Zimbabwe: Econet, Banks Feud Sucks in Steward Bank

DEC 20,2013.

THE HERALD.

THE ugly fight between banks and Econet Zimbabwe, the country's largest telecoms company, has sucked in its subsidiary Steward Bank, amid revelations other banks have refused the bank entry onto the popular ZimSwitch platform, which is controlled by the banking industry.

Sources within the banking industry said ZimSwitch, majority owned by the banks in Zimbabwe that hold varied shareholdings, has been sitting on an application by Steward Bank to join its clearing and settlement network, in the wake of the ongoing wrangle between the banks and Steward Bank's parent company, Econet.

Steward Bank has never been connected to the ZimSwitch platform.

Econet invested in the bank, formerly TN Bank, after pumping in about US$20 million to acquire a 45 percent shareholding in the financial institution.

Efforts to get a comment from Econet were fruitless yesterday as the company did not respond to e-mailed questions from the Herald Business. Similarly, no comment could be obtained from ZimSwitch yesterday.

"Other banks have lobbied against the admission of Econet's banking unit (Steward Bank) in retaliation over the mobile phone operator's refusal to allow banks free access to use its network platform," said a source.

Banks have accused Econet Wireless of playing big brother in the financial market by engaging in practices bordering on monopolistic behaviour by refusing equal and unrestricted access to its mobile phone network for the provision of mobile based banking services.

Mobile phone-based banking services use USSD platforms that ride on third generation or GSM telecommunication networks, enabling mobile phone subscribers to access banking services from their cellular phones.

Financial analysts said that Steward Bank needed to be connected to ZimSwitch to link with automated teller machines, point of sale machines and other related online financial service systems banks offer.

Banks have in the recent past expressed reservations about the conduct of Econet and whether the mobile phone operator was behaving ethically.

The Reserve Bank of Zimbabwe has in the past said it was important to have co-operation among the players to ensure financial inclusion and advised that if not happy about the conduct of the company, banks should approach the firm's regulators.

The feud between Econet and banks comes as Zimbabwe's biggest mobile phone telecommunications operator has been rolling out a number of mobile phone-based financial services for its eight million subscribers including EcoCash, EcoCashSave and more recently EcoCash Payroll using Steward Bank as its focal point.

Just yesterday, Econet issued a Press release saying that its banking subsidiary was strong, safe and liquid.

Sources said banks recently approached the central bank again to intervene in finding common ground between the BAZ and the mobile phone operator.

The banks questioned whether mobile banking was properly regulated particularly around the issues of KYC (Know Your Customer) and platform sharing.

In response the RBZ, is said to have emphasised the need for co-operation between players in order to fully maximise the promotion of financial inclusion in the country.

Recently, BAZ president Mr George Guvamatanga said that Zimbabwe does not have a legal framework that governs mobile phone-based banking services, opening up the sector to unacceptable practices.

According to sources, Econet does not want players with equal financial muscle on the market to compete with its mobile phone-based financial product, particularly, EcoCash, because "they want to monopolise mobile space".