Ugandan banks need to out-innovate to stay competitive

Posted on August 23, 2014 12:07 am

There’s no doubt 2014 looks to be an eventful year for the financial services industry in Uganda according to latest statistics from Bank of Uganda, the industry regulator. In a business environment strongly tied to compliancy and regulatory changes, increased customer turnover, and the ever-present need for increased efficiency at lower cost, the most successful financial institutions in Uganda will be those that can navigate all these challenges and still deliver an innovative, multi-channel experience to customers. Crucial to this will be the use and adoption of technology to out-innovate competitors. To improve service levels, increase data visibility and create value, the financial service sector has to embrace technology trends sweeping the financial market and banking sector in Uganda and across the East African region. Mobility remains Uganda’s biggest disruptor for the financial services industry especially the banks.

A survey of bank CEOs in Uganda earlier this year by an American research company revealed that consumers in the banking sector will continue to limit their face to face traditional interactions in favour of purpose built applications that provide immediate and focused value. In addition to that, liquidity asset liability management,credit analytics, information and cyber security, and enterprise risk dashboards and reporting are some other specific areas that are expected to do well. Another study by a European think tank foresees that financial organisations in Uganda will most likely move from ad hoc infrastructure projects towards managed services in the next three years as cloud initiatives mature, allowing them to leverage on cost effectiveness and the scalability paradigm of the cloud. As a result of such trends, there are huge opportunities for banks to innovate on their core banking projects, in particular channels, risk and compliance, and integrated data management.

Embracing transitioning to a real time processing platform, Ugandan banks could realise tremendous gains in scalability, increased performance of mission critical systems, and long term cost savings. There is no doubt that data management and analytics capabilities are the areas of focus for banks looking at core banking system improvements as they seek not only to upgrade core transactional engines but also to improve the way they engage with their customers Such core transformation projects could create opportunities for banks to out innovate their peers.  Me thinks that IT spending in Ugandan financial services sector is likely to grow at a very healthy pace, especially in developing regions.  These are plenty of strong motivators for the financial sector to continue pushing for core transformation projects in the next two years. The question that remains is whether they are equipped with the knowledge and choice to ensure that they will continue to innovate fast enough to address these market opportunities.

Contador Harrison