ServicesTechnology & Innovation

Brick-mortar vs digital banking: Centenary named payment service provider for senior citizens grants

By Daniel Otto

There is a major transformation happening in Uganda’s financial sector. Financial transactions are moving from paper money to digital money, while financial institutions are moving from brick and mortar to the virtual world. However, it remains true that there lingers lack of confidence and trust on purely digital systems, especially in the context that the country’s regulatory framework for digital transaction is still weak.

That seems to summarize the thinking and balance behind the recent selection of Centenary Bank as a payment service provider for the Senior Citizens Grant under the Social Assistance Grants for Empowerment (SAGE) of the Ministry of Gender, Labour & Social Development.

The Senior Citizens Grant is a social grant paid to older persons who are most times illiterate and infirm- conditions which call for innovative solutions to enable the social grant reach them. The payment service provider uses their channels to deliver the last mile of cash grants to older persons.

Announcing the selection of Centenary Bank, James Ebitu, the acting Permanent Secretary, Ministry of Gender, Labour & Social Development, said: “I congratulate Centenary Bank for coming out as the winner of this bid. The Ministry together with our development partners, UKaid/DFID and Irish Aid, selected Centenary Bank through an elaborate, transparent and rigorous competitive bidding procurement process in which various prospective service providers proposed different payment mechanisms.”

He said the evaluation team was particularly looking out for the feasibility and reliability of the proposed payment methods, bearing in mind the distance beneficiaries of the grant would have to travel to receive their payments.

“Focus is on accessibility, transparency, safety, efficiency and effectiveness of the payment mechanisms,” Ebitu said.

Centenary Bank managing director, Fabian Kasi revealed that his bank will use a hybrid of brick and mortar and digital banking solutions to offer the social service.

He said: “We are glad to be named a Payment Service Provider (PSP) for the Senior Citizens Grants. Being a bank for the people, we take pride in such partnerships that improve livelihoods of the vulnerable in our communities. Our Bank currently has over 4,000 Cente Agents and 74 Branches spread across the country that shall make the process smooth. We have a dedicated workforce that shall ensure commitment to standards of timeliness, convenience, anti-fraud & excellent customer service to the older persons.”

Cente Agents in Centenary Bank are private local companies, contracted by the bank that use point of sale machines to enable customers to conduct banking services (depositing and withdrawing) from their accounts with Centenary Bank. To this extent the bank will deploy some digital technology. However, according to Kasi, these transactions will be backstopped by actual brick and mortar branches.

African countries are known to be home to some 50 per cent of the world’s unbanked population. Because of this, the continent has been abuzz with development of fin-techs aimed at facilitating the often illiterate populations in some of the remotest locations to access financial services. For this reason mobile money has become a hit in financial transactions. The advent of Covid-19 has even made a more profound case for digital money.

However, it seems that because of the a weak regulatory framework and lack of complete trust and confidence on fin-techs, mainstream financial transactions will, for some time to come, rotate between hybrid solutions comprising brick- mortar and digital systems.

The Parliament of Uganda recently passed the National Payment Systems Bill 2019 that aims to provide for the safety and efficiency of payment systems; to provide for the functions of the central bank in regulating the sector, security, regulatory framework, among others.

Stephen Kasaija, head, Social Protection Programme Management Unit, said, “Centenary Bank comes on board at a time the Programme is implementing a national roll out and at a time the country is fighting the Covid-19 Pandemic. Their countrywide presence through bank agents and their robust payment channels will go a long way to support us achieve our goal to pay older persons timely, reliably and safely.”

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