In the year 2018, the Zambian banking sector witnessed both favourable and unfavourable business environment conditions. Top among notable favourable business environment conditions was the stable and consistent lending interest rates backed by the Bank of Zambia’s monetary policies.
However it was during the year 2018 that the Bank of Zambia in its role as the chief regulator of the Banking and Financial services industry made some regulatory changes that were necessitated by outcry from the banking products consumers with regards to product charges consumers felt acted as exploitative means of profit growth rather than cost cushion.
According to a Government Gazette number 6693, the Bank of Zambia Prohibition against “Unwarranted Bank Charges and Fees of 2018” (prohibition) came into law according to a Circular issued by Bank of Zambia Deputy Governor-Operations Dr Bwalya Ngandu.
Some of the Unwarranted Bank Charges and Fees included the following:
- Charge for account opening for both local and foreign currency
- Charge for over-the-counter cash deposits and charge for over-the-counter withdrawals (where the amount and or denominations being withdrawn cannot be dispensed by the ATMs)
- Automated Teller Machine(ATM) Surcharge
- Charge for ATM pin re-set
- Charge on basic savings account (without cheque book) operating within contractual terms
- Monthly maintenance fees on basic savings accounts (without cheque book)
- Point of Sale transaction (own bank customer and other bank customer)
More information with regards to the Unwarranted Bank Charges and Fees can be accessed here.
The effects on the Banks income statements were unavoidable as most if not all banks recorded profit declines. The immediate response was for banks to broaden their revenue base to mitigate losses recorded from the removal of product fees.
For some time now, Banks have been advised to be more innovative and modern oriented in their product offerings. It is against this background that most banks are now venturing into the untapped insurance industry through partnerships with insurance companies in arrangement called ‘Banc assurance’. Banks such as Stanbic, Standard chartered Barclays Bank, ZANACO, FNB and Cavmont have taken this route of introducing Banc assurance models in their operations. In Part 2 we will analyse the pros and Cons of the Banc assurance model and critically analyse the products offered by the various commercial Banks.