Local banks are increasingly embracing financial technology tools as part of efforts to enhance efficiency, reduce operation costs and ease access to services particularly in the rural areas. The shift is also mainly driven by government’s push for tools to support a cashless economy and the need to increase financial inclusion.

For financial sector players like Rwanda National Investment Trust (RNIT), the managers of Iterambere Fund, electronic payment systems can help them attract more investors.

Andre Gashugi, the RNIT chief executive officer, says: "Adopting digital payment systems is a strategic move to attract more Rwandans to save and invest through Iterambere Fund to improve their income and standards of living.”

Currently, people who want to save or invest with the Fund deposit money in banks partnering with RNIT, which Gashugi says is not ‘attractive’ to some investors.

"With e-payment, we expect to bring on board as many potential investors in Fund will be able to buy and pay for units (shares) in the Fund on their phones using the mobile money transfer service. We are hopeful the initiative will enable more Rwandans to save and invest besides helping to grow the sector,” he says.

The country also promotes use of technology to ensure sustainable and green development under the Smart Rwanda Initiative.

Fintech is especially crucial to tap the potential of the rural savers and people not served by commercial banks.

Gashugi adds that digital payment platforms also remove the risks involved in moving with cash. Those people that don’t have time to queue in banking halls can be enabled to save or invest using the platform on their mobile phones.

Currently, Rwandans pay for government services like getting a passport or national ID online through the Irembo platform, while taxpayers also file their returns for the tax body online.

These e-facilities have eased access to services and reduced inconveniences characterised by the previous methods.

According to Gashugi, the RNIT e-payment system would be fully operational by the end of the second quarter of next year.

The official, however, says the high fees charged by telecom firms could be affecting uptake of fintech tools like digital payments by financial sector and other business entities as well as individuals.

RNIT is still negotiating with local telecom firms to see how they can reduce transactional charges and make the service more affordable for users. "We believe this will attract more investors and also enable to monitor their investment easily on the mobile devices,” he says.

What digital payment systems experts say

Erick Joseph, the owner of Family Wallet, a digital application that helps informal workers like taxi moto operators to save, says that digital payments help to cut out the economy of cash since it is hard to manage cash because it is tempting and can easily be spent without planning.

"Through digital payments for taxi moto riders generate a report about how much they earn.

"This, therefore, enables them to easily monitor their savings and plan accordingly,” Joseph points out.

He adds that it is easy for one to track their transactions if you are using digital payments since the transactions are recorded.

Joseph says that digital payments reduce cash in circulation and also help users to monitor expenditure and income.

According to Innocent Ntwali, the senior manager in charge of personal banking and channels at KCB Bank Rwanda, digital payment systems like the mobile money transfer service enable both the users and financial institutions to cut transaction costs. He says facilities like Push&Pull enable customers to easily deposit or withdraw money from the bank accounts in the convenience of their homes or offices using their mobile phones.

Ntwali adds that e-payment systems save time and costs besides eliminating risks involved in moving with paper money.

The official adds that financial technology tools like digital payment systems are secure and easily accessible especially in times of emergencies such sickness or when one is travelling.

Challenges

However he says that people still lack education about digital payments because they still go to the bank to pay for electricity, loans, DStv, StarTimes and cash power bills which is time consuming.

Ntwali also emphasises that the financial services are also not so many, he believes that when they increase digital payments will be more valuable to the economy.

Joseph says that importing cash is expensive and monitoring how you use it is tricky since you can spend it anyhow without even knowing unlike the digital payments that show all the statistics of how much you have spent.

For Ntwali, digital payment users must have budget discipline to control their expenses and invest.