Transaction Origination – Transaction Creation.
The Zimswitch model has always been one in which they wait on the banks to dictate to them, new transactions and how they want them processed and they, in turn, create and adapt their engines to suit the task. Unfortunately, banks never speak with one voice. You have the early adopters like CABS, FBC Bank, ZB Bank and to some extent Steward Bank, who will jump at new products without delay. Then you have your approval-from-abroad Banks like Stanbic, Standard Chartered, Ecobank and so on who will only adopt the new product (usually considered to be inferior to their own international versions) after vigorous risk and compliance and security checks. Then, of course, the laggards who will take several years before any kind of change. You know who they are. I used to work for one of them.
With such a setup, the setup of any new product and having banks adopt is so complicated it will always drag on for ages after being introduced and explained from one Interbank Committee seating to another. There are of course genuine concerns like liquidity, in the case of STP, but the majority of the time it is pure bureaucracy.
As a result of this arrangement between Zimswitch and Banks, Zimswitch product development and evolution has been rather slow, especially when compared with the rest of Africa, and the world. Modern business models entail that you innovate and preempt your customers and sell to them solutions that they are not even aware they need.
Zimswitch Mobile App
Why doesn’t Zimswitch develop a Mobile app for ZIPIT? If Zimswitch where to truly provide interoperability there is no reason why each bank should have their own ZIPIT USSD code. They should be the primary channel and would then aggregate all banks’ ZIPIT modules.
There are so many challenges to using the USSD method. Besides the session timeout, each bank has specifics that must be adhered to such as adding a branch code to the account. Some banks need full account numbers with branch codes and others do not. There is the ambiguity of fields like Reference when transacting and what they mean and whether or not the field is alphanumeric, can be left blank and so forth. Then there is the gigantic list of banks and wallets that requires up to a 3-page menu.
In fact, while One Money and Telecash are struggling to mobilise a substantive customer base, Zimswitch may find benefit in using their MNO infrastructure to enhance the ZIPIT Wallet. This would be much easier than set up with Econet for an aggregated service of all their competitors, I think. The one USSD code would be universal across all networks but hosted by Netone or Telecel.
There is a good opportunity for Zimswitch to begin venturing into Low-value High-volume, postpaid and prepaid, and beyond-the-counter payments and services. Such offerings would be supported by a value store appendage to their current direct debit cards. These may include City parking, Commuter and transport payments (Bus pass), Stadium ticketing and Airtime purchses even. A bank in its individual capacity may fail to justify offering Stadia or entertainment ticketing but Zimswitch can sell the product as a stand alone brand supported by all connected banks in the background.
Purchase point technology (Merchant initiated POS module (NFC etc)
One of the main obstacles to Ecocash being used at purchase points is the lengthy USSD process. This has resulted in some merchants using their personal wallets as opposed to obtaining a Biller or Merchant code (besides the registration process). As a result Ecocash has been largely restricted to P2P transactions as opposed to Peer-2-Merchant. Some shops have begun using the transaction push POS that initiates the transaction and invites users to authorize on their mobile device. This is ingenious and half-way there.
Zipit can easily overtake Ecocash by adding this very convenient service to the numerous Zimswitch Enabled POS. Zimswitch has the option to develop numerous other menu options offered on the Zimswitch connected Bank POS. The idea here being of course to initiate transactions that Zimswitch will facilitate and that ends at the bank.
When you seriously consider it, why do the banks own the POS and ATMs and not Zimswitch? Wouldnt it make more sense for the banks to stick to banking and service providers like Zimswitch offer the delivery channels?
Currently the Zimswitch’s bulk payments module only has Debit Orders. This is an automated way of deducting contribution from a bank account for regularly occuring payments such as GTel instalments for Civil servants, Nyaradzo subscriptions, bank loan repayments and so on. This is a rather limited scope as it there are numerous other possibilities for debit and credit bulk payments. These include salaries payments (like Paynet), Insurance, subscriptions and so forth, with the catch being that the payments must not only originate from the banks. How about a direct debit to wallet for a housing corporative? How about payment of salaries to your wallet and so on.
Zimswitch probably hasa comfortable relationship with as a mule for the banks becasue apparently they created it. However, it may be time to seriously look at their business model and see if they cannot use their stregth to grow and consolidate. With the way some go-getters are rapidly developing and trialing solutions the disruption and relegation to irrelevancy of their service provision can be as easy as the Zimbabwean Not-so-Coup Coup.
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