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Pull up your socks, Malawi banks told

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The country’s commercial banks have been challenged to up their game and meet the demands of customers if they are to remain relevant.

Former Nico Holdings Chief Executive Officer, Felix Mlusu, made the challenge in Blantyre on Friday when he delivered a keynote address during the Bankers Association of Malawi (Bam) annual dinner and dance.

The annual dinner was held under the theme ‘Sustainable Business Development through Accessible and Affordable Financial Services’.

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Mlusu said failure by the banks to meet the needs of individual customers has resulted in the sprouting of parallel structures such as village banks.

Among other things, Mlusu observed that the quality of customer service in most commercial banks leaves a lot to be desired.

That, according to Mlusu, explains why Malawian banks have long queues in the banking halls and ATMs.

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The veteran insurer also took the banks to task over what he described as lack of innovation, saying the financial institutions are just rolling over the same old products and services they were offering 10 years ago.

“Customers need something new,” Mlusu said.

He also pointed out lack of competition in the banking industry, saying almost all the banks are just doing the same thing.

“For example, in deposit mobilisation, when one bank launches a promotion for a motor vehicle, or cash prizes all banks follow suit,” Mlusu said.

He also pointed out the large interest rate spread prevailing in all the banks as a sign of lack of competition among the players.

Mlusu said the commercial banks behave similarly when coming up with base lending rates and well as interest on savings.

“An interest rate spread of 18 percent is not very good for the development of the country. I know you have to make money for your shareholders but you also need to think about the customer,” said Mlusu.

He also took a swipe at the Reserve Bank of Malawi, which regulates financial institutions, saying regulation is supposed to facilitate growth and not the downfall of the industry.

“Because banks are not providing what the customers want, we have seen the sprouting of parallel structures such as village banks. Village banks are spreading like wild fire handling billions of kwacha. Even some of you bankers are now members of these village banks.

“If you don’t start giving the customers what they need, your market share will continue shrinking and you will wake up one day to find that village banks have taken over,” he said.

Bam First Vice President, Andrew Mashanda, said Mlusu’s remarks have given some food for thought for commercial banks.

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