Innovative Financial Services

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FSD Uganda supports Financial Services Providers, Mobile Network Operators, FinTechs, non-bank financial institutions and others who aim to address the key barriers to financial services penetration– cost, access and knowledge – through technology.

We do this by providing research, technical support, sharing risks of implementing innovative financial solutions, through matching grants and provision of risk capital to encourage institutions to test new products and services.

FSD Uganda is working to explore how the industry can leverage technology to provide a broad range of relevant and affordable financial solutions for the unbanked. FSD Uganda is focusing on the following areas:

  • Linkage Banking: Village Savings and Loan Associations (VSLAs) are a very popular means by which people come together to save and lend to each other, informally. It’s estimated that there’s over 100,000 Savings groups in Uganda with an average number of about 25 group members with close to 70% of the members being women. Despite being guided by methodologies from NGOs like CARE, PLAN, CRS and Aga Khan Foundation, a lot of these groups still experience a fair amount of insecurity by having their savings in a large metal box that can be stolen.
  • Micro – Insurance: According to FinScope 2013, only 2% of the adult population reported using formal insurance products, compared to 43% who use informal means as a risk management strategy. While informal means of insurance such as borrowing from friends, seeking for donations in events such as car washes or sale of assets, offer some protection, it’s hardly sufficient. More so for low income people whose livelihood and health is more vulnerable to shocks that prevent them from climbing the financial ladder.
  • Innovative products & services: Innovation in finance can be measured both in the development of entirely new products and services geared towards serving the financially excluded and the adoption of new methods of service delivery to bring previously inaccessible services to the poor. However, to provide services that will reach the average Ugandan, most financial institutions will need to broaden their current offerings and this requires both technical expertise and the right information and research on the low-income segment of the population. These are not easily sourced in the current market systems.
  • Agency Banking: In January 2016, the Ugandan parliament passed an amendment to the Financial Institutions Act of 2004. This act[1] allowed banks to offer Agency Banking services in the country. Agency Banking is the provision of financial services to customers by a third party (agent) on behalf of a licensed deposit-taking financial institution and /or mobile money operator (who act as the Principal). In the Ugandan context, and based on the draft regulations circulated by the Bank of Uganda, the ‘agent’ is defined as “an entity contracted by a financial institution to provide financial institution business on behalf of the financial institution in accordance with the Financial Institutions Act (2004)” and the soon to be released Agency Banking regulations.
  • Open APIs: As Uganda progresses along its journey of financial inclusion, growth has gone from 47% in 2013 to 55% in 2016. There has also been an improvement in the provision of several basic public and private infrastructural services that are essential for the efficient and effective provision of financial services. Examples are the registration and issuance of biometric national identification cards, increased mobile phone ownership, internet coverage, with the advent of digital technologies, opportunities have arisen enabling the creation of additional value through linkages between different digital systems to create innovative services.
  • Financial Inclusion for Refugees: The outcome of civil wars, natural disasters and disease outbreaks in Africa has seen a steady rise in the number of forcibly displaced persons (FDPs, or refugees) on the continent. Uganda is currently hosting over 1.2 million refugees 56% of these are women – and still taking in more refugees per day since late 2016 than many wealthy European countries did the entire year.
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