Interview: How Fintech, Bank partnerships will deepen financial inclusion

Fintech Partnerships are key drivers for the increase in not just Africa’s financial inclusion rate, but a core component for a boost in Uganda’s end customer rates.

Before mobile money operators headlined by MTN put a start to a new generation powered by Mobile Money, Money transfer was not just informal but also risky in Uganda.

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In the presence of Banks, transferring money involved lining up in a queue and making sure the receiver account details are correct dot by dot or else the transaction would bounce. This has come to change and the continued growth of mobile money has not only changing lives, but also made money transfer easier.

In an Interview with Stephen Mutana – the General Manager MTN Mobile Financial Services, he shared his views on how mobile money penetration has expanded access to modern financial services to the rural and remotely unbanked (No access to banks) population.

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MTN Uganda General Manager Stephen Mutana
The MTN Uganda General Manager Financial Services Stephen Mutana

What is your take on Fintech as far as financial inclusion is concerned?

Financial technologies promise to increase efficiency in delivering financial services and promote financial inclusion. Currently, mobile penetration in the country is higher than banking, which provides telecoms with an edge for marketing financial products to their clients through greater reach.

The service has been a major driver of financial inclusion in the last decade. Mobile money currently allows the unbanked people to use their phones as a bank account, to deposit, withdraw, and transfer money with their handset. People can also use mobile systems to pay utility bills and pay for goods in merchant shops.

Will the integration of Fintech and banks solve Uganda’s current financial inclusion paradox?

MTN believes that the power of partnerships should never be underestimated. As the central bank finalizes the National Payment Systems Act regulations, we foresee more possibilities for partnerships between banks, Fintech, and Mobile Network Operators that will further drive financial inclusion.

We improve on partnerships focusing on leveraging on existing infrastructure such as distribution systems sides for cost-effective operations. Partnerships that aim to drive innovation by exposing prebuilt APIs. For instance, access to accounts, transaction history, know your customer, or metadata enhancements. 

How has MTN managed to develop a seamless Digital payment Solutions system?

As a leading telecom operator on the continent, MTN has taken a global view on developing platforms. We are focusing more on solutions that enable many players or stakeholders to come on board or simply plug into our system.

 MTN launched the Open API (Application Programming Interface) two years ago to enable digital payments and collections. An API is a computing interface that allows two applications to talk to one another. For instance, when you go shopping online and use mobile money to settle a payment, you are using an API.

We have over 100 partners on the API platform. Active MTN Mobile Money users have grown to over 7.4 million. MTN Mobile Money services have grown to include bill payments, group salary payments, and school fees payments.

As the biggest Fintech in the country, what does MTN think about the National Payment Systems Law?

The National Payments Systems Act, 2020 (Act), effectively became law when it was assented to by the President in July this year. The law regulates operators of payment systems, payments service providers, issuers of payment instruments and issuers of electronic money.

We think the law seems to be comprehensive enough to plug some of the regulatory loopholes that have been prevalent among players in the payments space.

As the novel COVID-19 continues to spread, the race is on for innovators to design products that will add another layer of safety to support how payments for goods and services are settled.

Therefore, clear regulation and legislation are key in defining a sustainable approach within which payment service providers and consumers interact, exchange data, and make payments.

Give us your thoughts about how this law might impact the smaller Fintech in the country

With regulations in place, smaller Fintech firms which have enabled value addition on our products and services will find it a lot easier to integrate into MTN API platforms.

There will also be deliberate support from MTN to Fintech partners that work in areas of national development plan priorities such as healthcare, agriculture, job creation, and education.

Although we welcome the move to regulate these smaller Fintech firms a tiered regulatory approach will spur the innovation space. Innovation and technology have always moved faster than regulations.

What is the way forward for the smaller companies as far as the law is concerned?

We encourage our regulators to have a light touch to a regulatory approach that can improve access to technologies but also spur innovations. Most importantly though, regulating the sector will drive confidence and trust in Fintech products and services.

Customers and suppliers, both local and foreign will have greater clarity on products and safeguard customer funds. As a leading player in the Fintech sector, we think this will allow us a greater scale.

What are your final remarks?

The transformative role of mobile financial services will depend largely on whether stakeholders private, government or international organizations invest in approaches to solve everyday problems.

Also, partnerships are key if we want to progress. Behind the success story of mobile money, MTN has had partnerships with a number of Fintech firms that have enabled the technological capabilities needed to make the financial services a success.

Editor’s note: Part of this story is from an official Interview Release Shared with the Tech Point Magazine team.

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