RBZ initiates think tank to assess banking products

THE Reserve Bank of Zimbabwe (RBZ) has created a think tank to examine new banking products and innovations prior to their launch, to assess their viability.

The revelation came a day after the RBZ suspended Metbank Limited from operating as an authorised forex dealer along with the bureau de change, Rolink Finance (Private) Limited, and fast food firm Simbisa Brands (Private) Limited's money transfer arm, Innbucks.

The suspensions, which were announced last Wednesday, were as a result of violations of exchange control regulations and the failure by Simbisa to apply for and obtain necessary approvals in order to continue offering Innbucks as a service.

"As the reserve bank, our interest is mainly to safeguard consumers, depositors, so where we feel that there is a threat to financial stability we then guide the market accordingly," RBZ deputy director of the Economic Research division, Nebson Mupunga, said at the Institute of Corporate Directors Zimbabwe inaugural 2022 Corporate Governance Colloquium meeting last week in Harare.

"But, what we are trying to do in the era of COVID-19 and digitisation, we are promoting responsible innovation in the financial services sector. And, to do that, we have established a fintech unit within RBZ which is responsible for fostering responsible innovation in the financial services sector.

"So, all players in the fintech area who are interested in innovation are free to apply to RBZ through its regulatory sandbox to test the fintech products for us to ensure that they will not pose significant financial instability in the economy."

He added: "This is what we are doing and the key lesson from COVID-19 is the need to ensure we remain apprised with these innovative products which are coming in and also digitisation plays a role".

As the economy continues to become cashless, there has been an increase in companies offering new innovations that promote cashless transactions or use of foreign currency.

For example, in its financial report for the full year ended 2021 released this month, Stanbic Bank CEO Solomon Nyanhongo said the bank would "prioritise digitalisation efforts to ensure we serve our clients efficiently through process remodelling."

In another financial statement covering 2021, also released recently, FBC Holdings chairman Hebert Nkala noted that the group believes that: "Innovation and digitalisation are here not only to solve COVID-19-related issues but to also broaden and deepen organisational capabilities, unlock stakeholder potential and create customer-centric institutions. New skills and competencies are being identified, resourced and developed to necessitate and accelerate this paradigm shift".

Even the country's largest financial institution by capital, CBZ Holdings Limited, in its half year 2021 financial report noted that the group has "accelerated need for digitalisation across all business units" in light of the COVID-19 pandemic.

It went on to state that serving customers through digital channels had become the group's preferred way of doing business while observing World Health Organisation approved COVID-19 guidelines.

Bullion Group chief executive and RBZ monetary policy committee member, Persistence Gwanyanya said the problem was that the central bank was being too conservative on its approach to innovative products coming to the market.

"Quite often, I hear the RBZ governor (John Mangudya) and the Reserve Bank taking a very conservative approach on especially innovative products that are coming into the market. And, the Reserve Bank is on record writing to the market that it does not encourage, for example, things like cryptocurrency without necessarily saying we don't accept but they say we don't encourage," he said.

"If you reflect on the global financial crisis, as I said, the players were also to blame and the regulators were also largely to blame, regulatory failure on the global financial crisis. As things got so sophisticated, the financial markets were striving on mathematical models that were not delivering but just creating money so there was quite a lot of money sloshing all over the world.

He added: "So, I think for the central bank, it is responsible enough where it doesn't understand certain products that are coming into the market to forward guide the markets to the extent of its comfort or discomfort with certain products."