WARNING: This is Version 1 of my old archive, so Photos will NOT work and many links will NOT work. But you can find articles by searching on the Titles. There is a lot of information in this archive. Use the SEARCH BAR at the top right. Prior to December 2012; I was a pro-Christian type of Conservative. I was unaware of the mass of Jewish lies in history, especially the lies regarding WW2 and Hitler. So in here you will find pro-Jewish and pro-Israel material. I was definitely WRONG about the Boeremag and Janusz Walus. They were for real.
Original Post Date: 2010-04-06 Time: 19:00:01 Posted By: News Poster
By Vincent Obiro Orute Obunga
Arusha – It seems that the role of banks in Tanzania is changing rapidly. In the past few years, banking in Tanzania used to be about taking deposits from customers and granting or giving loans to them.
Customers based their purchase decisions on loyalty and established long lasting relationships with commercial banks. But Tanzanian banks today are part of an emerging financial service industry, which includes not only commercial banks and building societies, but an array of savings and credit cooperative societies (SACCOS) who are offering quasi- banking services to average Tanzanians such as accepting deposits, issuing credit cards and loans through their finance sections. These institutions are also broadening their horizons and including stock broking and insurance among their services.
But what are the primary driving forces behind these changes?
First, competition from other financial service providers. Intense competition to Tanzanian banks now comes from building societies, unit trusts, insurance companies, finance houses, international and merchant banks, and stock brokers and retailers.
Awareness of competition on the part of banks is vital, but so is the decision on whether or not to compete. One thing to take into account in the competition is customer preference. Indications are that average Tanzanians are no longer loyal to one bank as they used to do in the past. They are now looking more for convenience and the cost of their banking.
This has brought about increased competition and the need for Tanzanian banks to pay increased attention to better market segmentation, increased product lines, more delivery channels at lower costs, improved customer relations and improved cost controls. As Tanzanians demand more accessible and efficient banking services, the delivery systems may have to change drastically in order for Tanzanian banks to gain an edge in the market -place.
In the past few years, Tanzanian banks have faced increased competition from number of sources. As a result of economic, technological, and stable political climate, foreign banks have set up in business here, and more are likely to open branches here.
Right now, indications are that Kenyan banks are keenly eying the Tanzanian market are likely to set up in business here in the next few months.
Already Kenya Commercial Bank, Kenya’s largest Commercial Bank, with a branch network of over 340 branches in Kenya alone has opened branches in Juba in southern Sudan, Kampala in Uganda, and Kigali in Rwanda. It also has branches in Dar es Salaam, Mwanza, Arusha, and Moshi in Tanzania.
Indications are that Kenya Commercial bank having conducted banking business in Tanzania successfully over the last few years, is likely to spread its wings and open more branches in other key towns in Tanzania such as Mbeya, Tanga, Morogoro, Babati, and Musoma.
Clearly, Tanzanian banks must invest heavily in their branch networks, although this may not be cost effective to operate. They must take a bold step to close unprofitable branches and restructure the profitable ones into personal/corporate banking services.
Also Tanzanian banks need to examine new ways of delivering services such as home banking, ATMs ( automated teller machines), debit cards , EFTPOS ( electronic funds transfer at point of sale), treasury management systems, and in the case of First Direct, a totally branchless, telephone -based delivery system providing a full range of banking services.
Second, economic change has seen pressure on interest rates drive away the corporate borrower who can access the multinational currency and stock markets more cheaply than using a bank. This also applies to corporate raising funds and lending funds.
Interest and currency swaps only but to name a few mean that the corporation can lend or borrow more profitably by dealing directly, using the bank only in an advisory, fee – based capacity.
Tanzanian banks must gain expertise and commercial standing in the market -place to earn fees rather than merely lend money (issuing loans and granting overdraft facilities). They must decide whether the cost of entering these new markets will generate new business and eventually generate profitable fees.
Third, liberalization of the financial service sector in early 1990s that drastically changed the banking landscape; a fact that has seen the emergence of the so called micro -finance institutions which are now giving banks some good run for their money.
Clearly, an average Tanzanian doesn’t need to visit a commercial bank to obtain banking services anymore. These services are now being provided more cheaply and efficiently by SACCOS, micro- finance institutions such as PRIDE, SEDA, Freedom Financial services, Real People, FAIDIKA, Blue Financial services, Opportunity Tanzania Ltd, Bayport Financial services, FINCA, only but to name just a few.
And because service quality has emerged as a key strategic issue for financial service providers in Tanzania over the last decade, it would appear that quality of service is the area (battle ground) where competition will either be won or lost. This is because it is much better to compete on quality than on price (bank charges).
Vincent Obiro Orute Obunga is executive director Volunteer Network Africa, a global volunteer organization committed to social and economic change across the globe.
Original Source: 
Original date published: 3 April 2010
Source: http://allafrica.com/stories/201004060301.html?viewall=1