The rapid global surge in mobile banking adoption has encountered an unexpected hurdle in the pearl of Africa, as Ugandans remain cautiously reluctant to fully embrace this financial revolution.
Despite the convenience and accessibility promised by mobile banking solutions, a significant portion of the Ugandan population continues to grapple with persistent concerns surrounding the safety and cost implications of these innovative services.
A greater number of Ugandans are opting to use mobile banking for withdrawing money from their bank accounts rather than depositing, as reported by service providers.
This revelation was made by key stakeholders in Uganda’s banking sector, during a press conference organised by Uganda Bankers Association (UBA) On August 8th, in Kampala.
This trend will be a key topic of discussion at the upcoming 6th Annual Bankers Conference, that will take place at Serena Hotel Kampala from 14th to 15th August.
There are several factors contributing to the reluctance to deposit money through mobile phones, including concerns about incomplete transactions and potential financial losses, along with the relatively high transaction costs.
Richard Yego, the Managing Director of MTN Mobile Money Uganda, highlighted during the press conference that last year, approximately Shillings 4 billion was withdrawn from banks to mobile wallets, whereas only Shillings 2.6 billion was deposited from wallets to banks.
Yego also emphasized the significance of the Fintech industry, revealing that MTN alone facilitated electronic transfers totaling Shillings 90 trillion, with Shillings 400 billion in mobile loans issued.
Certain banks impose steep charges, up to Shillings 5,000, for depositing money from a mobile wallet to a bank account, whereas the fee for withdrawals from the bank to the wallet ranges from Shillings 1,000 to 1,700.
Some institutions argue that it’s more financially viable to deposit funds in person or move physical currency between banks. Yego expressed optimism about the forthcoming establishment of a national switch, a process currently in progress, which is anticipated to alleviate transaction costs.
This year’s banking conference revolves around the theme “Trends and Innovations in Fintech: Transforming Banking and Financial Services.” The main objective is to assess Fintech’s emergence and its impact on financial inclusion, as well as the obstacles encountered.
Speaking at the conference, Sarah Arapta, the Chairperson of the Uganda Bankers Association, stated that the conference seeks to determine how Fintech and banking entities can collaborate effectively to enhance financial services.
“This year’s #BankingConf23 will take stock of the contribution that fintech & other players in the financial eco-system including mobile network operators make towards the growth & transformation of the banking sector”
The financial sector experienced rapid growth, particularly with the advent of mobile phone technology in the 2000s, resulting in increased access to formal financial services and penetration into previously underserved regions.
Over the last half-decade, bank accounts have more than doubled to reach 23, as per the Uganda Bankers Association (UBA). Nevertheless, the industry confronts continuous challenges related to electronic financial fraud and cybercrime.
The conference spans two days, with the second day dedicated to training industry professionals, security personnel, cyber experts, and others in related fields. Wilbrod Owor, UBA Executive Director, emphasizes the global nature of fraud and the necessity for a comprehensive approach to tackle it.
UBA is in the process of implementing resolutions from a prior fraud conference and anticipates that measures against fraud will strengthen, including stricter penalties for wrongdoers.
Yego from MTN acknowledges that telecoms are often involved in fraud cases, some of which are perpetrated by common criminals exploiting system vulnerabilities.
A current investigation highlights criminals potentially accessing mobile money account numbers at agents, using transaction information to contact customers with threats or deceitful messages.
As stakeholders across the financial industry strive to address these challenges, the journey towards widespread mobile banking adoption in Uganda remains a complex one.
Balancing the allure of convenience with the necessity of safety and affordability will undoubtedly require innovative solutions, robust cybersecurity measures, and a comprehensive effort to educate and empower the Ugandan population.
Only then can the nation unlock the true potential of mobile banking and usher in a new era of financial inclusion and empowerment.
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