How Banks in Uganda can beat FinTech

Financial Technology aka FinTech refers to any technological innovation in the financial sector. This new industry exists to make financial services much more efficient and cheaper than the old traditional financial system. FinTech's in Uganda take various forms from mobile payments, mobile wallets, payments apps and many others.

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In Uganda, mobile money transactions hit 44 trillion in mid 2017. This was and still is bad news for the banks (why; because most individuals who use FinTechs, never return back to the banks. Few people today send money through western union within Uganda or visit a bank or bank machine to clear bills) not only because their revenue sources are being reduced but the sector has also taken advantage of the "unbanked" whose ratio to the "banked" is far from even.

Did you know? 1 Bitcoin today is equal to 46534868.84 Uganda shillings.

However, banks in Uganda can beat Fintech in the following ways;

1. Banks should consider slashing costs and ensuring services are provided at a cheaper price (a price that can compete with that offered by FinTechs)

2. One advantage fintechs have over banks is  accessibility. Banks need to target rural and remote areas. Having a loss making branch open in a remote area can be very bad for business but provides an opportunity.

Quote: "We are now under pressure from FinTech companies that are now in spaces we used to occupy. We have to continue investing in technology in order to keep up...." Mr Sekabembe DFCU

3. Are u familiar with the phrase "if you can't beat them, join them" banks can adopt this too. Work alongside FinTechs and find ways to mutually benefit or an option of buying out a Fintech company could also be adopted.

4. Investing in the Unbanked sector. Majority of people in the Unbanked sector attribute their failure to joining the banking system to language barrier, lack of trust for banking, lack of documents, etc which can all be approached accordingly e.g. through employing bilingual staff, financial education, etc. The large unbanked sector is largely responsible for the growth of the mobile money sector in Uganda.

5. Banks can also beat FinTech through relying on their high level of access to resources. Fintechs handle billions while banks handle trillions and as such have an ability to create more credit.

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In conclusion, FinTechs can be a viable investment for any entrepreneur and the industry is rapidly growing but their ability to substitute banks is still far from happening. However the same can not be said for cryptocurrencies like the Bitcoin whose future cannot be easily foretold at the moment and are greatly characterised by a high level of volatility.

This above article is based on research and personal opinion.
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Contact the author Arthur Kakande on service4businessweknow@gmail.com