Safety, Cost Concerns Still Limiting Uptake of Mobile Banking by Ugandans

More Ugandans subscribing to mobile banking are using the platforms to withdraw money from their bank accounts, than those using them to deposit, according to the service providers.

This is one of the findings and developments in the banking and financial technology (Fintech) industries that will form the discussions at the 6th Annual Bankers Conference next Monday.

Various reasons are forwarded for this low uptake of banking money using the mobile phone, including the fear of the transaction not being complete therefore loss of money, as well as the high cost of transacting.

Speaking ahead of the conference, Richard Yego, MTN Mobile Money Uganda Managing Director said Shillings 4 billion was withdrawn from banks to the mobile wallet last year as opposed to Shillings 2.6 billion deposited from the wallet to the bank.

However, to prove the importance of the Fintech industry, Yego said Shillings 90 trillion was moved around electronically by MTN alone, while Shillings 400 billion went out in mobile loans.

Some banks charge as high as Shillings 5,000 to deposit money from the mobile wallet to the bank account compared to the charge on withdrawal from the bank to the wallet of between Shillings 1,000 and 1,700. They say sometimes it makes more business sense to deposit cash via the counter or move physical cash from one bank to another.

Yego said they hope the establishment of a national switch, the process of which is underway, will help reduce the costs.

The annual banker’s conference is organized under the theme: Trends and Innovations in the Fintech Space, Changing the Face of Banking and Financial Services.

It is aimed at reviewing the developments relating to the coming of the Fintech industry and its contribution to financial inclusion and the challenges faced.

Sarah Arapta, the chairperson Uganda Bankers Association said the meeting is aimed at finding how best fintech and banking institutions can together to improve the provision of financial services.

The financial sector, which was boosted by the coming of especially the mobile phone technology in the 2000s has been on a rapid expansion, especially in terms of the number of people accessing formal financial services, and the reach to previously unbanked areas.

Over the past five years, the number of bank accounts has more than doubled to 23, according to the Uganda Bankers Association, UBA. However, the industry has experienced persistent and evolving cases of electronic financial fraud or cybercrime.

At the two-day conference, the second day has been dedicated to training financial industry players, security personnel, cyber experts, and others from related sectors. Wilbrod Owor, UBA Executive Director said fraud is a global industry and must BE tackled as such.

He says UBA is implementing the resolutions from the first fraud conference that happened earlier this year, and hopes measures against the crime will become more effective, including strengthening the penalties meted out to the culprits.

MTN’s Yego also admitted that there are many cases of fraud involving telecoms but added that some are committed by common criminals who take advantage of the loopholes in the systems.

He gave the example of what they are investigating where it is suspected that the criminals pick up mobile money account numbers at the agents, with the transaction information, and use it to call the customers with threats or deceptive messages.

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