It is important to analyse and evaluate the banking structure in Zimbabwe for us to appreciation how IT will really fit in. The Zimbabwe’s Banking sector is relatively sophisticated, consisting of the Reserve Bank of Zimbabwe, Discount Houses, Commercial Banks, Merchant Banks, Finance Houses, Building Societies and The Post Office Savings Bank. The development of the Zimbabwean banking sector can be analysed within three separate periods, which the banking industry went through different development phases.
PRIOR 1991 PERIOD
The financial system in Zimbabwe inherited a regulated environment and it has for years pursued segmented or specialised funding. For instance merchant banks were restricted on export finance while commercial banks were restricted to the service of taking deposits and advancing loans. There was also specialisation within each class of financial institutions. For example, Barclays Bank mainly financed the agricultural sector while First Merchant Bank was concentrating on financing the mining sector. Building societies concentrating on mortgages and Discount houses on commercial and RBZ intermediation. The government had put some boundaries that separated institutions and gave them almost guarantee of core business segments. There were restrictions to entry into the financial market, a situation that enabled banks to form some cartels. A cartel is a combination of firms whose aim is to limit the scope of competitive forces within the market. The firms usually enter into agreements pertaining to interest rates.
Furthermore they did not go out to the market to solicit clients. There was no need for them to be innovative since they were cushioned from competition. They rarely ventured into risk management. They often required security from the would be borrowers before advancing any funds to them. One writer pointed out that in general the financial system was lacking in the shaping...