By Chanel Smith, EMEA Editor (@PYMNTS_EMEA)
Banks in Rwanda are adopting new technologies to help differentiate themselves in a crowded market.
Traditional banks didn’t always have to worry about telecom companies. According to All Africa, this changed when telcoms began providing financial services such as popular mobile money transfers. Mobile money programs are impacting the market because a rising number of consumers are rushing to sign up for their services, especially those residing in rural areas. Banks can no longer afford to be complacent, and they need to develop new strategies to help curtail telecoms’ mobile money schemes. Some banks in Rwanda are already taking initiative and have introduced “mVisa,” which is a mobile banking solution banks hope will attract customers.
All Africa reported that the National Bank of Rwanda released study figures in March 2013 indicating over 1.7 million people in Rwanda had registered for mobile money services. This number jumped from the 639,000 subscribers that were reported at the end of 2012.
People in Rwanda told All Africa that they preferred mobile money services to banks because they offer more flexibility and convenience. Many consumers are underbanked because there are a limited number of bank branches in rural areas. Telecoms created a service that satisfied the unmet needs of these consumers, thus mobile money has become widely popular. Moreover, respondents told All Africa they enjoy the around-the-clock service they get from telecom programs.
“The mobile money service is helping to expedite operations as people can now pay for services using their phones,” John Rwangombwa, the central bank governor said in an interview with Business Times.
Telecom firms such as Tigo and MTN are constantly expanding mobile money features for customers, and their aggressive stance in the market has banks worried. A Rwandan bank, Kigali, took action and became the first bank in the country to launch mVisa, which aims to help bank customers to conduct financial transactions with their mobile phone.
“The Bank of Kigali mVISA is a digital wallet that allows one to deposit or withdraw cash, send money, top-up airtime, pay bills, buy items and check account balance at no cost,” said Lawson Naibo, the bank’s CEO.
Kigali told All Africa that his bank knew consumers were choosing mobile money services at a rapid race, and acknowledged they needed to start introducing more innovative alternatives to stay competitive.
While it is increasingly important for the banking industry to introduce innovation and value for customers, it should also be noted that developing partnerships would help improve mobile solutions. Regardless of the strategies introduced, it remains clear that mobile is the future of Rwanda, as it is in several countries in Africa and other developing nations.