More and more financial institutions are increasingly turning to information and communication technologies (ICTs) to facilitate their operations as well as deliver new products to customers.

The trend is also aimed at increasing access to services and further deepening financial inclusion, according to sector analysts. On this front, Rwandans could soon be able to apply and receive startup capital and other types of soft loans on their mobile phones, thanks to KCB Bank Rwanda’s new mobile banking platform, which will also allow non-KCB customers to open bank accounts, apply and receive loans directly on their mobile phones.

According to Maurice Toroitich, the managing director, the banking solution is currently under the pilot phase. "When the platform is finally rolled out, customers will be able to apply for loans on their mobile phones, which will then be processed and disbursed instantly,” he told The New Times last week in an interview. He added that the bank is working with the three local telecom firms on the project.

Already, Airtel Money subscribers can borrow up to Rwf50,000 on their phones. The micro-loan facility introduced in 2015 in partnership with Atlantis Microfinance does not require applicants to present collateral and the loan attracts 10 per cent interest, below the market rate of 17 per cent on average.

In Kenya, Safaricom operates a similar loan scheme where its customers can borrow soft loans directly on their mobile phones.

In addition, bank customers can now move money from their mobile phone wallets to the bank accounts and vice versa through the mobile money platform or transfer money from their bank accounts to their mobile money wallets. However, this will be the first time for a bank to give out micro-loans through mobile phones.

Toroitich said the bank’s facility will allow customers to deposit as little as Rwf100 on their accounts, and apply and receive loans of between Rwf500 and Rwf1 million.

"There are flexible repayment period and interest rates and the loan is repayable within six months,” he said of the service that goes live next month.

He was optimistic that the initiative will create new opportunities for small-scale retailers, increase access to credit and lower the cost of transactions.

Our customers will be able to get loans using their mobile phones. Mobile banking offers many advantages, such as good security, easy access and plentiful applications for smart phones.

Albert Akimanzi, the banks head of marketing and corporate communication, said when implemented, the lender will move basic banking services to the mobile space.

He added that the global trend today is for financial sector players to embrace mobile services to ease access and deepen financial inclusion. Anyone can now register for an account and start transacting instantly.

What experts say

James Intwari, a financial analyst, believes the initiative gives customers more control of their money. He added that the speed and efficiency of mobile lending eases business operations as it removes paperwork and other procedures.

Patrick Ndagijimana, a Kigali businessman, said the initiative ease access to much-needed funding by small traders.

He added that it will make the banking industry more competitive besides boosting transparency and efficiency.