Rwanda : “Branchless” banking makes debut in Rwanda
Three of Rwanda’s biggest banks are taking their war for new clients to a new level – each planning to launch got to the remotest parts of the country using a new initiative called Agency banking.
As competition gets tougher but for the same clientele – who are mainly found in urban areas, the market has of late become saturated. The solution has been to find ways of reaching the rural parts, but without setting up the usual costly branches that require a whole new infrastructure.
The solution devised is the Agency banking, a form of branchless establishment. What happens is that the banks partner with different outlets such as neighbourhood shops, supermarkets and hardware stores — to offer such services as making deposits and withdrawals.
Kenya Commercial Bank (KCB Rwanda) was the first to get into the scheme. KCB Rwanda has launched the product ahead of its rivals with 75 pilot outlets across the country, and is targeting to increase this to 135 countrywide.
Equity Bank Rwanda, which is a new Kenyan entrant into the Rwandan market, is planning on partnering with 200 outlets. Equity is Kenya’s largest bank in terms of customer base.
The only local Rwandan brand that is in the final stages of launching the service is Bank of Kigali (BK), Rwanda’s biggest bank in terms of assets base. Officials at the lender hope to begin with several dozen outlets.
Meanwhile, the National Bank of Rwanda (NBR) has indicated that it would like to have many of the banks going into the service to bring into the banking sector the rural communities. The central bank announced recently that it was preparing to licence new operators.
Government data shows that just fewer than 20 percent of the population use the conventional banking system. Another small percentage use cooperatives and Savings and Credit Co-operative Societies (saccos) and micro-finance banks.
For its part, KCB is keeping ahead of its competitors. It already targeting to partner with many of these saccos spread out into the rural hills of the country.