An investigation into the effectiveness of strategies that are being used to attract deposits in the financial sector in Zimbabwe from 2009 to 2012: A case of comercial banks

Abstract

The study sought to investigate into the effectiveness of strategies that are being used to attract deposits in the financial sector in Zimbabwe from 2009 to 2012 with a case study of commercial banks. The research combined both the qualitative and quantitative research approaches in order to take advantage of the strengths of the two approaches, to obviate the weaknesses of a single approach and to increase reliability and validity of findings. A survey was carried out using two systematic and structured questionnaires, one administered to staff and management and the other administered to commercial banks customers. A hundred questionnaires were distributed among the customers, management and staffs of the thirteen different commercial banks in Harare, eighty-five were responded to. The objectives of the study were to identify the challenges which are being faced by commercial banks, assess the factors influencing deposits uptake, determining the strategies being implemented by commercial banks to attract deposits, identify the banking models used by commercial banks, identifying the reasons why customers leave a bank and the factors considered when choosing a bank. The findings from the study showed that the factors influencing deposits at commercial banks were price methods, technology, competition, legal regulations and company objectives. The strategies implemented by commercial banks were customer relationship management strategies, promotional strategies, distribution strategies and pricing strategies. However the findings show that the strategies were ineffective because they were not being fully utilized whilst banks also had no confidence in them. Banks were also using traditional banking model and diversification banking models. The findings showed that banks had shifted from the traditional banking model to diversification models however they were not yet fully utilizing the diversification banking models. The study concludes that customers leave a bank mainly because of quality of service, fees charged, product unavailability and bad brand image. Customers consider customer service, convenience, security of funds and bank’s reputation when choosing a bank. The study recommended that commercial banks enter into strategic alliances, upgrade their technology, recapitalize the Central bank and conduct product targeting and strategic segmentation. An area of further study to investigate into the effectiveness of technology used to attract deposits in the financial sector in Zimbabwe from 2009 to 2012. A case of Commercial Banks.