Kenya Commercial Bank (KCB) Uganda, a member of the KCB Group of companies has emerged as the latest bank in the country to join the race to offer its customers mobile banking services.
Mobile money transfer business has emerged as the biggest threat to Ugandan banks, as more lenders seek partnerships with telecom firms to roll out mobile banking products.
In Uganda, the banking population is low with only 38% having a bank account and only 7% using more than one banking product.
Meanwhile in Uganda, MTN, a mobile firm that runs a mobile money service ratcheted up to two million users in 2010.
With the fast growth of mobile money transfer which has become a threat to traditional banking since it offers a real-time satellite data connection to the Bank’s data systems, Uganda has joined the ranks of countries like Kenya in the East African region, where mobile-money services have become big business over the last five years.
MTN Uganda and Uganda Telecom launched their money transfer services, Mobile Money and M-Sente, in 2009 and 2010 respectively, giving opportunities for subscribers on the two networks to top up their phones with airtime, send and receive money, and pay utility bills using mobile phones.
Similarly, Warid Telecom which has since closed launched Warid Pesa in December 2011 followed by Airtel Uganda.
Mr Joram Kiarie, the Managing Director KCB Uganda during an interview on Friday while in Gulu town revealed that they will start to serve their customers through mobile banking by the end of this year.
Mr Kiarie noted that, “Mobile banking is convenient since it will save people from lining up in the crowded banking hall in order to access their accounts.”
According to Kiarie, one can transact business using his mobile phone from the comfort of his bedroom, a taxi and business premises.
He adds that their focus will be the local business operators who always get challenges when it comes to banking or withdrawing their cash.
The KCB Uganda Managing Director stressed that the new innovation will boost the ability of the banks to distribute products cheaply, run the back office and enhance capabilities for cross-selling products.
He also reassures customers that mobile banking is safe since the bank will safeguard its customers against fraud.
KCB is also considering plans to start agent banking similar to that of mobile banking in the future.
An agent will be connected electronically and will access the Bank’s data systems and serve the customers.
Other commercial bankers have already partnered with the telecommunication companies with utility providers — electricity and water services — to allow customers pay their bills through the mobile banking platform.
Mobile money transfer has brought a serious challenge to commercial banks because a person can decide to run a savings account in his or her mobile phone, hence affect the performance of the banking sector.
The Nigerian subsidiary in Uganda currently partners with 10 commercial banks including United Bank of Africa, Global Trust Bank, FINA Bank, and Opportunity Bank.
Mr Patrick Okello Oryema, the LCV Chairman Nwoya, noted that, ‘Due to lack of electricity, the district has not been able to attract any bank to open its branch in the district despite the bigger potential for banking institutions.”
Mr Oryema however said with the growth of mobile banking, bank customers will have had the opportunity to access their savings.
Since 2009, Nwoya is trying to court some of the major banks to open their branches in the district to ease challenges faced by traders.
Majority of Nwoya and Amuru residents have to travel up to Gulu to transact banking services.
Experts say mobile banking has transformed the way people in the developing world transfer money and now it is poised to offer more sophisticated banking services which could make a real difference to people’s lives.
Currently 2.7bn people living in the developing world do not have access to any sort of financial service. At the same time 1bn people throughout Africa, Latin America and Asia own a mobile phone.
