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Involve clients in product development, Kenya’s CBK governor warns

Tumusiime Mutebile and Mathias Katamba

Fintechs present regulatory challenges as some technology providers are not domiciled locally

Kampala, Uganda | ISAAC KHISA | Commercial banks should walk with clients in the development of different products to succeed, according to the Kenya’s Central Bank Governor, Patrick Njoroge.

“Banks that have succeeded or that are succeeding are those that have been close to their customers. The notion of competition in the sector is zero-sum game. How connected are you to the customer? Are your products working for them? Don’t think for them. Let them be part of the creation process” he said.

Njoroge, in his key note address to hundreds of attendees during the Annual Bankers Conference held in Kampala virtually on July.27, said banks should strengthen their ties with their customers through involving them in the creation process of the different products to get the right services.

He said banks should also avoid unveiling rushed products to the market to avoid any incidences of compromising services to the customers or be rejected.

“We must all do the right thing to not only survive but also thrive in this new revolution” he said. Njoroge also reiterated that banks need to address the common challenges collectively to maximise opportunities especially in this era of digital technologies.

This comes as commercial banks and other financial institutions are engaged in various digital innovations to not only serve their customers better but also reduce their operational costs and boost profitability.

Prof Emmanuel Tumusiime Mutebile, meanwhile, said though new technologies have provided immense opportunities for the financial sector including reduction in operational costs, increasing financial inclusion as well as enabling customers to transact and interact in a flexible, seamless and in a real-time manner, there are also challenges that the financial industry has to contend with.

He said digital transformation may polarize the market by excluding those segments with low levels of digital and financial literacy.

He also said the growing use of technology to capture, store and analyze data, consistent with the fourth industrial revolution increases the risk of data misuse and privacy violations.

“In addition, an increasing reliance on technology solutions and third party service providers increases operational risks, including cyber-security and Money Laundering risks,” he said.

He said the pace and dynamism of fintechs also presents regulatory challenges as some of the providers for these technologies are not domiciled in the domestic jurisdiction.

Patrick Njoroge

Possible remedies

Nevertheless, Mutebile said a number of initiatives are being implemented to provide an enabling and regulatory environment for digital transformation, including fintechs. He cites the recently enacted National Payments Act and implementing Regulations which provides a regulatory environment for payments services.

“The government set up the National Taskforce on the fourth industrial revolution, which has formulated a draft strategy on policy interventions on fourth industrial revolution, which if adopted will guide the implementation of various fourth industrial revolution related technologies,” Mutebile said.

Mathias Katamba, the chairperson, Uganda Bankers Association said the 4th Industrial Revolution has been disruptive in nature but  it has contributed in driving the financial services to a high speed of mobile and internet.

The Annual Bankers conference is organized by the Uganda Bankers Association, bringing together practitioners, and regulators, industry experts from national, regional and international spheres delivering financial and banking services.

This year’s conference was held under the theme: Bend but don’t break: How the financial sector can thrive in the era of the 4th Industrial revolution.

The conference highlighted among others; emerging trend/developments and future outlook in the payments space, confronting fraud & cyber security risks, redefining financial inclusion & deepening access to financial services, and harnessing opportunities from the unprecedented processing power & storage capacity in the fourth industrial revolution.

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