Commercial Banks and the government have justified the digital integration in the cash management systems despite the negative effects, saying the benefits will in the long run outweigh the disadvantages.
Banks have over the last few years closed traditional banking halls and some have closed branches from many parts of the country and replaced the services with digital platforms.
Godfrey Sebaana, the Head of Institutional and Corporate Banking at Standard Chartered Bank says the clients have got a better deal in digital platforms like online and mobile banking, as well as agent banking, which has necessitated the reduction in branches by the entire banking industry.
“We have seen a shift in the brick and mortar model of operation with the total bank branch network reducing from over 700 to slightly over 600 while the number of mobile money agents has grown from over 300,000 in 2021 to 450,000 in 2022,” Sebaana said.
He was speaking at a dialogue on Treasury and Cash Management called by Standard Chartered Bank in Kampala to analyse the emerging risks in Treasury and Cash Management and the role of digitisation in mitigating them. The bank has been at the front of integrating digitalization which has seen them close several traditional branches.
However, the electronic banking system has come with challenges, especially cybercrime, and both the banks and telecommunication service companies, as well as the government and sectors, have registered theft or attempted theft of money.
But, Accountant General Lawrence Semakula said most cases of cybercrime are done in collaboration with the bank and telecom staff and warned the companies to be cautious about the people they hire to either develop, manage or upgrade their systems.
The banks also say there is a challenge of customers being cautious about digital platforms as they are not sure about the safety of their transactions and deposits. This has affected the rate at which they embrace the new order.
Using the example of their Straight2Bank electronic banking platform as an example, Viplav Rathore, the Head of Cash Management in Africa and the Middle East, said it is important for cash managers to keep ahead of criminals to protect the institution and the clients.
The Accountant General says the range of technological innovations and instruments available to treasury or cash managers has increased considerably, but so have the challenges hence the need to ensure proper controls and risk management processes are implemented. He says, despite this, the government will continue digitizing its operations because so far the shift has led to positives.
The shift to digital cash operations has been a big part of the public finance management reforms by the Ministry of Finance, Planning and Economic Development. Semakula says they started with the abolition of cheque transactions because forgery had become the major cause of direct theft of government funds, with the criminals taking advantage of the law that a government cheque shall never bounce.
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