The winter of 2016 bought with it a slew of cash shortages which culminated with most of the country going cashless. The physical currency quickly became a commodity which resulted in e-money being regarded as holding less value than physical cash, particularly in informal markets. While large sections of the public are generally unhappy about this imposed cashless economy, the current cash crisis has opened up countless opportunities for entrepreneurship in fintech. The public has in the last 4 years been forced to accept and adopt mobile money and banking services out of sheer necessity. The silver lining in all of this is that Zimbabweans have gone largely cashless in a period of time that is far much shorter than that which would have been required in a better and more normal economic climate.
The card, mobile and internet transactions through which millions of dollars are moved each day require telecommunication networks. Unfortunately, these networks are unreliable and regularly leave the transacting public stranded. I suspect that thousands if not hundreds of thousands of dollars in potential revenue are lost by local businesses each day because of slow, glitchy networks. This is not to mention all the countless areas in the country without access to working networks.
Developing or adopting technologies which allow some of these transactions to take place offline would reduce the loads that the networks and servers have to contend with during the carrying out of these transactions. These would be even more useful in rural and remote areas which are dead zones (places without access to networks). These offline transactions would make electronic payments less reliant on networks. This is a good thing because outages have been plaguing our payment service providers so much that their legal teams must be slapping each other on the backs for composing ironclad Terms of Service documents.
With no cash to give to their customers, the number of people who visit banks has been steadily declining. Seemingly regressing from a period of rapid innovation just a few years ago which saw several banks opening up agent banking services, some banks now appear to have ample staff (and time) to pore over hand filled loan applications. Considering that most of their customer’s records are digital it makes more sense for them to let algorithms assess applicants’ creditworthiness and grant loans.
This cannot just be used by banks; nowadays people’s phones contain plenty of SMS records of their transactions. These can also be used to assess the credit risk of even the unbanked. Microfinance companies can use this information to decide whether or not to give someone a loan. Retailers which offer their goods on credit or hire purchase will also find such applications useful.
Internal foreign currency transactions
When the multi-currency system was introduced into the country, it effectively put to rest the Zim dollar which was resurrected a decade later. Unfortunately, the skewed balance of trade that originally eroded the value of our currency never went away. With no currency of our own, the only way it could let its presence be felt was the sudden disappearance of the several foreign currencies we were using from the streets. People could not withdraw their money from the banks and they could not move it out of the country. This loss of trust in the banking system means that a large portion of the volume of foreign currency in the country circulates outside the official systems. Unfortunately, it also means that almost all foreign currency transactions are conducted using physical currency. Therefore these transactions do not enjoy the same convenience afforded by electronic transactions.
There is, therefore, need for services that allow the local electronic transfer of foreign currency where the recipient of foreign currency can retrieve their money as physical notes if they so wish. Because nowadays there are so many rules concerning foreign currency transactions, this will require more legal prowess than technological know-how.
It is sad that some investors and financial firms are seemingly so keen on justifying their investments in buildings and manpower that they are reluctant to move some of their operations online. Zimbabweans deserve to be able to invest online. The closest system to this we have so far is the stock trading app that is offered by the ZSE. It has a steep learning curve and appears to require a lot of human intervention. The service leaves plenty of room for innovation for future competitors. Existing stockbroking firms can create their own better online portals which their customers can use instead.
Algorithms to keep the value of money in mobile wallets stable
The current economic climate is forcing Zimbabweans to spend all their hard-earned (RTGS) money as fast as they earn it because the currency sheds its value so fast. They are continuously buying what they can only hope are ‘investments’ that will be better able to maintain their value. However, one should not be forced to convert their money into far less liquid assets in the name of saving. Nowadays people are far less interested in the interest that their money can earn than its ability to keep its value. Algorithms can be created which automatically invest mobile wallet users’ balances in order to attempt to maintain their value. This will enable and encourage people to go back to a culture of saving.
Free mobile money
One of the reasons that cash is still in such high demand is that mobile money services have fees which some users may feel are too steep. Sometimes users are charged for transactions that fail to go through. This together with other unexpected and hidden charges has contributed to some businesses and individuals shunning mobile money. There are a lot of possible business models out there that will allow mobile money to be offered free of charge to customers.