Digital banking will boost financial inclusion - CBA Group boss

Many Rwandans are increasingly embracing mobile banking as the country moves toward a cashless economy. And with almost all the banks rushing to digitize financial services, Isaac Awuondo, the Commercial Bank of Africa group managing director, says Rwanda should leverage on digital and mobile banking to boost financial inclusion. The finance and accounting expert who was in the country to launch MTN’s new Mokash mobile banking product tipped bankers on how they can increase formal financial services through digital and mobile banking. In an interview with Business Times last week, Awuondo called for a complete suite of financial products to boost financial inclusion and increase access to finance across the country. Briefly take us through your new partnership with MTN Rwanda and what it means for the financial industry? We are announcing the fulfillment of our promise with the launch of MOKASH, the new Mobile Savings and Loans product from CBA, brought to you by our partnership with MTN Rwanda. MOKASH is an unprecedented product in Rwanda’s banking industry, the first truly democratic banking solution for everyone with a mobile phone. The launch of MOKASH in Rwanda is in line with the government’s objective to achieve cash-less transaction economy, and we are proud to play our part in this vision. What role is mobile money playing in the region’s economic transformation? Mobile money has been a phenomenal change driver all across East Africa. Lives have been transformed by improving the speed and convenience of payments. Mobile money has played a key role in disintermediating money across distance. This simple statement has had a profound socio-economic impact on the livelihoods of many Rwandans. It means that a father working in the city will pay school fees on time. A daughter will pay for her mother’s hospital bill, even when she is on business travel halfway across the world. A wage earner will receive his pay on time and securely, without having to wait for his employer to travel. Therefore our partnership with MTN is designed to take on the very important challenge of disintermediating money across time – through saving and lending. Such financial solutions are especially critical to lowering the vulnerability of households to financial shocks and motivating productive investments. When savings and lending solutions are delivered digitally, we greatly lower the access barriers for households that are typically underserved by formal financial services providers. This is particularly relevant for women and youth. Our partner MTN has made tremendous contribution towards the broadening of financial inclusion. Today CBA partners with MTN to deepen financial inclusion by extending the payments proposition to offer a complementary savings and loans service dubbed MOKASH. Is this not taking way the traditional role of banks? The reality is that Banks must now partner with telecoms to drive government’s financial inclusion agenda. This will increase money circulation, savings and ultimately help formalize the country’s financial industry. We must therefore recognize that telecoms are bringing solutions to people especially those accessing financial services informally. More so, there is need for trusted relationships between telecoms and banks so that those in informal bracket can be formally included. What are some of the advantages of Mobile Banking? Mobile Banking gives you the privilege of anytime and anywhere banking. One can do most of the banking transaction after banking hours from anywhere. For-example CBA prides herself in having achieved tremendous success with products similar to MOKASH in Kenya, Tanzania and Uganda - where we have been entrusted with savings by our more than 23 million customers, and have extended credit in excess of USD 2.5 billion to these customers. The teams at CBA and MTN have spent so many sleepless nights to make sure that every MTN Mobile Money customer has the opportunity to access easy and convenient banking through MOKASH. We are therefore very optimistic that the end result of this effort, MOKASH will indeed bring real transformation at every household in Rwanda. We are saying we must continue lowering the barriers that limit households to access finance to further deepen financial inclusion. We fully understand that digital does offer some opportunities for banks to improve the way they are perceived, by helping them to improve the overall customer experience. What role is mobile banking playing when it comes to the ease of doing business in the region? There is clear and widespread recognition that Africa is at the forefront of the mobile banking revolution; this has been spearheaded by the success of mobile phone technological platform for financial services. M-Pesa’s impressive success story has set the standard in mobile money, and nine out of ten of the leading mobile money companies are in Africa. East Africa has the deepest penetration of mobile money globally, and Africa is leading not just in terms of numbers but in innovation and therefore in knowledge-sharing, this therefore gives banks an opportunity in terms of formalization of financial services in the region. How can banks leverage on this fast moving technological frontier to become more profitable? The technological frontier is moving rapidly and in a variety of directions; there is a proliferation of technology-driven trends in the distribution of digital financial services, such as use of biometrics to enhance security and use of customers’ digital footprints as a source of credit referencing for MFIs. Such initiatives have the potential to foster broader and more secure and efficient financial inclusion. What role should the regulator be playing amidst these great inventions and innovations? Ensuring the right infrastructure is put in place but also coming as a partner to support the cause. editorial@newtimes.co.rw

News

Digital banking will boost financial inclusion - CBA Group boss