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Abay Bank To Launch Modern Banking Services

Published on: Sun, 2013-11-10 00:00
Image of the Abay Bank logo

Abay Bank is to receive the mobile, Internet and point of sales banking systems it bought from Société Maghrébine de Monétique (S2M) – a Morocco-based switch banking company – in late November 2013.

The Bank, which currently has 54 branches and plans a total of 73 by the end of this fiscal year, finalised the deal for these systems on October 3, 2013, as part of its plans to launch mobile and agent banking, which it plans to start in the next year. Agent banking involves the use of a company that will provide transactional services to clients of a bank.

“It is a form of branchless banking,” said Molla Mengistu (PhD), vice president of business development. “It will help us save money that would have been spent on human resources, rent, furniture and other expenses that come from setting up branches in different parts of the country.”

The use of agents will also benefit bank customers who will have easier access to their money from shops near them, instead of travelling to branches.

The Bank plans to regulate the cash flow from the agents by holding a minimum of half a million Birr of their money as collateral.

“We will be connected to our agents through a network, so whenever they give money to a customer, we will replenish it to their account with us,” said Molla. “Depositing a customer’s money means the same amount will be deducted from their account.”

The Bank is currently negotiating with nearly 100 agents nationwide, and plans to start giving the service as soon as the company gets the green light from the National Bank of Ethiopia (NBE).

S2M will prepare mobile apps, SMS money transfer, Internet banking mechanisms and Point of Sale (PoS) systems, according to Ayenew Wudu, vice president of the systems and e-banking department.

“We were prompted into procuring the services when our clients started asking for more up-to-date technology,” Ayenew said. “We see the direction that the banking business is going and we have to keep up with the times.”

S2M won the bid to devise these systems from nine contestants, according to Ayenew.

“There were four bids, for mobile banking, Internet banking, PoS and the installation of ATMs,” he said. “S2M won the bids for the first three.”

During the next stage, which is the launching of the project, two of the challenges the Bank expects to face include the unreliability of the network system, and getting customers to use agent banking, which is very different from conventional banking, according to Ayenew.

If approved, Abay will be the second bank to be licensed for agent banking after the Commercial Bank of Ethiopia, according to Dereje Asegidew, public relations & communications director at the NBE. Addis Credit and Savings Institution S.C – a microfinance institution – is currently piloting agent banking before launching the project.

The directive, which governs mobile and agent banking and was issued in January 2013, however, is currently being revised by the NBE. The involvement level of foreign companies that partner local financial institutions by providing them with technology to launch mobile and agent banking has raised questions over whether these companies are entering the banking business, which is a sector exclusively reserved for Ethiopian nationals.

Though the concerns revolved around mobile banking service providers, Dereje declined to state what changes are on the way for agent banking.

This will be the second project of this nature that S2M has carried out in the country. Their first foray was the card banking system they installed for Premiere Switch Solution (PSS) – a consortium established by the United, Nib and Awash banks.

Ayenew disclosed the winner of the ATM bid has already been selected out of six contestants, but declined to reveal its identity.

“We will announce the winner soon,” he said.
Source: Addis Fortune

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