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The duty of the customer in the digital banking era

The banking sector has seen several changes in the previous 10 years, mostly as a result of global technological improvements.

Customers now handle many of the customary tasks that banks once performed. Customers may now conduct business from the ease of their smartphones or laptops anywhere at any time thanks to digital banking systems like mobile and internet banking.

As a result, in every passing year, fewer transactions take place in the bank lobby or over the counter. In fact, banks like Standard Chartered have aggressively decreased the number of their branches around the nation while encouraging its clients to use digital and online banking alternatives.

Customers now have the authority to complete transactions from start to finish with the bank acting as a facilitator, but they also naturally bear the corresponding responsibility to exercise caution and diligence when completing these transactions and doing business with the bank. This responsibility has been recognized in the courts of Uganda.

Recently, the Commercial court in Translink Limited v Standard Chartered bank decided that “there is no duty or obligation on the bank to reverse or countermand a transaction after the money has been paid out”.

The rationale for this decision is that it would be unreasonable to place burdens on the banks to countermand a transaction after the payment has already been made. In this case, the CFO of Translink had initiated an online payment of $13,675 in favour of Nanjin Chaungwei Household Electron of Halifax Bank UK at around 3:08 pm and within 30 seconds, Standard Chartered had already processed the payment to Halifax Bank UK and even sent acknowledgement.

The Translink decision comes nearly a year after the Commercial court’s ruling in Aidah Atiku v Centenary Rural Development bank where it was decided in favor of Centenary bank stating that “On the flip side of digital banking duties, is the customers’ responsibility to always keep their banking information, user IDs, passwords and PIN numbers confidential”.

This dispute arose from electronic withdrawals of about Shs 55m from the account of the plaintiff using her CenteMobile platform. Justice Stephen Mubiru famously stated “Equity does not save people from the consequences of their own folly but will save them from being victimised by other people”.

The question then is how can a bank client ensure that utilizing online bank platforms will not have any unfavorable effects?

Because bank customers will be bound to the terms and conditions of the contract regardless of whether they read or understood the terms before signing, customers should be careful, right from the start of the account opening process, to ensure that they thoroughly read and understand the terms and conditions.

Of course, there are a few exceptions to this, including misrepresentation and undue influence, among others. This will generally enable the customer to be conversant with the minimum fees, interest rates applicable, maintenance fees and other products associated with the account such as email alerts and digital banking options among others.

Once the account has been activated, a customer should at all times protect their online credentials to reduce the risk of fraudulent activities.

Additionally, clients should always double-check the account numbers and other information of the recipient party in transactions to reduce the chance of doing business with the incorrect party. Customers should also take an ongoing interest in checking their bank statements to ensure that the numbers add up.

However, this does not absolve the banks of their responsibility to make sure that the systems created for their clients to conduct banking online are secure and undergo continuous inspection.

The users of the digital banking systems must also be continuously informed of changes and updates in the security measures used by the banks.


The author is a lawyer with Cristal Advocates

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