Revealed: Internet banking the cheapest

What you need to know:

  • Banks rewarding clients who have embraced internet technology to access services with lower transaction costs

Dar es Salaam. Tanzanians taking advantage of the internet to access banking services are enjoying the cheapest transaction costs, a recent report reveals.

A tariff notice published by the major commercial banks indicates that mobile banking, ATMs or the more traditional over-the-counter services are more expensive than internet banking.

According to the notice, most financial institutions are not charging fees on internet banking per transaction, while others are charging lower rates for ATM and branch services. Although internet coverage is still low, the mobile telephone penetration is expected to stimulate the growth of internet banking, as it is being considered as the easiest and quickest way. Latest reports from large banks -- CRDB, NBC, NMB and Barclays Bank Tanzania -- have shown that internet banking charges were less than Sh1,000 per transaction, with one bank showing that it does not charge fees on such services. Barclays Bank Tanzania Limited does not charge transfer fees on internet banking, but charges Sh2,500 for ATM cash withdrawals.

NBC and NMB are charging fees for internet banking ranging between Sh600 and Sh640, lower that ATM charges, which are between Sh944 and Sh1, 200. CRDB has the highest charges on internet banking at Sh899, which is nearly similar to the ATM charge of Sh944.

Withdrawing money over the counter seems to be the most expensive as banks charge between Sh3,500 and Sh4,100 per transaction. CRDB, NMB, NBC, and Barclays charge Sh3,540, Sh4,012, Sh4,130 and Sh3,500, respectively.

Maintaining an account at a brick and mortar bank costs monthly service rates of Sh1,888, Sh3,600, Sh7,000 at CRDB, NBC, and Barclays, respectively. These banks operate with no monthly charges on the internet banking service.

In the world of banking, brick and mortar banks are banks with branches. Many of them also offer online banking.

The major factor which has seen clients opt for banking on the go is convenience; money transfers and bill payments can be done from the palm of one’s hands through electronic devices such as mobile phones and tablets. “For business personnel this is the best and most affordable way to bank since it works well with time management and saving money,” said Mr Ahmed Khamis, head of SME’s at Barclays Bank Tanzania.

“The growth of internet banking will create a conducive environment for payments and foster business opportunities to small business groups and individuals.” The internet channel also seems to be the most reliable as customers can set up online bills or perform balance inquiries on a daily, hourly, or minute-by-minute basis.

The only notable weakness in this type of banking is the lack of face-to-face, personal relationship between the service provider and the customers, which helps in improving service delivery, customer retention and marketing.

Still, technological advances in the digital space means that people are now always connected to the Internet via their mobile phones hence clients now demand fast, convenient and accessible real time banking solutions on the go without visiting a branch.