Rwanda’s banking industry has over the years been on the journey of embracing technology with many players adopting and integrating new banking systems in their day-to-day operations.

This is in line with Rwanda's quest to make the country's economy cashless. The National Bank of Rwanda's (NBR) move to explore the potential usage of Central Bank Digital Currency points to Rwanda’s banking commitment towards adopting emerging technologies.

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Diane Karusisi, CEO of Bank of Kigali, said that technology is at the center of the industry given its ability to not only reduce operational costs but also to improve access to services with convenience through mobile banking, internet banking, and other digital services.

She said that most banks are now moving beyond payment services and financial inclusion to streamlining digital saving products, access to credits, and trade financing, among others.

Bank of Kigali is one of those players. The lender has leveraged Artificial Intelligence (AI)technology to enable account opening remotely, whereby one can take a picture of themselves and it gets cross-checked with information at the National Identification Agency for confirmation.

"The solution is able to tell us that it is close to 99 percent the same person. This shows the power of technology to revolutionise the financial sector,” she said.

Karusisi is convinced that there is huge potential for AI to significantly reduce the cost of doing business, automating services, and scoring clients, all of which would improve access to finance.

According to the latest National Bank of Rwanda’s (NBR) financial stability report that compares 2023 to 2022, the number of funds transfers through mobile payments increased by 57 per cent to 603 million and increased by 49 per cent to Rwf13,001 billion.

Mobile banking registered a 115 per cent increase of transfers to Rwf5.03 trillion, whereas internet banking increased by 99 per cent to Rwf10.6 trillion in 2023.

The shift in usage towards mobile payments for goods and services saw card-based merchant payments decline both in volume and value at 45 per cent and 27 per cent, respectively.

Edward Gasore, Director of Banking Supervision at the National Bank of Rwanda, said there has been exponential growth in the banking sector from leveraging technology opportunities.

He indicated that over the past five years, savings channeled through mobile banking amount to Rwf7 billion and digital loans significantly increased to Rwf12.5 billion in 2023 from Rwf1.7 billion in 2018.

"The various opportunities that we have seen in the financial sector at large revolve around speed, and technology has created that in terms of payment services and digital transformation,” he noted.

Gasore said we are past days when people carried huge bundles of cash to banks and cheques to withdraw money, thanks to the fast adoption of technology in the banking industry.

"Today, millennials actually visit a dentist more than going to a bank branch,” he added, suggesting that people generally born between 1981 and 1996 might prefer online banking or mobile banking applications over visiting physical bank branches.

However, as bankers strive to enhance consumer satisfaction, Gasore noted that there are some threats associated with technology such as concerns about reliability and cybersecurity.

Harnessing innovation

The central bank has put in place regulations aimed at consumer protection while creating and supporting technology-based innovations.

Gasore noted that four cohorts have already been enrolled in the Regulatory Sandbox, an initiative that enables innovative financial services and products to be tested and deployed in a live regulated environment with real customers within a period of 12 months.

This has attracted innovators in different sectors such as payments, lending, and funding, and insurance, among others.

John Rwirahira, Head of Research and Information, Access to Finance Rwanda, suggeststhat embracing technology should go hand in hand with financial education.

His organization conducts FinScope studies that examines trends in financial services adoption. The soon-to-be launched study, he said, is expected to reveal more data about how financial technology can support adoption of banking technology.