The Usage Of Internet Banking in Zimbabwe

Before the advent of new technology, banks used to rely on traditional ways of conducting business whereby most of the activities where conducted on bank premises, and bank performance was measured on the number of walk in customers to determine the market share. Due to globalization and technological advancement bankers were forced to adopt and change to these latest technology which is internet banking so as to remain competitive. IBS services allows banks to perform transactions such as transfer of funds, payments of bills, access of latest balances, statement viewing, and account detail viewing, printing and downloading of statements.

Internet banking services currently available include online inquiry; e-payments, e-transfer and online 24/7 banking services which reduce labour cost ,increase the banking efficiency and effectiveness. (Henry, 2000)

The introduction of internet banking has been viewed as a revolution transformation in the banking industry that pushed banks to shift from practicing traditional ways of banking to modern ways (Al-Jabri, 2012). In the 2000s about 70 % of financial transactions carried by bank clients were done through a bank office with brick and mortar structures and nowadays, about 30 % of financial transactions are carried out through a branch office.

Get quality help now

Dr. Karlyna PhD

Verified writer

Proficient in: Banking

4.7 (235)

“ Amazing writer! I am really satisfied with her work. An excellent price as well. ”

+84 relevant experts are online

Hire writer

This clearly indicates that banks are on the move of modernizing there operations by fully implementing the use of internet banking. However, the rate of adoption of internet banking by bank clients have been the limiting factor on value and volumes of transactions conducted on the internet. In context to Zimbabwe, the adoption of internet banking by bank clients is very slow due to different factors and it is posing effects on banking performance (customer services, cost management ,market share, profitability) and also offering convenience on service delivery to clients (Mols, 2000).

Many local banks in Zimbabwe have made huge investments in their online infrastructure, particularly in the early 2000s. Despite these tremendous investments by banks in this aspect of IBS delivery, the adoption rate of internet banking in Zimbabwe has been lagging. However, IBS was a breakthrough in the banking industry as it released banks from the constraints of time and geographical location. It also allowed banks to cut costs on transactions, improve their service delivery, and respond better to the demands of the market. The adoption on internet banking in Zimbabwe has remained sluggish despite efforts by banks to promote the use technology so as to provide convenience in service delivery. The current Zimbabwe economic is characterized by high levels of hardship which has forced bank clients not to rely on internet banking but rather rely on the black market for access to cash and other banking services offered (Point of Sale (POS),mobile banking ,automated teller machine and Real Time Gross Settlement (RTGS). Banks were of the view that liquidity crisis in Zimbabwe will force bank clients to shift to internet banking to carry out payment and funds transfer but rather it increased the demand for money and this triggered interest rates in the black market. The demand for cash by bank clients was a result of demand of cash by small to media enterprise (SME) who were refusing plastic money as most of their raw materials and products were imported.

Importation of such raw materials required cash in form of United State dollars (USD) since the currency used by Zimbabwe (bond note) is not accepted internationally, this was the reason behind demanding of cash by SME since it was cheap to purchase USD with cash than with money transfer. Shortage of this USD has forced SMEs to buy it on the back market which is rated at $100 used = $160 bond note transfer and $100usd=$130 bond note cash. These interest rate has resulted in SME passing on the burden to consumer who use money transfer. In reference to this, most bank clients are now preferring to look for cash instead of using money transfer which is witnessed by high queues in banks, increase interest rate in the black market, decrease on e-banking, online payment.

Apart from that, making online payments on goods purchased abroad through the internet requires a client to deposit funds in form of USD in his account since bond note are not internationally recognized, this therefore means that the clients account will be in form of USD and not bond note. These challenges as a result of cash crisis in Zimbabwe has forced bank clients to slow adopt to the use of internet banking. The monetary police released by the Reserve Bank of Zimbabwe (2018) showed most values and volumes were purchased through RTGs, mobile banking and POS while internet banking constituting 7.92% on value and 0.49% of volumes purchased. This clearly indicates that there is a gap in the usage of internet banking. However, in Zimbabwe the public has find it difficult to adopt to IBS regardless of its effectiveness and advantages. Due to the fact that most of the public comes from rural areas (60% rural based) where they is in access of internet due to poor connection service, customer have found it difficult use internet service under these conditions. Mobile banking offers millions of people a potential solution in emerging markets that have access to a cell phone, yet remain excluded from the financial mainstream .The main benefits of internet banking to banks are cost savings, reaching new segments of the population, efficiency enhanced reputation and better customer’ service satisfaction. Jayawrdhena & Foly, (2000), suggest that IBS offers new values to customers such as reduced costs in accessing and using bank services, increased comfort and time-saving transactions that can be made 24 hours a day without requiring physical interaction with the bank speed of transaction and better administration of funds(Tuchila,2000). IBS also offers a competitive advantage to banks by providing an unlimited distribution network. Although, there are past literatures studies on the adoption of internet banking, many of these studies have tended to focus on developed countries such as USA and UK (Pikkarainen et al. 2004). However, still not predictable in some developing countries (Kaled, 2008); Zolait, 2009; Al Nahian et al. 2009; Mohammad 2010). Customers today are demanding much more from banking services. They want new levels of convenience and flexibility (Birch and Young 1997; Lagoutte 1996) on top of powerful and easy to use financial management tools, products and services that traditional banks could not offer.

Slow adoption of internet banking by bank clients have heavily affected the operations of banks, this has promoted unfavorable business industry. Banks are on the move of keep up with the latest technology in terms of internet banking so as to promote convenience in service delivery to their customers but its clients are not adopting to the internet banking. Bank clients are now shifting to banks that offer more withdrawal cash, this in turn decrease the market share reference to FBC bank. Apart from that the main aim of internet banking was to reduce cost for both banks and clients since all transactions where to be done online, but due to the fact that clients are slowly adopting internet banking, banks have to invest more in their operations so as to serve the interest of its clients.

Quereshi (2008), was of the view that bank clients migrated from traditional banking to online banking system, the main reason being that of perceived usefulness, perceived ease of use and security provided by online banking. The usage of internet banking in Zimbabwe has being worrisome since 2015 due to economic hardship characterized by the economy to date.The demands of the economy have forced bank clients to mainly adopt to other payment system offered by banks at the expense of internet banking. According to the monetary policy for January 2012 the governor pointed out that internet banking constitutes 30% of the total retail values. During 2011 internet values increased significantly by 132% to us 532 million from us 230 million of 2010. Concomitantly volumes increased from 85 thousand in 2010 to 196 thousand in 2011 Figures released by the RBZ as from 2015 up to date indicated that mobile banking, RTGs and POS have been the dominant methods of payment while list IBS is ranking as the least method of payment. Little is known by bank clients on using IBS as a means of payment thereby the adoption rate of it is very slow.