The race to bring on board the unbanked population is gathering pace among commercial banks after realising that low income earners have potential to grow revenues and customer base.
Almost all the 23 banks in Uganda are investing heavily in expanding their branch networks to reach out to people especially those in rural areas who had previously been ignored, in a bid to bring the unbanked in those areas on board.
All these branch expansions, however, have mainly been on the mainland, leaving out the population living on Islands. However, in a bid to cater for the financial needs of the underserved people on Islands, Post Bank is in advanced stages of extending its services to Koome Island to enable fishermen from the surrounding communities to access financial services.
Almost 95 per cent of about 2,700 people living on Koome Island keep their money under mattresses since the nearest bank branch is in Entebbe, 21 kilometers away, making it inaccessible to many.
Mr Christopher Kigenyi, Post Bank executive director told Daily Monitor in an interview that competition in the corporate customer segment has forced banks to consider bringing on board small businesses to boost revenues. “It’s better to have many small businesses and get more revenue than getting corporates who tend to negotiate on price,” he said at Koome Island on Tuesday.
Out of a population of 32 million, only about three million Ugandans have bank accounts, meaning that banks have a huge potential to tap by innovating products that suit Uganda’s rural poor. Post bank has 31 branches across the country but Mr Kigenyi said that the bank’s strategy is to have a Post bank unit in all the 112 districts in Uganda.
Although mobile money has been widely adopted by most people even in the remote village on the mainland, people on this Island despite having mobile phones, have never used the mobile money platform to save, send or receive money. Mr Kigeny, however, said low banking levels due to financial illiteracy and high operational costs are still an obstacle to the industry.