As the Bank of Uganda finalizes regulations to support agency banking, financial institutions have agreed to form a centralized platform that will enable them to share agents across the country in order to reduce administrative costs.
The platform, according to the Uganda Bankers' Association (UBA) chairman, Fabian Kasi, will also help banks in spreading the risks associated with cybercrime and fraud, after the product is fully rolled out in three months' time.
"Under this arrangement, we shall have all agents under one central registry, which banks will access in order to appoint their own agents. The agents will also be displayed on our different digital platforms," Kasi said.
This was on the sidelines of the World Savings and Retail Banking Institute (WSBI) conference at the Kampala Serena hotel on Thursday, which was discussing effective leadership in a digitally changing banking sector.
The platform, Kasi said will also make regulation of the agents easier, and ensure that customers have multiple choices, since all agents will be easily accessible from the same focal point.
"We must agree that anything new comes with risks and have also witnessed that many banks have been hit with cybercrime and fraud, so there is a lot that has to be done to ensure that we increase financial security," he said.
Agency banking is a model that allows banks to use agents with a nationwide presence, from various parts of the country, to offer banking services on their behalf.
In January 2016, government passed the Agency banking law, although the product is still waiting for supporting regulation from finance and the central bank in order to take root.
Kasi said banks are keen on riding on digital platforms to increase the number of banked people, who currently stand slightly above six million, and must collectively ensure safety and efficiency.
"When the association of banks invest in a shared platform, it means the individual banks will incur a small costs compared to a situation when that bank has to invest alone. Because of economies of scale, costs to individual banks will be less, which is good in order to reduce costs of operation. We also acknowledge that evolving technology has both positives and pitfalls, and are trying to ensure that we take full advantage of improving technology while at the same time safeguarding ourselves against the pitfalls," Kasi said.
According to the Managing Director of Finance Trust Bank, Annet Nakawunde the increasing integration of the financial sector into global financial markets have ushered in new risks in the banking industry and require adjustments in regulatory framework.
"If left unchecked, fraud and cybercrime can damage the reputation and integrity of our financial system, and thereby discourage honest business transactions. Reputation is one of the most valued assets in the financial markets, and the economy at large," he said.
She said banks need to break away from systems of working as individuals and work as partners in order to benefit from economies of scale.