CRDB to introduce digital banking

Arusha. CRDB Bank will introduce a digital banking platform, Mobile Wallet, in the coming few weeks as it seeks to grab a share of the revenue that is transacted via mobile phone money transfer platforms, the bank has announced.

Bank of Tanzania (BoT) figures put the total value of money transacted through mobile money platforms at Sh42.9 trillion as of December 2016.

The Mobile Wallet is one of the steps that CRDB Bank - which is Tanzania’s largest lender - is taking as it consolidates its position in the market by capitalizing on its past investments.

“If everything goes according to plans, our Mobile Wallet platform will go live in June,” managing director, Dr Charles Kimei told The Citizen on sidelines of the bank’s 22nd annual general meeting here on Saturday.

A Mobile Wallet works like any other mobile money transfer service. It will help the bank to increase its client base and get more deposits.

“It is so far done by over 90 per cent but we are only waiting for a license from the BoT,” he said.

Mobile Wallet allows clients to open bank accounts using their mobile phones.

It allows them (clients) to conduct cash deposits and withdrawals instantly. It will also allow CRDB clients to transfer funds from a bank account directly from their mobile phones and pay utility bills.

It is a virtual wallet that stores payment card information on a mobile device. They provide a convenient way for a user to make in-store payments.

CRDB will have its own network of Mobile Wallet agents, similar to those for mobile phone money transfer platforms and probably, the bank’s agent banking agents (FahariHuduma) may also be approved for the new product.

Quoting BoT figures, the World Bank said in its 9th Tanzania Economic Update that over the past decade, Tanzania’s mobile money revolution has facilitated a dramatic increase in the share of population with access to financial services.

By 2016, there were more than 260,000 active mobile money access points throughout the country, suggesting that there was one access point for every 103 adults.

“As a result, more than 60 per cent of adult Tanzanians now have a financial account, a dramatic increase that has placed Tanzania at the forefront in Africa in terms of the rate of use of digital financial services,” the World Bank says in its economic update that was released last month (in April).

A 2006 Finscope Survey, which was funded by the Financial Sector Deepening Trust (FSDT) – showed that it was only 11 per cent of Tanzania’s adult population that used formal financial services in that year.

“Mobile money has contributed to increasing the share of payments conducted electronically, with mobile money transactions accounting for about half of the overall total of electronic payments in Tanzania,” the World Bank says.

Detailing the bank’s performance in 2016, Dr Kimei said the year was a challenging one to the financial sector and that CRDB was forced to undertake several initiatives to cushion itself against the year’s economic realities.

Last year, the banking sector grappled with increasing levels of Non-Performing Loans (NPLs) as the ongoing economic reforms – including a decision to transfer Sh900 billion for various public institutions from several commercial banks to a single account at the Bank of Tanzania (BoT) - sent the liquidity situation in the economy down.

As a result, some of the companies were forced to either downsize their operations or close their businesses and thus making it increasingly difficult for them (the companies) to repay the loans they got from commercial banks.

“In short, the environment was quite challenging for the banking sector,” he said.

As a result, net profit dropped to Sh74.1 billion in 2016 from Sh129 billion in 2015.

Zambia, DRC expansion

In response to last year’s challenges, the bank undertook a series of steps aimed at consolidating its operations while laying out the foundation to dodge the allure of further expansion.

Dr Kimei, codenamed by the bank’s shareholders as ‘Professor of the Banking Business’ said here at the weekend that in light of last year’s challenges, CRDB decided to put on hold its planned expansion to the Democratic Republic of Congo and Zambia.

The bank, which also operates in Burundi, announced in October 2015 that it was conducting a feasibility study before setting foot in the two economies, banking its hopes on its Right Issue proceeds.

CRDB raised a total of Sh152 billion through the Right Issue that was conducted in August 2015.