BAZ justifies high bank charges

Bankers Association of Zambia chief executive officer Leonard Mwanza says people must shop around for a bank with lower prices that suit their needs instead of complaining about high charges.

In an interview, Mwanza explained that the pricing of products for each bank was based on the cost of their infrastructure.

He said the association had received numerous complaints about high bank charges but he always encouraged clients to look around the 17 commercial banks and pick the best for them.
“The industry has got 17 commercial banks and these commercial banks have got their own pricing structure which is independent of each other. So they come up with products, product features in terms of minimum balances, transactions, how much you pay per transaction. So those charges are peculiar to each and every institution. So the pricing is based on the cost of their infrastructure as you know for every ATM deployed, there is also a cost of fiber optic network, not just for one line but maybe another back-up line. There is the cost of distributing and holding of cash, the cost of security, CCTV, let me just say operational and administration costs are quite heavy depending on each bank’s own internal cost structure,” Mwanza said.

He said the banking sector had a bouquet of products, giving clients an option to pick the best offer that perfectly suited their needs.

“So when it comes to complaints about bank agents, our response has been that over the years, I think that there has been a complaint about the fees and charges are too high that people cannot save money, if they leave money in an account by the time they go back, they find that it has been reduced by charges. So my response to that is that it depends on what you as a client are looking for. The banking sector is the one which I would call a bouquet of various products that are on offer from the 17 commercial banks. So you will understand that there are different products that each bank has and the features for each product are different from each bank. What I can confirm to you is that there are products that are on offer which respond to the needs of those people who want to save with minimum or no charges at all. And you can shop around to get the best price for whatever account you need,” he said.

“Now when we generalize that the charges are high, there are two things I need to talk about, one, let’s shop around and get accounts that fit our space and our needs. So we have what we call entry level account for those people who can’t afford to pay the charges beyond their capabilities. If you escalate that further, you will find that there are people who have retired, they have pensioners accounts. You find that the minimum balance for opening that account is usually very low and then because of the nature of the pensioners account where money goes in once you normally find that there are no charges attached to that account. So it’s about profiling the plan and then designing the product that suits their needs.”

Meanwhile, Mwanza said the association was pleased to note that a number of banks had started reducing their product prices.

“It’s always good for people to walk around and ensure that they find a bank which meets their particular needs and fit that into their profile so that the maintenance fee that thy pay is reasonable and very assuring to their pockets,” said Mwanza.

“So I think from the association perspective is that we are glad to see that banks have over the years developed products that are free of charges and which encourages people to purely save which is a good thing. We now have those products on the market. We have also noticed that a number of banks have started adjusting their prices. We have noticed that most banks are responding in terms of scaling down on their charges. We have seen that banks are increasingly responding in terms of fees and commissions, transfer cost and things like that. But as they do so, they have to bear in mind that they have invested in huge infrastructure which is quiet expensive and they need to recoup and ensure they deliver shareholder value at the back of their mind.”

         

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