The banking sector has been changing throughout the world, and money transfer is getting smarter each day. While some countries are way ahead with their technologies, some are making progress slowly but steadily. Clients are also adapting to the changing technology and enjoying the benefits of new banking.
Tanzania is no different in this case. With new technologies like mobile and internet banking, the number of people who visit traditional branches to make payments has drastically dropped. With this recent change, commercial banks’ commissions are on the rise. In fact, this change in the banking industry appears to be the driving force for profits in the financial statements of commercial banks as it has increased their non-interest income.
In the year 2020, an analysis of 31 commercial banks showed that for the first six months of the year, the banks made a profit of around Sh580.13 billion, which was Sh279.83 billion in 2019. The banks in this analysis include CRDB Bank Plc, NMB Bank Plc, NBC Bank, Tanzania Commercial Bank (TCB), Exim, Stanbic, Standard Chartered, People’s Bank of Zanzibar (PBZ), Diamond Trust Bank (DTB), Azania, Citibank, Absa Tanzania, and other commercial banks.
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Data from this analysis indicated that the interest income of these 31 banks increased by 18.3%. In contrast, non-interest income grew by 43.4%, which includes operating income, foreign currency dealings, dividend income, and the revenue fee that banks charge on their products, like ATM fees and account checking fees, etc.
The analysis also shows that a large number of lenders were making more transactions through alternate channels rather than traditional branches. However, some analysts did show their skepticism about banks’ profitability trend saying that it is mainly dependent on the lenders; hence, those who are on the lower end must do extra work.
Banking is one of the fastest-growing industries in the world, and there is no doubt about this. Only a handful of industries have seen such rapid growth in the last five years, and banking is one of them. Digital marketing has already been making rounds around the world for the last couple of years, and it is safe to say that it is indeed the future of banking in Tanzania. Here are two reasons why you could see a drastic change in the normalization of digital marketing in Tanzania.
One of the most significant factors that played a part in the growth of digital marketing is Covid19. When the entire world was in lockdown in 2020, life could be stuck for some people, but their finances indeed didn’t. People could not go out to banks to do transactions, but they needed money; that is when they started to use mobile banking and realized how useful it was. The first six months’ report of the year 2020 clearly proves that the pandemic played a significant role in helping people take on digital banking, which became profitable for the banks.
When the pandemic was over, and people could go to traditional branches, people might have been happy because they could go out again, but one thing that had already taken the place of branches was digital banking. Customers found it highly convenient and easy to use that they didn’t think they should be traveling to make transactions when they can easily do it anywhere just with their fingers.
The pandemic might have been over, but it started the digital banking trend and took it to new levels. Some people might still stick to traditional banking, but many have shifted their focus to the smarter version. The banking sector of Tanzania has been making profits with the help of digital banking, and it is clearly visible in the report of 2020.
If you want to know more about banking in Tanzania, reach out to Shikana Group, and their advisors will guide you to the best of their abilities.