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PostBank embarks on digital transformation journey

Peace Regis Mutuuzo, the State Minister for Gender and Culture (R) makes a payment to a qualifying senior citizen during the launch of the Social Assistance Grants for Empowerment (SAGE) at Mukura Sub County, Ngora District. COURTESY PHOTO.

But the lender faces an uphill task of looping its customers onto it

Kampala, Uganda | JULIUS BUSINGE | Tier II lender, PostBank Uganda, is embarking on a digital transformation journey aimed at decongesting customers in the banking halls, cutting down operational costs and driving profits upwards.

This follows the conclusion of a management shake-up spearheaded by the new Managing Director, Julius Kakeeto, in which most of the lender’s key positions got merged or scrapped.

Kakeeto, who replaced Steven Mukweli in November last year on alleged corruption related charges, said on Oct.13 that the lender has unveiled its first ever digital campaign dubbed Digital Banking, Beyi Powa, in an effort to increase the number of customers transacting with its digital platforms.

He said coronavirus pandemic has changed the mode of operation for businesses across the world with social distancing being a core precaution to prevent the spread of the virus.

“The purpose of the campaign is therefore to increase awareness about the bank’s alternative banking channels – PostApp, PostMobile, PostAgent and UnionPay PostCard – their benefits and their contribution to the lender’s transformation journey,” Kakeeto said.

“Now with COVID-19, it is important that our customers subscribe to digital banking platforms for their safety and that of their loved ones.”

However, some sources familiar with the operations of the lender intimated to The Independent that PostBank Uganda has a lot of work to drive their customers online.

“Most of PostBank customers are low- end clients such as small scale farmers, soldiers who are not so much doing their business via electronic platforms,” one source said.

“In fact, most of the customers don’t trust electronic channels. They believe in seeing a particular teller giving them their money, and in the event that there’s a problem, they know how to proceed.”

This is in sharp contrast to customers banking with big banks such as Stanbic, Standard Chartered Bank, Absa where majority of their customers are already tech savvy.

Stanbic Bank’s latest data, for instance,  shows that 85% of all its  transactions are now executed digitally, with  branches having less than 15% of the work to do.

On the other hand, withdraws at CenteAgent locations witnessed an 18% growth in transactions and 15% growth in total value transacted when the lender waived charges in digital transactions. About 62% of the growth in number of transactions was for transactions between Shs5, 000 to Shs20, 000.

Kakeeto said the channels are very easy to transact with as they provide convenience and are accessible to customers 24/7.

Andrew Agaba, the chief business officer at the bank said the new campaign is premised on the results of a dipstick survey carried out about these channels early this year to establish the level of awareness about the bank’s digital channels.

He said the campaign which started on Oct.13 will run until the end of December, 2020, targeting to reach at least 1.2 million customers of the bank and over 5 million prospective customers countrywide.

This development comes at the time Uganda is witnessing an unprecedented rise in the adoption and the use of mobile phones and the internet services for financial services such as card payments and mobile wallets due to a number of factors including COVID-19.

Latest data from telecommunications regulator, Uganda Communications Commission indicates that the number of mobile phone users in Uganda stands at 26.8million and that 10.6 million were internet users.

The bank executives said they intend to ride on these numbers to boost the uptake of digital programmes and to increase the bankable population and grow revenues.

The bank employs a total of 700 staff according to available data (2020). Shareholders’ equity was reported at $20m (Shs74.2bn) at the end of 2018.

Profits

According to the Auditor General report for the year ended June 30, 2019, the bank reported a sharp drop in profit after tax of Shs3.4bn in FY2018/2019 compared to Shs6.2bn in FY2017/2018.

The report further indicates that in 2018, the bank’s loans and advances amounted to Shs265.7bn, and the impairment losses totaled to Shs7.13bn.

The bank serves its customers through 42 brick-and-mortar branches, 52 ATMs, 12 mobile bank vans and 98 banking agency locations.

Owned by the government, PostBank was started in 1998 to take over the operations of the former Post Office Savings Bank. It provides loans, savings products, e-banking services and money transfers to clients on low incomes.

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