STANDARD Chartered Bank Zambia Limited has announced the closure of eight branches across the country in a move designed to fully maximise its digital platforms.
But Finance Minister Dr Bwalya Ng’andu says the Bank of Zambia (BoZ) has questioned the bank’s decision to close the branches in the country.
In a notice, Standard Chartered Bank stated that it was proceeding to shut down eight of its branches across the country in response to its decision to utilise digital platforms to better serve its depositors and cut costs.
“The bank wishes to inform its clients and members of the general public of the following changes to our branch network: Lusaka Main branch and North-End branches in Lusaka will be merged into one branch along Cairo Road; Chingola and Jacaranda branches in Copperbelt Province; Levy Mall, Kabulonga and Manda Hill branches in Lusaka and Livingstone branch in Southern Province will close. For all the areas where branches will be closed, clients will be provided with due online and mobile service platforms. The changes will take effect from December 31, 2021,” StanChart revealed.
Reacting to the unprecedented bank closures, Dr Ng’andu told Parliament that while government understood the rationale of shutting down the bank branches, it questioned the basis of the unprecedented move by StanChart.
Responding to a question asked in Parliament by Luangeni PF member of parliament Charles Zulu, who wanted to find out whether government was aware that was closing its branches countrywide, and why the Bank of Zambia had allowed the closures, Dr Ng’andu said StanChart decided to close its branches due to its retail strategy of going digital through platforms like online banking, among others.
“Mr Speaker, I would like to inform the House that Standard Chartered Bank Plc informed the Bank of Zambia of its intention to close a number of selected branches as required under section 19 (3) of the Banking and Financial Services Act of 2017. The Banking and Services Act requires that the bank, which intends to close a branch, must notify the Bank of Zambia within 60 days of carrying out its intention. The House may further wish to note that the decision to open or close a branch by any bank is a business decision, which the Bank of Zambia cannot interfere without reasonable justification. In other words, the Bank of Zambia questions the basis of the decision that has been taken by the bank. If it falls short of making commercial sense, then the Bank of Zambia will take a different view on that decision,” Dr Ng’andu said.
“The decision by Standard Chartered Bank to close some branches is part of its retail strategy to go digital through such platforms as online banking, mobile banking, deposit-taking, Automotive Teller Machines (ATMs) in which the bank has made substantial investments. Mr Speaker, the role of the Bank of Zambia is simply to facilitate in line with its mandate of ensuring financial stability and in the case of a new branch, the role of the Bank of Zambia is to determine that the bank meets the minimum operating standards required before it opens to the public. In case of closure, the Bank of Zambia must be satisfied [that] the bank’s customers have been well-informed and alternative banking channels have been put in place.”
He added that StanChart informed the central bank that over 70 per cent of the bank’s service requests were already being fulfilled digitally rather than in-branch.
“In addition, the bank is also interested in seeing the labour-related issues have been properly dealt with as this has the potential to impact on the bank’s reputation and the legal provisions under the Employment Code as well, hence the Bank of Zambia allowed Standard Chartered Bank to proceed as requested and will continue to monitor this transition. The bank indicated that it will continue to increase its capabilities in the digital platform. Standard Chartered Bank informed the Bank of Zambia that over 70 per cent of the service requests were already being fulfilled digitally as opposed to being fulfilled in the branch. The bank also highlighted that digital transactions accounted for more than 80 per cent of the total transactions, while the remaining transactions were done through branch networks,” explained Dr Ng’andu.
“The fact of the matter is that, what Standard Chartered Bank is doing is probably a pointer to what exactly is to happen within the banking system. I think the digital platform is going to drastically alter the way we do banking. I would like to put the House on notice; we should be ready to see more of this! If a bank’s total transactions are done 80 per cent on the digital platform, the justification for maintaining brick and mortar branches comes less and less imperative. So, this is the way things are going and we would see more. What is imperative is that in the process of implementing these innovations, the banks are mindful of not creating gaps, which deny members of the public access to banking services.”