Banks will adopt Blockchain technology where necessary to lower operational costs and risks, Mr Patrick Mweheire, the chairman of Uganda Bankers’ Association (UBA) and Stanbic Bank managing director, has said.
Speaking in an interview over the weekend, Mr Mweheire told Daily Monitor that besides the risks associated with blockchain technology, there are certain aspects which are ideal for the banking sector.
“Aspects such as data processing, settlements and payments [are good] and anything that reduces costs and risks is good for us,” he said.
Mr Mweheire’s comments come at a time after Uganda hosted a conference last week, which discussed how Africa can leverage on blockchain technology to improve its payment systems and data collection.
Mr Kweme Rugunda, the chairman of the Uganda Blockchain Association, last week told Daily Monitor that apart from payment systems, blockchain technology could be used in documenting drug supplies, collecting taxes and land registration, among others.
However, Mr Emmanuel Tumusiime Mutebile, the Bank of Uganda governor, last week warned Ugandans against cryptocurrencies, saying the Central Bank had no technology to regulate the sector that has a high risk exposure.
Mr Mweheire said blockchain technology could be important in inter-bank settlements that currently take two to three days.
Blockchain technology, according to Mr Kwame, allows real time payment settlement and offers a high level of security that has back-to-back records documentation.
A number of operational costs feed into bank accounts, which Mr Mweheire said could be eliminated by blockchain technology.
“We [banks] face high operational cost of up to 70 per cent. Therefore, if there is a way we can eliminate them, why not?” he said, indicating that the banking sector was ready to adopt some areas of blockchain technology.
According to the 2017 financial results Stanbic spent close to Shs400b on operational costs, which among them including employee costs, premises costs, franchise fees and IT expenses among others.
Mr Mweheire said they use Shs40b on ICT, which could reduce through the use of blockchain technology.
While closing the Africa Blockchain conference in Kampala last week, Mr Frank Tumwebaze, the ICT minister said Uganda would adopt blockchain technology, adding that government would appoint a National Advisory Taskforce on Blockchain to steer the country into adapting the technology.