Financial Services Magazine Finance and Banking BANKING • COMMODITIES • INSURANCE • STOCK MARKETS • MICROFINANCE • TECHNOLOGY • REAL ESTATE AUGUST 2021 /ISSUE 011 , FREE COPY SERVICES MAGAZINE Banking on Innovative Financial Technology to Deliver a Cashless Economy FINANCE & BANKING MICRO FINANCE FINANCIAL NEWS How banks and fintechs are Digitizing financial transactions Artificial intelligence as a key leading Uganda into a cashless in Micro Finance Institutions, driver of the bank of the future. economy post COVID -19. SACCOs to promote efficiency. UGANDA KENYA RWANDA SOUTH SUDAN BURUNDI TANZANIA ISSUE 11 July - August 2021 I Financial Services Magazine Finance and Banking II ISSUE 11 July - August 2021 Financial Services Magazine Finance and Banking CONTENTS 01 How Banks & Fintechs are Leading Uganda into a Cashless Economy Post Covid 19 04 Towards a Cashless Economy in Uganda-A Regulatory Perspective 08 Digital Banking Innovations mean Uganda is On Track to Achieve a Cashless Economy 11 Financial Inclusion & Evolution of Digital Payments In Uganda 12 Artificial intelligence as a key driver of the bank of the future 16 Role of Data Driven Analytics in Business Decision Making 18 Emerging Financial Crimes and Digital Threats to Financial Sector Growth 22 Relevance of Bancassurance to The Customer Today 24 Uganda - Dealing with Cyber security Risk in The Banking and Financial Services Industry: The Need for a New Mindset 27 Housing Finance Bank: Overcoming Challenging Times Through Customer Focus and Dedication 29 Digitizing Financial Transactions in Microfinance Institutions and SACCOs to Promote Efficiency 32 Wealth Creation Through Enterprise Development 34 Driving Innovation Through Financial Technology and Predictive Analytics 36 How Resilient Organizations Can Thrive Even in Times of Uncertainties 41 The Uganda Institute of Banking and Financial Services holds first ever Joint Annual General Meeting and Graduation Ceremony 44 Professional & Academic Programs (September 2021 Intake) ISSUE 11 July - August 2021 III Financial Services Magazine FinancePublisher and Banking Foreword THE UGANDA INSTITUTE OF BANKING AND FINANCIAL SERVICES ISO 9001:2008 CERTIFIED Plot 10 Buganda Road, P.O.Box 4986, Kampala, Uganda Tel: +256414255847/8 Web: www.uibfs.or.ug CHIEF EXECUTIVE OFFICER Dear esteemed readers, I welcome you to the 11th Edition Goretti Masadde of The Financial Services Magazine. MEMBERSHIP & BUSINESS DEVELOPMENT MANAGER Sulaiman Semakula The just concluded 2021 Annual Bankers Conference organized by the Uganda Bankers Association (UBA) REGISTRAR Semakula Richard under the theme, “Bend but don’t Break: How the Financial Sector Can Thrive In the Era of the 4th Industrial FINANCE & ADMIN. MANAGER Revolution”, highlighted the key developments in financial Apollo Michael Engwau technology, financial inclusion and responsible banking for EDITORIAL COMMITTEE sustainability. Sylvia Juuko, Sulaiman Semakula Benedict Buhanguzi The theme for this edition “Banking on Innovative financial WRITERS/CONTRIBUTORS technology to deliver a cashless economy” is a continuation Dr. Charles Augustine Abuka, Diana Wanyama Akullo, Bernard Wasswa, Sulaiman Semakula, Perry Mason, of the discussion on how the banking and financial services Fred Migadde, David Kawaida, David Masinde, industry can leverage financial technology to improve Ronald Mugwanya and automate the delivery and use of financial services to enhance financial inclusion and economic transformation. PHOTOGRAPHY Courtesy & internet The edition focuses on key topics relating to use of digital LAYOUT& DESIGN platforms, technological innovations such as the 4th Ssemanda Paul +256772 049707 industrial revolution. They include; how banks and fintechs can lead Uganda to a cash less economy post COVID – PRINTING New Vision Printing & Publishing Co Ltd. 19 and a regulatory perspective, financial inclusion and evolution of digital payments, utilization of digital platforms SALES & ADVERTISING to drive commercial Agricultural productivity and digitizing Trans 5 Ltd financial transactions in Microfinance Institutions and James Odeke +256704745732 /+256786080896 SACCOs for efficiency. CIRCULATION Very importantly, this edition offers insights in emerging Uganda, Kenya, Tanzania, South Sudan, Rwanda. financial crimes and digital threats to the growth of the COPYRIGHT financial services sector and how to deal with them as well The information contained in this publication is given as how resilient Organizations can thrive even in times of in good faith and has been derived from sources Uncertainties. believed to be reliable and accurate, however, neither Last but not least, the reader is offered an overview of The Uganda institute of banking and financial services (UIBFS) nor any person involved in the preparation of the online training programs and other offerings at the this publication accepts any form of liability whatsoever Institute. for its contents including advertisements, opinions, advise or information or any consequences from its use. I invite you to read this Edition of the Financial Services No part of this publication may be reproduced, stored in any retrieval system, or transmitted in any form or by Magazine and share in the rewarding experience it any electrical, mechanical, photocopying, recording or presents. inkjet printing without prior written permission of the Goretti Masadde publisher. ISSUE 11 July - August 2021 CHIEF EXECUTIVE OFFICER Financial Services Magazine Finance and Banking How Banks & Fintechs are Leading Uganda into a Cashless Economy Post Covid 19 By Diana Akullu Wanyama Introduction Cashless economy Effects of COVID 19 According to the Central Bank, Predominantly Uganda`s economy pandemic on Financial there are 25 Licensed commercial has been a cash economy. Most Services banks in Uganda as at July 01, financial transactions were cash The COVID-19 pandemic drastically 2020. Banks play an important based until the introduction of reduced social interactions. This role in providing financial services mobile money in 2009.A cashless affected not only banks but the to the public and businesses thus economy can be defined as an economy in general. With customer ensuring economic stability. The economy where all transactions numbers in branches drastically term Fintech is a short form for flow through electronic channels reduced due to observing social Financial Technology. It includes such as debit cards, credit cards, distancing SOPs from the Ministry computer programs, applications internet banking, mobile banking of Health and World Health and other technologies used to payment systems etc. as opposed Organization, banks have had to enable or support banking and to use of cash. Normally the refocus on alternative cashless financial services. There are transition to a cashless economy channels to deliver financial about 200 Fintech companies in can be traced from Cash to Cash- services to the last mile customers. Uganda serving different sectors lite to Cashless economy. in Uganda. Both entities are respectively represented under umbrella association bodies: - Some of the benefits of a cashless economy include: eliminating several business Uganda Bankers Association(UBA) “ risks like theft of cash by employees, counterfeit money, effective Anti-Money and Financial Technology service laundering measures, increased financial transaction speeds, enable financial providers’ association (FITSPA) authorities stimulate economic“ growth by formulating better government polices Uganda. based on data analysis. ISSUE 11 July - August 2021 1 Financial Services Magazine Finance and Banking Current sector Brief According to data from Central Bank of Uganda, Cashless transactions increased in the first half of 2020 compared to the first half of 2019.This upward trend was attributed to the deliberate effort by banks to increase cashless transactions as a measure to reduce COVID-19 spread while reducing online transaction costs to the customer. The value of credit card payments rose by 19.7%, value of Mobile Banking and Internet banking increased by 157.3% and 52.9% respectively. It states that the value of POS transactions grew by 14.5% while the value of card payments increased by 19.7%. In Uganda today, the main cashless channels include; Debit cards, Credit cards, Mobile Wallet Apps, Mobile and Internet banking, Agent Banking POS (Point of Sales), etc. Debit and Credit cards – can be used by customers to withdraw, make cashless in store or online purchases. Some common global card partners are: - VISA, MasterCard, Union Pay, etc. Mobile Wallet Apps – These allow users to send, receive and store money. They can be linked to bank accounts allowing users to carry out Cash in and Cash Out transactions, Utility payments, Fees and e-commerce payments, at their convenience. Mobile and Internet banking – A cashless payment option for Individuals and Businesses with internet access on different tools such as smart phones, laptops, desktops etc. Agent Banking – Banks have established a network of agents that allow customers to carry out deposits and withdrawals within their own proximity and at their convenience. This could be noted as a cash lite intervention on a cashless economy journey. 2 ISSUE 11 July - August 2021 Financial Services Magazine Finance and Banking Cashless economy initiatives encourage onboarding and usage the various industry like Central As a regulator of the Financial of cashless channels e.g. Change bank, Fintechs, Commercial banks, Sector, Bank of Uganda