Customers in the banking sector will no longer need financial cards for verification and loans tracking following the launch a digital ID verification alternative.
The digital based system, cord-named NIRA e-KYC Project, will be hosted by Bank of Uganda through which NIRA's existing records and the National ID cards system, will be used to help banks verify the identity of a customers while providing credit.
It follows the signing of a contract between Bank of Uganda, Uganda Bankers Association, Financial Sector Deepening Uganda and Leboremus, a Fitech company.
The agreement will see the development of a digital ID verification system that will be deployed by banks and other financial institutions.
Mr Bram Vanden Bosch, the Leboremus managing director, told Daily Monitor on the sidelines of the signing ceremony in Kampala over the weekend that they have begun to build a digital financial system, which is expected to be ready by early March.
"The system will be up and running by April. Banks will have to undergo the testing period and begin using it afterwords," he said.
Banks have been using Financial Cards to track borrowing activities of a customer. However, the entry of Fintechs has provided a number of innovations and solutions .
Dr Tumubweine Twinemanzi, the Bank of Uganda executive director in charge of supervision, said the sustainability of financial services delivery is dependent on the ease with which customers can be identified.
"The absence of a flexible mean of verifying the identity of financial services customers has therefore been a major constraint to financial inclusion and credit growth in Uganda," he said, noting the financial card identification system, which is currently in use, is limited to credit customers and does not address the challenge of Know You Customer.
Know Your Customers
Bank of Uganda launched the Credit Reference Bureau to develop a Financial Card, a biometric-supported system in August 2008 to track customers' borrowing history.
However, Dr Tumubweine said the financial card identification system is limited to only credit customers and therefore does not wholly address the challenges related with 'Know Your Customers'.