Tanzania: E-Banking Comes of Age

Automated Teller machines (ATMs) were the first well-known gadgets to offer electronic banking services to retail customers. Next came phone banking that allowed subscribers to call their banks' computer systems using ordinary phones and performing bank transactions through the phone keypad.

Personal computer banking superseded phone banking and allowed users to interact with their banks through computers with a dial-up modem connection to the phone network.

The mother of all Information Communications Technology (ICT) on banking however is e-banking, which refers to the deployment of IT services by banks using the infrastructure of the digital age. The technology lowers transaction costs and creates new types of banking opportunities, which also overcome barriers of time and distance.

For users, e-banking provides current information and 24-hour access to banking services in addition to the familiar browser interface. The primary services offered through e-banking are money transfer, bills and tax payments as well as account balance checking.

E-banking in Tanzania has made a number of in roads, although the transactions are still cash-intensive. Citibank, Bank M and Standard Chartered are among the pioneers of e-banking, especially in paying taxes. The three banks use AsyBank system, which is a customs payment scheme that reads Tanzania Revenue Authority (TRA) commissioner's general taxpaying account.

According to Bank M Chairman Nimrod Mkono, Bank M perceives the AsyBank technology as the backbone of financial service industry in the country.

"we have been in the forefront of bringing to this market products and services geared to meet the aspirations of our clients, with levels of commitment unique to us and accompanied by delivery standards unheard of in the local markets," Mr Mkono said when launching Money.Mapato service.

Money.Mapato guarantees speedy payment of taxes, according to Mr Mkono, "With most banks having long queues, some taxpayers opt to pay taxes a day or two before the due date to avoid penalties but with Money Mapato, tax payment becomes smooth and stress-free."

Acting Director of Accounting Operations with TRA Happiness Nkya says the revenue collection agency is delighted by Bank M initiative to simplify procedures for tax payment and enable collection of more revenues, "Bank M has reduced the cost of doing business, especially cutting down the number of days for clearing of goods by customs."

The bank has integrated its systems to TRA's ASYCUDA tax management software to payment of taxes electronically and notifying the authority within short time. Other banks--Citibank and Standard chartered-have the similar technology.

In banking, ICT is basically used under two different venues-communication and connectivity as well as business process reengineering. IT enables development of sophisticated products, better market infrastructure, implementation of reliable techniques for control of risks and helps the financial intermediaries to reach geographically distant and diversified markets.

The Citibank's online banking, CitiDirect, speaks volume of IT in banking. It is a powerful new way that the bank has devised, bringing all banking functions within reach by the entire organisation.

"CitiDirect lets you access your accounts-real-time -and an ever-expanding portfolio of industry-leading products and services through the web you can be more efficient, more flexible and more in control of your banking," Citibank says in a statement.

Almost all leading commercial banks in the country now have internet banking services. There are 42 banks in the country, led by the National Microfinance Bank (NMB) in term of profit, but with Bank M in terms of IT advancement. But, despite the IT advancement and almost 1,000 ATMs countrywide, long queues in banking halls remain common.

NMB has introduced PesaFaster product in attempt to reduce the queues. The new product allows NMB customers to send money to any person even if the receiver does not have an account or ATM card with NMB.

According to US based Information for Development Programme (InfoDev), online banking allows customers to get current account balances at any time and if the banking transaction does not require physical interaction.

In Latin America and Africa, e-banking has however been less successful, according InfoDev. Developing a successful e-banking for poor people entails managing a host of inter-related issues-technology, pricing, financial literacy, functionality, partnerships, delivery channels, POS distribution and regulation.