Experts have said Rwanda’s financial institutions are at a very low pace to adopt digital technologies to increase inclusive access to finance, despite the country’s financial sector registering a positive outlook.
While government has endorsed a policy to push digital migration across financial institutions, most banks are reportedly practicing traditional methods such as physical branches, documents like cheques and withdraw receipts to serve their clientele.
However, a shift to use of technology would increase user experience.
Gavin Krugel, founder and CEO Digital Frontiers Institute told KT Press that banks like other sectors which have adopted technologies and moved user experience further need to increase innovation and to build financial products that can be accessed digitally.
According to Krugel, products such as opening of a bank account using a scratch card accessible like one of the airtime banking on social media, linking bank accounts to e-wallets would help banks reach more populations.
Such products, he adds can be built on the current digital platforms which would also reduce on operational costs. “Banks should ask critical questions. Why can’t a consumer bank with me on WhatsApp, why can’t a consumer get an account through a scratch card,” he told KT Press.
In Kenya, banks such as Kenya Commercial Bank(KCB) provide quick loans through mobile phones, where a trader can borrow as below as Kshs1 million and pay later in the evening. In a similar digital circumstance, in South Africa, bank clients are able to bank on WhatsApp.
With such innovations, says Gavin, “There are many reasons why banks say they can’t, but instead of looking at why they can’t they should look how they can.”
John Karamuka, head of payment system at the National Bank of Rwanda admits there is a need for banks to shift to digital technologies after the government put in place the infrastructure to facilitate the transition.
“The regulations are in place what is needed is now the financial sector to be innovative,” Karamuka said.
In 2011, government established a national infrastructure platform-Rwanda Integrated Payments Processing Systems (RIPPS) that ensures real time transactions for the financial sector, but players are hesitant to put it to total use with digital products.
According to this year’s FinScope Survey, a representative survey of how small business owners source their income and how they manage their financial lives, only 27 percent of Rwandans trust banks with their savings compared to 57 percent who trust Umurenge savings and credit cooperative.
The survey also found that 26 per cent of eligible Rwandans trust banks to obtain credit from compared to 57 percent for Umurenge Saccos.
With an uptake in the use of mobile money with 2.3 million adults owning mobile wallet accounts, banks still need to build products that would facilitate these growing transactions.
Maurice Toroitich, chairman of bankers association in Rwanda and CEO of Kenya Commercial Bank Rwanda, says banks have already rollout some of the digital products that have given consumers yet another banking experience.
For instance, he says, banks have rollout internet banking, mobile banking, agency banking as well as point of sales which has shifted the banks from banking halls to consumers’ fingertips.
But Krugel says “There is need for more innovation by banks. All this is an extension of traditional banking… we are not thinking about new digital products and services to reach to the mass consumers.”
To design such products and shift to digital technologies, banks will have to tap into use of data. “There are data services available today which enable financial services providers to test behavioural sciences principles and better understand customer preferences,” said Rose Goslinga from Pula Advisors.