Over the past couple of years, a lot of Rwandan banks have had to alter the way they do business so they can keep up with the pressures from mobile operators and the ever-changing demands of their customers.
The advent of Covid-19 has led to governments in many countries enforcing lockdowns which have made it even more difficult to access cash. However, as things have taken a different turn, Rwandan banks now need to move faster towards aligning with the rest of the world is going cashless, but are they ready?
Indeed, as a safety strategy resulting from the fears of catching the virus by touching infected surfaces, most local banks in Rwanda have been making intensive efforts targeted at encouraging their customers to go cashless. Is this the end of cash as we know it?
Who Won’t Be Carried Along?
Right now, Rwanda’s younger generation, the affluent, and tech-savvy are leading the uptake of cashless systems. Also, a lot of service providers are increasingly encouraging their customers to use digital channels more often.
Some banks have invested resources in customer education. Sensitising the customer on how to use banking technologies securely. However, a lot still needs to be done to help small business owners who still prefer to accept payments in cash because they find the new payment terminals convoluted, unreliable, and a costlier way of doing business in low-profit margin areas.
Most customers prefer the ‘cash on delivery’ option as they get to pay only after receiving a product or service but the seller bears the risk in these types of transactions and would be better served by electronic payment options.
In general, businesses selling products or services at a fairly low cost, such as motorcyclists, mini-markets, fast food vendors, cabs, and a lot of others are more likely to reap the benefits of installing POS (Point of Sale) terminals that allow cashless payments which have been discovered to be suitable for most customers and the elderly.
Ultimately, there are fears that removing cash from circulation is bound to negatively affect numerous groups in the society especially customers with learning disabilities, the less well-off who keep tabs of their spending by using a cash budget, customers who can’t make purchases on their own, and those who live in remote areas where the internet is less reliable.
Banks Now Know Why E-Payments Is the Way to Go
The current banking infrastructure was built to handle a high cash society but is no longer viable to cater to a cashless one. The irony.
With cashless systems, banks no longer need to store and distribute cash. This lessens the need for ATMs and physical branches. That saves money. Also, transactions can be carried out faster and at a reduced cost too, with fewer employees to handle them and fewer mistakes. That again saves money.
Can We Completely Move Away From Cash With The Current Banking Technology?
There have been noteworthy technology failures in several banks over the last couple of years which the affected customers won’t forget in a hurry. So, there is a bit of scepticism about whether the existing banking infrastructure is robust enough to drive a cashless banking system, especially when the technology fails. From the look of things, not every customer is ready for the transition to cashless systems.
Ideally, a cashless society does not give room for errors. Banks have to ensure that their systems are resilient enough to handle new technologies and upgrades as well as secure their channels against fraudsters.
Priming for Digital Banking
Mobile operators have an extensive network of resellers which they have managed to increase significantly over a couple of years. A sign of success. However, it’s been a different story with the traditional banks. Their efforts have largely been unsuccessful, with studies revealing extremely high rates of failure – close to 84% – of their digitalisation projects.
The reasons for these failures are many-fold, ranging from intricacies of their current IT systems and infrastructure to a lack of expertise to run digitalisation projects, as well as bank workers slowing down the progress of digitalisation drives due to the fear that they may lose their jobs if the industry goes fully digital.
The only way some banks have managed to record successes is by partnering with FinTech companies that are more adept and technically skilled than they are. The result is a blend of brand name, experience, trust, and reputation of the bank with the skills and technical know-how of the FinTech company.
There’s Still A Lot to Be Done
Even though the requisite infrastructure for cashless systems is now ready, banks need to make sure their systems are secure and robust enough to handle the extra volumes of digital payments that will be coming their way.
For each bank, there has to be a concerted effort to train and educate people in the society who are reliant on cash so that they can be carried along. This is necessary because there is now a plethora of viable options to traditional card payments as an alternative to cash payments. These are digital wallets, open banking, payments made within apps, internet banking, and mobile banking.
Financial services providers should assess their physical locations to make sure that branches that have been kept open still have an effective way of contributing to their host communities. Also bank staffs need to lay less emphasis on processing and focus more on human interactions that are most important to a banking relationship.
The Heads of Digital & Technology along with the Customer Experience Officers of banks should be charged with channelling the focus of the banks in the right direction. Definitely, open banking together with instant payments has strong benefits over card transactions. Merchants who decide to opt-in to this service will without a doubt feel these benefits. However, Technology & Digital officers in banks need to be aware that in a situation where there is no Plan B, Plan A is all they’ve got, and they need to make it work.
