Are digital banking efforts finally paying off?


Last year, Government stepped up efforts to deepen use of electronic payment platforms including mobile and digital banking.

While many were optimistic about this drive, some analysts remained skeptical arguing that there were many challenges stakeholders had to first address before going digital.

However, last week it emerged that digital banking is on a rise when John Rwangombwa the Governor National Bank of Rwanda (BNR) delivered his Financial Stability Committee and Monetary Policy Committee statement.

Rwangombwa announced that Card based payment system registered an upward growth trend in 2017 with point of sale (POS) increasing by 11.6 percent (from 1,885 in 2016 to 2,104 in 2017.

Equally the number of payment cards slightly increased by 22 percent from 750,126 to 916, 726 during the same period.

Indeed, the usage and volume of ATM transactions in the country increased by 15 percent from 8,200,589 to 9,408,701.

Also transactions through POS technology increased by 84 percent from 660,746 to 1,213,853.

In monetary value more than Rwf69 billion was transacted in 2017 up from Rwf41.5billion transacted the previous year.

This reflects an increase of more than 66 per cent and a testimony that efforts geared at deepening digital banking is finally paying off.

According to sector experts, the numbers are an assurance that the country is on the right track and will actually do much better if there is consistency in terms of sensitizing the public.

According to Rwangombwa, one of the areas growing really fast in the retail digital payments space is mobile money transactions.


For example, between December 2016 and December 2017, active mobile money holders increased by 13 percent from just 3.3million in 2016 to more 3.7 subscribers in 2017.

This surge led to an increase in the transactions of almost 22 percent, which propelled the sector to register a 33 percent boost in monetary value from Rwf1, 040 billion in 2016 to Rwf1,385 billion last year.

This is an indication that, mobile banking services have been growing at a good pace and will according experts like the GTBank managing director Veracruz Bayo, help deepen financial inclusion in addition to boosting bank deposits.

So far, the number of those registered on mobile banking platforms has increased by 18 percent to about 1,158,944.

And with more than 10 banks and one microfinance institution offering mobile banking services, Rwanda’s dream of becoming a cashless economy could soon be realized.

Going branchless

According to the Central bank, the number of physical branch networks for banks, MFIs and insurance companies declined in 2017, thanks to digital payment platforms.

Statistically, the number of bank branches reduced from 549 in 2016 to 546 in 2017.

Experts believe more branches are set for closure as the industry continues to embrace digital and mobile banking.

However, this trend in the governor’s view is attributed to the replacement of physical brick and mortar branches by digital services and in some cases, agency banking.

This echoes what the GT Bank boss told Business Times in an exclusive interview recently, “When a branch is not generating income, it doesn’t make economic sense to keep it running; however, it is important to understand that operating branches as a bank is a thing of the past and digital is the future of banking, Bayo said adding that embracing digital banking will boost savings and deepen financial inclusion in the long run.

Like Bayo, Alice Kilonzo-Zulu, the managing director of Ecobank Rwanda, said banks have no choice but to go ‘branchless’ with the growing digitisation of the sector.

She said the sector must leverage technology and “add value to products and above all become innovative enough to enhance efficiency.

According to central Bank, it is this perspective of boosting interbank market activities that are geared at enhancing monetary policy transmission mechanism, that BNR has established a financial markets operations committee to help improve daily liquidity management and guide the bank on money market intervention front.

The role of financial education

Meanwhile, despite the milestone, the central bank believes Rwanda still faces a challenge related to the prevalent use of cash as a payment mechanism for economic transactions.


“Thus, transforming Rwanda’s cash dominant economy to a cashless one continues to be a high priority but will require introducing more noncash electronic means of payment, thereby significantly reducing the share of cash usage in the economy.

Equally, experts believe more focus should go towards boosting awareness and communicating to the public about the existing infrastructure and different platforms available to help promote the usage of digital payments.

As Norman Munyampundu, the MTN Rwanda chief business officer noted, it is through these campaigns and embracing more innovations that Rwanda will achieve its cashless economy objective.

“Moving from cash-based to digital payments has many potential benefits, for both senders and receivers. It improves the efficiency of making payments by increasing the speed of payments and by lowering the cost of disbursing and receiving them.”

Many analysts look at these electronic payment systems as one mechanism that will help enhance the security of payments thus reducing the incidence of crime associated with carrying cash.

According to the World Bank, 350 million unbanked adults live in Sub-Saharan Africa and the ability for them to send, receive and transfer money via mobile devices has been revolutionary.

“Smartphone penetration throughout Rwanda and Africa is rising something stakeholders must leverage on to boost mobile and digital banking,” said Jane Umurerwa a Kigali based economist.

However, Interoperability remains another challenge that banks must battle and ensure all various mobile money providers’ services are interoperable to allow transactions flow seamlessly across all mobile money providers, she added.

According to Umurerwa, mobile banking apps have become a de facto part of the customer-bank relationship.