Financial technology, also known as FinTech, is an economic industry composed of companies that use technology to make financial services more efficient. Almost all around the world, tasks once handled with paper money, bulky computers, and human interaction are now being completed entirely on digital interfaces.
In some economies like China, the FinTech space has been majorly dominated by bank card organizations closely working with banks. The ecosystem in Europe also seems to revolve majorly on banks and bank card organizations.
But Uganda’s FinTech ecosystem introduces a new dominate player. Ever since the introduction of mobile money services, mobile telecom service providers have come to the forefront and dominated the fin tech industry.
In Uganda and East Africa mobile service providers through their mobile money services have been more preferred to the banks. In spite the relatively high level of penetration of fin tech systems like ATM services, online banking and SMS banking, the model adopted by the telecoms in Uganda still remains by far more convenient.
Just like in developed countries were mobile phone hardware and software makers still remain at the end of the fin tech eco system, the Telecoms have a similar model but less relying on the software of the mobile devices. The mobile money services are loosely coupled on the phones hardware through a USSD platform which means they are very independent of the phones software.
The dominance of the mobile money services has seen both losers and winners. Banks are by far the worst losers in this model, since they have seen a decrease in number of users especially in rural areas.
The model has also a rise of new winners, especially tech startups that look to improve how we consume mobile money services. These (the startups) have found ways of integrating mobile money payments as a form of payment in their innovations. Startups such as Remit Uganda and Beyonic solely depend on mobile money services.
Utility companies have also pushed for partnerships with telecoms to ensure that payments can be concluded using mobile money platforms. In Uganda today almost all utilities can be cleared using mobile money.
And Utility companies are not the only ones forging such partnerships, Banks have also signed M.O.Us with different telecoms to ensure that they are regain their market share. It is therefore no surprise that you can bank from you mobile money account to most banks and vice versa.
There are also other players in the FinTech ecosystem like PayWay and Ezee Money but they still maintain a close integration with mobile money platforms. It is evident that the FinTech ecosystem in Uganda will continue to grow as the number of mobile phone users continues to grow but the direction is quite different from what is adopted in the developed countries.