Tanzania’s banking sector outlook bullish on growing demand for digital banking services

Tanzania’s banking sector remained sound and well capitalized during the post COVID-19 era last year thanks to sound and accommodative policy interventions undertaken by the Bank of Tanzania.

The pandemic forced banks to rethink how they operate their businesses that prompted banks that heavily relying on traditional methods to be under pressure to transform their business and operating models by adopting innovative digital ways due to change in consumer expectations, heightened competition, evolving regulations and advancements in technology.

The banking sector in Tanzania however sector posted a bullish performance last year with the largest top ten banks in terms of assets and deposits sharing a record net profit of 715bn/- that was driven by income growth, cost containment and a decline in impairment provisions.

During the period, digital banking services also continued to expand driven by increasing financial inclusion and mobile penetration rate,

Banking and financial analysts however predict that supported by a growing demand for digital banking services and a positive operating environment, the banking sector is poised to remain in its growth strategy in the years to come.

The Banking Industry Trends Report 2021/22 released by research firm Deloitte last year however noted that the future of banking involves innovating ways to make a consumer’s daily life easier.

“The high cost of investing in new technology and robust digital systems also poses a significant challenge to banks that have not considered significantly shifting to a digitized banking environment. Banks will have to create or select the right platforms that bring the most distinctive and personalized user experience,” the report said.

The report noted that Artificial intelligence (AI) generates an enormous opportunity for the banking sector to understand the entire consumer footprint and accelerate their digital transformation journey.

Several top tier banks in the region such as NMB Bank Plc have developed credible and reliable systems that allow their clients to have a smooth transition into the new operating mode of a digitized banking environment. Some of these systems include Mobile money, Mobile banking applications and online transaction systems.

According to the NMB Bank Chief Executive Officer Ruth Zaipuna, the bank last year leveraged on its strong digital capabilities to enhance its service delivery by delivering customized offerings, driving further efficiency gains and widening access affordable and reliable banking services.

Speaking during the Bank’s Annual General Meeting a few weeks ago, Zaipuna said the bank last year continued to invest in innovation delivery channels to support the bank’s financial inclusion drive.

“During the year, we continued to enhance NMB Mkononi, our mobile banking platform to make it simpler and safe for our customers. The channel continue to grow day by day and has helped reach the unbanked,” she added.

She noted that the bank’s digital investments have helped to ease access to stable, reliable and safe banking services with the strong adaption of translating to lower cost-to-serve customers.

She added, “Being at the forefront of widening financial inclusion, we continued to scale our agency banking footprint to broaden access to financial services closing the year with 10,194 agents across the country,”

Zaipuna noted that the bank will continue to explore and pursue opportunities for further digitalization and automation to enhance its service delivery.

“We constantly engage with our customers and gather their views to understand their current and evolving needs and offer tailor-made solutions. We remain committed to further develop innovative solutions to scale and widen financial inclusion,” she said.

The bank’s Board Chairman Dr. Edwin Mhede during the event was however optimistic that amidst a rapid competitive environment and continued strong domestic recovery, the bank eyes to remain the leading commercial bank in the country.

“Through disciplined execution of our key strategic pillars and optimized investments in technology to enhance efficiency and productivity, we aim to continue providing the best propositions for our customers, expand financial inclusion by widening access to affordable financial services and continue supporting key national development priorities, Dr.Mhede said.

He noted that the bank will continue exploring available opportunities within the Tanzanian market and beyond borders to determine the best fit in line with the bank’s strategic ambitions.

“Am confident that the bank will continue to withstand the challenges that may arise and we remain committed to providing excellent customer experience by providing products that address customer needs. The management and the board will continue to closely monitor developments and remain mindful of the evolving global conditions while pursuing our growth strategy” he added.

The NMB Bank board on a few days back declared a 96.7bn/- dividend for the bank’s equity shareholders being a 41 percent increase as compared to 68.5bn/- issued by the bank last year promising to continue creating a shared value for the bank’s customers and shareholders.

This follows strong 2021 financial performance of 290bn/- profit after tax being a 41 percent increase as compared to the preceding year translating to 193/- per share to its equity shareholders that will be paid on or about June 15, 2022.

The bank has paid a total of 213bn/- to the bank’s equity shareholders in the past three years.