What’s wrong with our banks?

Tuesday will go down as one of the worst days for the average banker. Most of the commercial banks in the main cities had their banking halls awfully congested and queues were snaking long due to network problems. The best some banks could do to ease the frustration that was building in these hot and poorly-ventilated halls was to take in deposits while customers waited for the problem to be sorted out.

At one bank in Blantyre, University of Malawi (Unima) first year students had to endure three to four hours of standing on the queue to deposit their tuition fees. While those who trust automated teller machines (ATM) had to exercise a lot of patience with the machines, which were offline for the better part of the day.

The network problem which has not been sorted out as I write, demonstrates how feeble and rigid our banking infrastructure is. The economy came to a standstill Tuesday because a third party to the sector—Internet providers—were experiencing network hitches.  So does this mean our banks are shy to invest in their own infrastructure to avoid such scenarios?

Apart from this minor network problem, word on the street is that, commercial banks are too big for nothing. Some are too old, tired and are failing to catch up with the times. The quality of service in most of the commercial banks leaves a lot to be desired and the bank products are not consumer-friendly.

Let us take the issue of opening an account for a start. A majority of people in this country remain unbanked because our banks have strict requirements for one to hold an account, including a 19th Century ‘book balance’ requirement that puts off most bank consumers, especially young bankers.

Some banks have hawk eyes on the employed. No wonder large bank branches are located primarily in major towns, often leaving rural villages with very few options.

Yet villagers—a majority of whom are farmers—drive this economy with money from tiling the land. Classified as poor people by society, farmers are left with two options: a “village bank”, owned by share-holding villagers or and mobile money service.

Some choose these banking services because both types have zero minimum balance requirements, easy to access and there are no withdrawal fees. Even when it comes to borrowing, credit is cheap.

But walk into a commercial bank. The first thing to put you off is a grumpy bank teller. Then there is the red tape. A simple transaction takes you hours and no one really cares that time is money.

It is surprising that the bank manager feels uneasy when a customer walks into his office to talk about credit. It’s because all that Malawian banks want is to take, take and take in money from individual consumers and lend it to the corporate world.

But hear the cries in the streets; this economy is not driven by a sugar manufacturer alone but us consumers! Lending—for production—to entrepreneurs, will change this country and the economy.

Banks cannot depend for their survival on corporate lending alone for too long. They need to cast their net wider. Commercial lending must be flexible and extended to a majority of Malawians who have ideas to start a business or build houses.

Times are changing. Banks need to change too. The day most corporates will realize that it is cheaper to raise capital on the stock exchange, than to borrow from a rigid financier, some banks will have gone belly up.

Malawian banks need to understand that access to basic banking services still remains limited and lags far behind.  We on the streets believe that such limited access could potentially have repercussions on people’s lives. For example, a lack of banking access may make it difficult for people to save up large sums, cope with unexpected emergencies, or obtain credit for start-up costs for a business, agricultural inputs, or even preventative health crisis.

Little attention is being been paid to the demand side. Service quality and trust in banking institutions is declining. No? n a