By Stuart Lisulo
Commercial banks must innovate to stay abreast of technological developments happening in the financial market or they will cease to exist, says Bank of Zambia governor Dr Denny Kalyalya.

And Dr Kalyalya has reiterated the central bank’s calls to the financial services industry for them to continuously reach out to informal savings groups, such as women’s village savings groups, to enhance financial inclusion.

Addressing journalists during a question and answer session in Lusaka, Dr Kalyalya urged commercial banks to continue innovating in order to stay abreast of technological developments happening in the financial market or they will cease to exist.

“This has been in a discussion point in many fora. It means that banks have to shape up! If they don’t shape up, obviously, the others will take over; that’s how life is. So, I don’t think they [commercial banks] will go away, but they will go away if they don’t innovate. But they are aware of this,” Dr Kalyalya said in response to questions from journalists following the BoZ’s Monetary Policy Rate (MPR) announcement, Wednesday.

“So, banks are also innovating; the FINTEX that we are talking about. We also have to jack-up! You talk of regulation technology; you can’t stay behind because otherwise you become a drag on that development. So, for sure, if you don’t innovate, you will be overtaken. That’s the message, and banks are working on that. Even us, as central banks, we are honing our skills in terms of being able to stay with the developments. So, the issue is that, innovate or you die, as simple as that. So, that is the space, which is moving forward, so you have to keep pace or else you are cast on way side.”

And he reiterated the central bank’s calls to the financial services industry for them to continuously reach out to informal savings groups, such as women’s village savings groups, which are an increasingly popular alternative, to enhance financial inclusion.

“These village savings, women savings…they are welcome! The space is big. At the end of the day, they [women] will have to put money somewhere so they will mobilize it, but they will have to put it somewhere else. We are also encouraging banks actually to work with these groups because they widen their reach,” said Dr. Kalyalya.

“So, all these are avenues. Banks are not enough; there are other forms of banking, we are even talking of agent banking so that you don’t have to deal with a regular bank.”

Earlier, Dr Kalyalya announced that the BoZ’s Monetary Policy Committee (MPC) decided to maintain the Monetary Policy Rate (MPR) at 9.75 per cent, while also keeping the Statutory Reserve Ratio (SRR) at five per cent in a bid to induce lower interest rates and revive economic growth.