Threats and opportunities by Fintechs on Zimbabwean commercial banks: An open innovation persepective

Abstract

The growth in financial technologies (Fintech) skyrocketed in Zimbabwe and there are many reasons behind this happening. New entrants in financial services sector such as large cuttingedge technology companies and technology startups offer new innovations and technologies. They shape whole sector in terms of regulations which are made by authorities, customer habits and strategies. The study aims at understanding the triggers behind Fintech development and unearthing the threats presented by Fintechs to the Zimbabwean commercial banks. In addition, the study seeks to examine the opportunities presented by Fintechs to the Zimbabwean commercial banks, to find the implications of FinTechs to the regulation of financial services sector and to establish the strategies being employed by the Zimbabwean commercial banks to cope with this disruptive technology.The study reflects the effect of economic crises, the developments in technology after and changing business models of technology vendors and changes in the demographics as triggers behind Fintech development. It exposes that while capital and customer base are the main advantages of incumbents, cutting-edge technologies and flexibility are main advantages of Fintechs. The Zimbabwean banking fraternity has welcomed financial technologies as it improves prudential safety and soundness. The results analysed focused on the drivers of Fintec, threats and opportunities of Fintec (mobile banking, Regtech and digital banking). Technological breakthrough and good supporting infrastructure were found to be the major drivers of fintech. Several opportunities were noted which include the enhancement of customer base, reduction of real time transactions, convenience and reduced expenditure in terms of building many branches. Fintech companies were found to be threat to commercial banks in the country. In terms of threats, it emerged that cyber risks and systems challenges are the major setbacks being experienced by customers when using digital platforms, however the cash crisis has been partially eased by both mobile and digital banking.