Embracing digital facilities will boost domestic savings - experts

Last week, Cogebanque and MTN Rwanda signed a partnership deal that will enable the bank’s customers to withdraw or deposit money on the accounts using mobile money. The “Push&Pull” digital platform, for instance, allows Cogebanque customers to transfer (push) money from their MTN Mobile Money wallets to their bank accounts, or withdraw (pull) money from their bank accounts to their mobile wallets, a move that strengthens Rwanda’s move toward a cashless economy.
Mobile financial facilities could help the country increase its savings as well as improve access to banking services. (File)
Mobile financial facilities could help the country increase its savings as well as improve access to banking services. (File)

Last week, Cogebanque and MTN Rwanda signed a partnership deal that will enable the bank’s customers to withdraw or deposit money on the accounts using mobile money.

The “Push&Pull” digital platform, for instance, allows Cogebanque customers to transfer (push) money from their MTN Mobile Money wallets to their bank accounts, or withdraw (pull) money from their bank accounts to their mobile wallets, a move that strengthens Rwanda’s move toward a cashless economy.

Adoption of financial technology will help banks reduce the cost of transactions, according to Yvan Gilbert Nishimwe, the head of e-banking at Cogebanque. He added that digital services are secure and will help boost domestic resource mobilisation to fund long-term investments.

Already, other banks in the country and across the region are increasingly embracing financial technologies to ease access to services and improve operations, among others.

To encourage more Rwandans to adopt digital facilities, financial sector stakeholders have come up with a range of incentives, including discounts, for customers.

Deepening inclusion

Sector experts say mobile technology plays a significant role in enhancing electronic payments and hence deepening inclusion and a cashless society.

Nishimwe said promotion of fintech should be done as part of the national drive to reduce use of paper money to fast-track move toward a digital economy as per Small Rwanda Initiative.

“Ultimately, this means banks will largely interact with customers digitally which drives efficiency and convenience in service delivery and access to services, respectively,” he said in an interview with The New Times.

Patrick Nkurunzinza, an economist in Kigali, said fintech reduces risks involved in carrying out transactions using paper money.

“With digital financial transactions, the risk associated with carrying cash is removed and the service provides convenience and is user-friendly. This will attract more users and enhance bank deposits,” he added.

The McKinsey Report September 2016 estimated digital financial service to have the potential of boosting annual GDP of all emerging economies, including Rwanda, by at least $3.7 trillion by 2025, or 6 per cent above baseline projected GDP.

Such a potential, according Lindy Larson, the Reach for Change Africa programmes manager, can only be fully exploited through strong partnerships between financial institutions and telecom firms. 

The experts say digital financial products can help lower cost of service provision by up to 90 per cent in economies like Rwanda, enabling widening of their reach and bringing on board underserved communities especially in rural areas.

Mobile financial services, internet banking users rise

Central bank figures also indicate that the number of active users of mobile financial services increased by 13 per cent, from 2,986,696 in June 2016 to 3,377,111 subscribers by mid-2017. The number of mobile operators’ agents increased by 60 per cent, from 52,081 to 83,550 agents between June 2016 and June 2017.

Similarly, mobile financial service accounts inched up 3 per cent year-on-year to 8.6 million in June this year, from 8.3 million in 2016. Transactions rose by 26 per cent to 119 million from 94 million, while value was up by 33 per cent from Rwf469 billion to Rwf622 billion.

Furthermore, the registered mobile banking users increased by 20 per cent to 1,041,430 whereas internet banking users decreased by 17 per cent to 39,066.

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