Annet MulindwaFinance Trust Bank recently obtained a license from Bank of Uganda, which upgraded it from a deposit-taking institution to a fully-fledged commercial bank. Annet Mulindwa, the managing director, spoke to Julius Businge about their vision.
What prompted you to upgrade from an MDI to a commercial bank?
It was in response to the demands of our customers. Customers who have grown with us over time started demanding for commercial banking services such as current accounts, overdrafts, guarantees, international money transfers and foreign exchange transactions. These prompted us to upgrade to a Tier I status to ensure that we could satisfactorily meet these new demands.
Some people say this bank is primarily for women. Why?
That is largely true because the founder members of the Bank had a vision of empowering the disadvantaged women out of poverty. This objective has not changed to date given that women have continuously been marginalized from the main-stream financial system.
We have a unique product called 'Mama's safe individual loan,' which is specifically for women aged 18 years and above who fall in the micro-small and medium entrepreneurs category, and salary earners who wish to access affordable loans and the benefits of non-financial services such as quality healthcare, financial education and basic business skills training. But this does not mean we do not serve men.
The men, youth and institutions are our secondary customers and we cherish them too.
What is your reading of the financial services industry in Uganda currently?
The banking industry in Uganda is growing though the unbanked population is still high. Out of the over 12 million people that are economically active, only 30% are currently served by the formal financial system.
The majority are still being served by the informal sector, which is characterized by exorbitant interest rates and unfavorable repayment terms. Finance Trust is working to rely on innovation and leveraging of technology to increase outreach to the unbanked population in Uganda.
You are entering a competitive market and yet low access, so how do you intend to you survive in such an environment?
Finance Trust Bank enters the market with a unique value preposition for its customers. We currently have 31 inter-connected branches spread across the country and we are still growing. We have a number of customer centric products that have been developed and more in the pipeline.
We shall rely on innovation to edge out the competition and increase penetration and outreach to the unbanked. On top of the products I have mentioned, we are keeping a good relationship with our clients -business people, agriculturalists, government institutions and agencies, NGOs among others. We are not worried about the competition because we have the experience in this market.
How strong is your capital base as a bank?
Currently, the Bank is highly liquid to meet all our client's funding requirements. Our liquidity ratio is in excess of 45%, which makes us one of the most liquid commercial banks in the market. Our total asset base as at end of November 2013 was in excess of Shs 90 billion. The bank is largely owned by the Uganda Women Trust and other founder members. Other shareholders are RIF II, Progression East Africa Micro Finance, Oikocredit and IPEA.
What is your reading of the future of the financial services industry in Uganda generally?
The future holds a liberal customer who is highly informed about the financing options and with a variety of financial institutions. Branchless banking shall take over and cash transactions are likely to reduce as people embrace electronic money transfer and payment systems such as mobile banking.
The high lending rates in Uganda have been a big issue. How best can banks offer loans at affordable terms but also remain profitable?
Bank interest rates are driven by the cost of funding. Banks can only offer loans on affordable terms only if they can drive their cost of funding lower. This involves sourcing for cheap deposits and increasing efficiency to cut out unnecessary processes that turn out to make credit more expensive.
Where do you want to see Finance Trust Bank in in the next five years?
We want Finance Trust Bank to be the most-preferred and most-affordable micro finance bank in Uganda in the next five years.
Finally, taking an institution of this stature through a major transition like this one is not an easy task. How are you managing the situation?
Well, Finance Trust Bank has a team of young and innovative staff that has been very instrumental in the transformation process. I intend to continue relying on this very competent team to deliver value for our customers and ensuring sustainability.
We are proud to be the first indigenous institution to successfully transform from an MDI to a commercial bank. This definitely provides a big opportunity to our customers to grow with us.