Banking Rwanda’s unbanked; first, bank their minds

On Friday, the city’s top bankers left office earlier than usual between 5 and 6pm and scurried off to the Kigali Convention Centre for their annual gala which gathers industry players to reflect on the year’s challenges and to celebrate victories. It’s always a colourful affair. This year’s gala theme was unsurprising…‘Banking the unbanked.’ They better. The dress code broke with the banking style stereotype of three-piece suits in dark colours. They went African. Perhaps unknown to the gala’s creative producers, they sent out a subtle message, juxtaposing the theme and the African dress-code. Bankers want to bank more Africans, sell them financial products and trust them with their savings. But they face an uphill task. In rural areas, where only a handful of banks have a presence, most people there are still saving under mattresses or wooden boxes while in cities, which have the highest concentration of banking services, they face a major challenge in technological disruptions. Today, less than 30 percent of Rwanda’s adult population is formally banked; so there’s plenty of fish for bankers to catch if only they cast their nets deeper and more creatively. Instead of competing for clients that are already with other banks, they should be going out there to court virgin potential customers. They should be thinking of ways to tap into the fast growing mobile banking option; getting used to thinking that disruptive technology is not a threat but an opportunity. Six months ago, in a Nyamirambo saloon, I talked to a girl in her late teens. She works as one of those girls that wash your head after shaving. In the conversation that ensued, I learnt that Sheila had quit school for lack of inspiration; her elder sister’s failure to find a job in spite of being a university graduate. The irony, while graduates fail to find jobs, it is easier for dropouts like Sheila; blame it on high expectations; anyway, Sheila was on a mission to save Rwf200,000 to start her own small business. From her daily allowance of Rwf1000 in seven days, she saves Rwf3000 of it; from her Rwf35000 salary, she saves Rwf20,000. That is Rwf23000 saved, monthly. Within twelve months, she would have Rwf276, 000, well over her target. “So where do you save?” I asked. The answer was unexpected. “I bought a simcard, registered it on mobile money and I keep it somewhere safe at home. I save my money on it,” she told me. “Wow. Why don’t you just open a savings account in a bank?” I probed. She told me, “Banks are too expensive, besides, they are for educated people. But the paperwork is also too much…” For banks to convince people like Sheila to save her dear savings on a bank account, they must first bank her mind. Bankers are misunderstood by most of their customers, even those that already have a relationship. There is suspicion and mistrust that must be cleared. With her discipline, Sheila could earn a handsome interest on her savings, but it would take bankers to get off their high horses, go down to Sheila and have her banked; there are many Sheilas in the countryside. But to bank Rwanda’s unbanked; first, they must bank their minds. This year, we saw a number of banking scandals, internationally and regionally. The crookedness at Wells Fargo, the lack of transparency at Chase Bank and the lackadaisicalness at Uganda’s Crane Bank all hurt the credibility of banking as a practice. This dwindling credibility resulting from gross industry mal professionalism only pushes would-be customers to seek alternative financial services. Banking is founded on absolute trust. As economist, Umair Haque, once observed; “Banks need people a lot more than people need banks”. That is unlike garbage collectors. Before formal banking, there was some sort of informal banking. If banks decided to close, there would still be some form of banking ongoing. Here is an anecdote adapted from Rutger Bregman’s Utopia for Realists: On May 4, 1970 Ireland’s bank employees decided to go on strike over poor salaries. The strike lasted six months. How did the people manage, without banks? Well, the Irish started issuing their own cash and writing cheques. The Irish pubs (bars) – stepped in to fill the banks’ void. This thrived on the Irish culture of stopping for a pint at their local pub at least three times a week, –the bartender had a pretty good idea who could be trusted. People forged a radically decentralized monetary system based on the country’s 11,000 pubs with its key nodes and basic trust as its underlying mechanism. By the time the banks finally reopened in November, the Irish had printed an incredible £5 billion in homemade currency. Cheques were scribbled on the backs of cigar boxes, or even on toilet paper. According to historians, the reason the Irish were able to manage so well without banks was all down to social cohesion; this is a resource quite in plenty, here in Rwanda. However, “that people began do-it-yourself banking clearly indicates that they couldn’t do without some form of financial sector.” Now that should be the bankers’ source of hope.

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Banking Rwanda’s unbanked; first, bank their minds