Malawi’s digital banking will face similar challenges to that of the country’s telecommunications industry according to Bram Fudzulani, President of the ICT Association of Malawi.

Fudzulani made the remarks in response to an announcement from one of the country’s commercial banks that it had registered over a million digital customers after launching several digital solutions.

He warned that the digital finance market will mirror developments within the telecommunications industry in which telcos are reluctant to invest in rural areas because they believe it will take too long to secure a return on investment.

“Banks alone cannot bring about financial inclusion - especially to the rural masses because they are risk-averse,” said Fudzulani. “The current environment is a little bit harder for a local Fintechs partly because of the playing field and the regulations, and the fact that our local banks still see Fintechs as a threat to their bottom line. (Actually) Fintechs need banks for them to bridge the gap that is currently there in the market.”

FDH on track

One bank, FDH Bank, believes it is on the right track in its digital journey, despite an increase in operating expenses since 2018.

According to FDH bank’s audited financial statements for the year ended 31 December 2019, its continued investment in digital platforms, delivery channels, human capital and other customer-centric innovations has resulted in a 14% increase in operating expenses since 2018.

FDH Bank PR Lorraine Lusinje told ITWeb Africa that the Bank has several digital solutions aimed at easing access to financial services, payments and championing financial inclusion.

Lusinje added that the Bank is the only institution in the country that offers the ability to instantly open an account with a mobile phone number (its Ufulu account service).

“As part of our digital journey, we have invested a lot in data analytics, IT infrastructure so that we build an architecture that can connect us to anything anywhere. The strategy is very critical as this is our blueprint for success that allows the bank to track progress and challenges in the digital journey,” she explained.

“We recently introduced Whatsapp Banking as part of our plans to enhance convenience and access to banking through digital products and we are currently rolling MasterCard to ease online payments for our customers and international access,” she added.

The Bank is planning to list on the Malawi Stock Exchange this year and hopes this will inject fresh capital to allow for further investments in digital financial services.

Reserve Bank of Malawi (RBM) Governor Dalitso Kabambe says as countries move into the digital space, there is need to adopt digital financial services to save time and reduce the risk of money loss.

“We have realised that the growth of digital financial services is a paramount component of the monetary and financial system of an economy. We are encouraging people to adopt it,” said Kabambe.