When Finance Trust made the turn of its life

It is a tale of an entrepreneurial passage that started off as a humble initiative to help women raise money they could invest in roadside and home businesses so as to feed and clothe their children, pay school fees and take care of their medical needs.
When it all started 1984, a group of about 15 women spent a dusky afternoon combing through their thoughts on how they can improve their lot by providing easy access to cheap financial services to low income people in the country.

And today, 26 years later, those thoughts have metamorphosed and materialised into Finance Trust, a microfinance institution whose mission is to provide unique financial services to low income people in Uganda, especially women.

Two and a half years ago, the company re-branded and changed its name to Uganda Finance Trust Ltd, a name that has evolved from just being identified with women as was the idea of its founders.

“We repositioned the company to create a much more confident and recognisable brand. Today our staff can stand out in the crowd to defend the brand through consistently delivering excellent service to the customer,” Managing Director Mathias Katamba says of the current look of the bank whose active membership [savers] is over 120,000 with a total deposit as of last year’s balance sheet in excess of Shs15 billion.

He says over three years ago, when the institution had just been allowed by Bank of Uganda to take deposits but within a microfinance operation model, they set out to achieve six things; improve their compliance and risk management, strengthen the customer value proposition, improve talent attraction, motivation and retention, gain the right positioning and corporate identity for the company, increase savings mobilisation and ultimately to grow the business in all aspects. Since then it hasn’t been a ride on a camel’s back.

To-date, the Ugandan financial industry still serves only a handful of people mainly because the industry itself is still in a novitiate. Hence mobilising savings by microfinance institutions for borrowers remains one of the most challenging aspects of the business hampered by lack of consumer education and a cultural dilemma of preferring the mattress for a bank. “It is one of the most challenging things to do. It has been costly to educate our customers about the benefits of savings, but a worthwhile process. We have a number of initiatives including a mobile van for public sensitisation about savings and its benefits,” says Katamba, a seasoned banker who comes across in close encounter as a frugal financier.

He once told a journalist that he has always defined himself as a curvature from an entrepreneurial mould and not an employee. “I have always seen myself as an owner of [a] business unit. I don’t work for the salary but for the results,” he said. Barely in his teens, he owned a recreational facility at Ggaba from which he made at least Shs100,000 a week. “I learnt a lot about what makes great businesses. I learnt about efficiency and productivity because suddenly, I had costs to manage. I learnt financial discipline,” Mr Katamba said.

And so, when three and a half years ago he became managing director at Finance Trust, he had his sights set on growing the business. Repositioning the business and developing a clear and saleable customer value proposition were key as was attracting, motivating, training and retaining good talent. Leveraging technology has come in handy in offering better services such as ATMs, more branches located at the heart of Small and Medium scale Enterprises have been established to increase convenience and access.

“We did this in recognition of the reality of rural – urban migration and the constraints faced by Ugandans who migrate into the city and do not find any opportunities. City migrants take advantage of micro credit facilities to support businesses – this group of people improve money movement into rural areas,” he says.

Among the array of personal financial products is one that is still in the pipeline named “Girls’ Choice” that will soon hit the marketplace to encourage girl children to save money. From its history, Finance Trust has from the onset been a women-oriented institution. Its current membership consists of 70 percent women underscoring the role of women in savings mobilisation and their entrepreneurial acumen.

During its formative years, Uganda Women Finance Trust – as it was known then, focused mainly on low income households and the small scale entrepreneurs, who were least likely to receive the attention of formal financial service providers.

He, however, believes that the current market changes and challenges mean that the institution cannot solely depend on women to achieve its goals. This means reaching out to any low income customer who wants to borrow for business or personal development or save for a better future.

“We have improved our identity not just for visibility but the customer experience. We monitor customer experience in our premises. By moving down to Katwe from Buganda Road, we came closer to our customers and are now more responsive to their needs.
“We see ourselves as an MDI that serves rural and urban micro- entrepreneurs but also the lower end of the middle income entrepreneurs and those in the formal sector venturing into entrepreneurship or acquiring assets for personal development and wealth creation”.

Last financial year, Finance Trust plotted an improved graph of financial performance. Its customer deposits hit the Shs14 billion mark up from just Shs6 billion in 2006. Its total assets rose to Shs37 billion, a 60 per cent increase from its value in 2006. In the same period, its lending has grown to Shs27 billion from Shs13 billion all this on the back of an improved recovery rate where the portfolio at risk is less than 3 percent effectively implying an over 97 percent rate of recovery.

Maintaining employees
But far from keeping its books in order and guarding against all sorts of risks, the company has had to be at its best to keep its best human resource.
“The last three years have been the most challenging in terms of managing talent. New banks have come into the country; there has been an expansion of the financial sector without a corresponding improvement in human resource capacity in the sector,” Mr Katamba says.

The increasing number of commercial banks and other entrants in the service industry such as telecommunications and insurance have tapped talent from the same limited sources. Most new banks recruit already trained staff by offering better pay forcing the market to react by improving their own compensation to staff to ensure competitiveness.

The journey that started in a founder’s living room going over the rough edges of a vision found finality in supporting the lives of hundreds of women and men by providing easy access to credit. However, for Katamba and his team, “growth is like a moving target”, one achievement always begets a new challenge calling for new solutions.

“It is a natural process because as a business grows it needs to look at what more it can do to improve its customer proposition. You need to aspire to become a one-stop financial solution to your customers and to do that you should be able to offer them an array of services – it is about what it takes to improve your customer satisfaction,” he says with satisfaction.