BANKING Digital Banking as an Alternative to Cash Transactions

DURING President Hakainde Hichilema’s inaugural address during the ceremonial opening of the first session of the thirteenth National Assembly, a policy pronouncement on the need to promote digital economy was made.

This pronouncement is in line with the theme of his address “Creating a United, Prosperous and Equitable Zambia: Restoring Economic Growth and Safeguarding Livelihoods.”

“To enhance provision of financial services to our people and attract investment in the economy, we will introduce legislation to widen the scope and lower the cost of financial services,” the President Said.

“In addition, we will create an enabling environment that facilitates the development of financial sector and evolution towards a digital economy,” he added.

Efforts towards the realisation of a digital economy lies in the continuous research and development of innovative solutions for digital financial services (DFS). The shift towards the uptake of DFS is one such avenue that will bring the Zambian economy a step closer towards becoming a ‘Cashless Society’, which brings to fruition the realisation of a digital economy.

A cashless society is defined as one that does not use cash in monetary transactions. These societies favour alternative means of payment, such as cards, contactless payments, and digital payments.

Presently, there is no country around the globe that is truly as

plays an integral role in the de- and Exchange Commission. The Association also works to ensure that the bank-

velopment of commerce and industry in BAZ is a mouthpiece of the banking sector and is ing industry views are put forward when government

any economic dispensation. In this regard, mandated to address various matters of common in- determines policy or legislation. Many areas of law and

banks play an important role in the creation of new dustry interest through lobbying, advocacy and poli- including international law impact upon the interests

capital (or capital formation) in a country and thus cy influence. The Association aims at facilitating the of commercial banks in Zambia. help cashless the economic society. growth But process. countries The banking Chakravorti, sys- industrial Chaturvedi and innovation and growth sidering of the getting sector, as rid well of large-deFor example, that issues for of some micro countries, and fiscal policies the tranand tem around facilitates the world the intermediation are embracing of internal Mazzotta and (2016), as building it has and been sustaining neargood-will nomination and public bills. con- financial sector sition reform has affect been the trading very rapid environment and at international cashless payments trade. systems. It is ly 300 years fidence since in paper the commercial money banking Cash, sector. according One of the to for a banks recent in Zambia a scale and that the is Association without precedent. consults its

hard The to history predict of and the banking exact period sector in became Zambia acceptable ways this mandate as legal is tenrealised MasterCard is through engagement Study, accounts members for to form In industry 2009, over position two-thirds on many such of all is- dates as to as when far back this as 1906, transition when could the first commercial der. While with much critical has Government changed agencies nearly and 85 ministries percent of as global sues. conWith the e-commerce active participation payments of the in member China bank-Standard happen, but Chartered some experts Bank specuwas established, about with how we well make, as other sell, critical and stakeholders buy sumer in the Zambian transaction. econ- Cash banks, the has Bankers were Association cash on of delivery. Zambia works However, to fos-

late that it could be much earlier goods and services, cash money stubbornly resisted going the way mobile wallets such as Baidu, Al

it first branch opened in Kalomo District of Southern omy. ter an environment in which financial services are val-

than anticipated. has cut across and stuck around. of digital extinction. Paper curibaba, and Tencent-mobile pay

Province. In the last 114 years of the existence and oper- ued and can prosper. In communicating the industry’s

Burton (2018) contends that as It has been only recently that rency is abundant. Paper currenments today, account for over 70 ation of the commercial banking sector in Zambia, the HOW WE WORK views, the Association works with Government, the

secure cashless payments conthe road to a wider cashless socy is also universally acceptable, percent of all e-commerce transcountry currently has 18 registered commercial banks. The Bankers Association of Zambia works with its regulators, other industry associations, the community,

tinue to become faster and easier ciety has started to really take except in some circumstance, actions in China.

Taking into account the critical role played by the members to provide analysis, advice and advocacy and community groups and the media.

to use, their popularity among shape. usually involving very large payBelow are examples of four

sector in the provision of banking services to all sec- contributes to the development of public policy on Some of the initiatives that the Bankers Association

consumers is changing the global Policy makers and economists, ments. For many users, cash countries that have been ecotors economy. of the economy the existing banks in the such country as Harvard’s banking and Ken other Rogoff, financial services. equates to a sense of security. of Zambia is working nomically on in collaboration and socially with the transBank realised She the goes importance on to state of establishing that not an have umbrella made elegant The Bankers arguments Association for of Zambia However, works to the ensure rise of Zambia of cyand formed other key by stakeholders the uptake include of cashless the fol- body too that long would ago, effectively as cashless represent society the interests the benefits of that of a the cashless banking society. system can ber-crime continue to deliver amid the growing lowing: con- payments: the simply sector. bartered for good but, Economic benefits uncertainty of competition around to Zambian cerns banking about the custom- ability of public Sweden: has become the

in It the was against modern this day, background the rise that of in the 2008, globe the has ers. raised concerns that agencies to look through -Promoting digital shared benchmark digital payments for cashless channels econothrough Bankers electronic Association payment of Zambia methods (BAZ) was consumers formal- could take cash out records will add to the unwillingmies with more than 59 percent ly has registered. made the Prior exchange to the establishment pf paper of of BAZ, banks-especially the in negative ness among many to let go of paof transactions completed withAssociation notes seem operated just as informally ‘outdated’ with or the interest chairing rate environment-and per money. out physical money. According to bank ‘old in fashioned’. a particular Credit year, cards offering payall related board secre- it. Therefore, Rogoff argues The migration to cashless sociRiksbank, by 2018, Sweden had tarial ments services, and more as well recently, as coordinating online, all activities that eliminating of cash is one way ety (in order for it to become ei70 million fewer bank notes in the and membership. mobile transfers The Association’s have renrole has to overtime reduce that risk. ther uniform or universal) varies, circulation than four years before evolved dered to transactions include the promotion more secure, of efficiencies, Countries in- such as Denmark, as most countries are at different (2014). This is because even the novations minimising and industry the time growth spent and queupositioning Sweden mem- and Norway are already levels. local flea markets use Sweden’s ber-banks ing at shop to continue tills. supporting both private considering sector this, while the EuroChakravorti, Chaturvedi and homegrown mobile payment and However, Government economic according agendas enshrined to pean in Union the Central Bank is conMazzotta (2016) further argue App-Swish, in place of cash, mak

country’s National Development Policies.

ing it impossible to purchase a

the National Financial Switch

bus or train ticket with physical money. This increased opportu

-Developing accessible and affordable financial

nity for small businesses and the

ucts and services to support the National

elimination of fraudulent hard

Inclusion Strategy

currency makes cashless payments and attractive proposition.

-Promotion China: of The Financial Chinese Literacy populaprograms groups tion’s appetite for cashless pay

ments continues to grow, with

-Fraud the WePay Prevention and and AliPay Security App-inawareness

troduced by Chinese tech giants

-Leadership Tencent and in the Alibaba, development respecof policy tion. tively-continue to dominate the

market. In fact, mobile payments

HOW in China WE accounted ARE GOVERNED for a total of

USD The $5 Bankers trillion Association worth of of transacZambia through tions in a 2016. committee of Chief Executive commercial Kenya: banks The advent which meets of virtual monthly matters payments affecting in Kenya the banking began sector. slightly The Association over ten years are coordinated ago and has through prothe who duced report remarkable to the Executive results. committee. The The Committee country’s is mobile elected every payment year at the App Annual Meeting M-Pesa and was is made launched up of: to allow quick The Chairperson, transfers of small Deputy payments Chairperson,

via text message. The system

Executive member and the BAZ CEO who

proved overwhelmingly popular,

The Bankers Association of Zambia Secretariat

with over 30 million users by the

currently led by Chief Executive Officer who

close of 2016.

ed by the Public Relations & Administrative

A study conducted by the Mas

and a Research and Communications Officer.

sachusetts Institute of Technol

The Chief Executive Officer with support

ogy, established that the mobile management payment service team, play has a also crucial helped role in

BAZ’s lift two responsibility percent of to Kenyan improve housepublic awareness understanding holds out of the extreme industry’s poverty, contribution country’s equating economy to roughly and 194,000 communities, peowith emphasis ple. on consultation with stakeholders.

Having As always, discussed your in brief feedback the background is please highly look valuable, out for a and two this series platform column on lating offers to an individual opportunity financial for awareness further as joins engagement the rest of the with world members in commemorating of Financial the public Literacy on Week. matters relating to Commercial Banking. Please share your feedback with us via