Firms partner to reduce bank processes in Uganda

Monday January 27 2020

The digital platform will help reduce the process and time it takes for loan approvals and to open a bank account in Uganda. PHOTO | FILE | NATION MEDIA GROUP


Three major players in Uganda’s banking industry — Uganda Bankers Association, Bank of Uganda (BoU) and Financial Sector Deepening Uganda (FSDU)  — have partnered on a digital identity verification platform to reduce the process and time it takes for loan approvals and to open a bank account.

Commercial banks will get access to the system, whose cost is yet to be given, through a BoU server linked to the National Identification Registration Authority (NIRA). It will give real-time verification of customer details through a system to be developed by Laboremus Uganda. The system is also expected to help weed out the use of fake national IDs and reduce fraud cases. Ugandan banks have suffered losses amounting to millions of shillings on account of forged details in loan applications.

According to the BoU, future integration of the digital identity verification platform with Credit Reference Bureaus and the database of the Deposit Protection Fund (DPF) will eliminate the use of financial cards — a mandatory requirement for local borrowers — and enable the use of National Identification Numbers for all bank customers.

Currently, loan applicants seeking credit facilities in commercial banks, licensed credit institutions and microfinance deposit taking institutions (MDIs) are required to apply for financial cards from credit reference bureaus before their applications are vetted by credit officers. There are currently two licensed credit reference bureau providers in the local market, Compuscan Ltd, and Metropol CRB Ltd — a Kenyan financial services firm.

On the downside, persistent inefficiencies experienced at NIRA could derail the success of the platform.

“The inefficiencies reported in NIRA will be side stepped by this new platform whose sole purpose is to confirm client identification details and not collect fresh user information,” said Tumubweinee Twinemanzi, BoU’s executive director for bank supervision.


There are currently 13 million bank accounts in Uganda and 11,000 banking agents countrywide, according to UBA data.