Transactions between Centenary bank and Finance Trust bank customers that subscribe to the institutions’ mobile banking platforms have been made easier with the introduction of real-time interbank transfers.
The product, which allows customers to instantly transfer money using their phones between the two banks, was developed by Craft Silicon, a Kenyan software house that provides customized banking solutions in more than 40 countries.
Speaking at the product launch at Sheraton hotel on Monday, Craft Silicon’s chief executive officer Kamal Budhabhatti called this innovation a game-changer that will attract more banks.
Budhabhatti explained that the product connects different banks through Craft Silicon’s Elma platform that allows users to instantly transfer money from an account in bank A to an account in bank B at a cheaper cost.
With this, Budhabhatti says, the 600,000 customers on Centenary bank’s Centemobile and the 60,000 on Finance Trust bank’s Trust Mobile will not have to make long queues or fill in several documents to make transactions between the respective institutions.
Currently, the quicker ways of transferring money from one bank to another is through the use of Electronic Funds Transfer (EFT) and Real Time Gross Settlement (RTGS) which cost about Shs 20,000 (outbound) and take at least two days to materialize. Cheques take at least four days to clear.
According to Dennis Kakeeto, the executive director at Finance Trust bank, for the real-time interbank transfers, the bank’s customers will be charged a minimum of Shs 1,000 and a maximum of Shs 2,000, depending on the amounts being transferred.
For now, Kakeeto said, FTB customers will be in a position to transfer a minimum of Shs 500,000 per day and a maximum of Shs 1m per day. On the other hand, Centenary bank managing director Fabian Kasi said their customers will be able to transfer up to Shs 5m per day.
“Today we celebrate our customers. We take advantage of technology but, most importantly, we celebrate partnerships,” Kasi said, noting that they will soon sit with other banks to attract them on board. At least three more banks; Housing Finance, Tropical and Pride have expressed interest.
Meanwhile, Benedict Ssekabira, the Bank of Uganda director for commercial banking, warned that while the regulator fully supports such innovations, implementers must establish risk-management processes.
“Increased operational risk must be managed to ensure safety of customers’ money,” Ssekabira said.
He noted that a payments systems policy is being debated and a bill will be tabled before cabinet next week and “we will soon have a payments systems law.”
Ssekabira, however, encouraged more banks to “hook up” to these innovations, noting that in their 2017-2022 strategic plan, BOU intends to cut down on the usage of paper (cheques and banknotes) and shift to e-payments.
“We want to see e-payments go down to the retail/merchant markets where you can walk into a barber shop and pay for the service using your phone,” he said.
According to the World Bank, in sub-Saharan Africa, mobile technology has the potential to vastly expand financial inclusion. By 2015, some 12 per cent of adults in the region had a mobile money account compared to just two per cent globally.
Kenya led with mobile money account ownership at 58 per cent, while Tanzania and Uganda had rates of about 35 per cent. In Kenya, more than half of adults who pay utility bills use a mobile phone to do so. And in Tanzania, almost a quarter of those receiving payments for the sale of agricultural products do so into a mobile account.
With interbank transfers, it means less people will be seen in banking halls as they will easily transfer their money onto the mobile money accounts and make transactions using their phones.