KAKEETO: Investments in tech, digital spur growth in Postbank Uganda

PostBank’s 5-year transformation journey bears fruit

ANALYSIS | THE INDEPENDENT | Over the past few years, PostBank Uganda has embarked on an ambitious journey to revamp its operations, harness technology, and redefine customer experience. For a fully government owned financial institution, embracing transformation has been a strategic imperative.  In a rapidly evolving financial landscape, innovation and adaptability are key to staying ahead of the curve.

This transformational odyssey has starting yielding impressive results, catapulting PostBank to the forefront of Uganda’s banking sector. With a renewed focus on digitalization, financial inclusion, and customer-centricity, the bank has successfully navigated the complexities of a shifting market.

At the heart of PostBank’s success story is its visionary leadership. Spearheading the transformation efforts is Julius Kakeeto, the bank’s Managing Director. With extensive expertise in the financial sector and a passion for innovation, Kakeeto has been instrumental in steering PostBank toward a brighter future.

In his first anniversary interview as PostBank Managing Director/CEO held in September 2020, Kakeeto envisioned a transformed financial institution.

“A tier 1 fully fledged digital commercial bank at the heart of the country’s economic growth by economically transforming the lives of millions of Ugandans and businesses, in partnership with government,” was his straight answer when we asked him where he saw PostBank in the next 5-10 years.

Kakeeto, who at the time said the bank was going through some housecleaning and restructuring, which he called “strengthening the bank’s foundation so that it can optimise its potential and ably compete with the aggressive privately owned financial institutions,” said his top priorities were recruiting the right people, building a superior technology-led customer experience, and fixing risk and governance issues.

The 2019-2023 strategic plan

He said priority would also be put on creating and leveraging the right partnerships, especially with the government and government-owned financial institutions. The government of Uganda owns the bank 100%.

All these changes were part of the 2019-2023 strategic plan in line with the bank’s mission to offer affordable financial services that drive financial inclusion for social and economic development.

Indeed, as part of the transformation, the then 44-branch network received a facelift, and an additional  13 branches have been opened to date, bringing the bank’s current total branch count to 57, spread across the country, serving over 800,000 customers.

On the back of an investment into a new core banking system, PostBank revamped its self-service channels, including the mobile App, the  USSD code *263# and  internet banking, enabling 24/7 banking.

A new ATM switch enabled the simultaneous rollout of over 60 Smart ATMs, which, among other things, accept bank deposits. These ATMs further enhanced the 24/7 banking experience and decongested the banking halls, further improving the customer experience.

To drive and deepen financial inclusion further, especially for the unserved and underserved, the bank invested in the Wendi Mobile Wallet, which was launched in November 2023.

Wendi is a bank agnostic

Wendi can be used by both PostBank and non-PostBank customers,⏤ retail customers, agents, and groups⏤ and is accessible via multiple channels, i.e., the web portal, a Mobile Application, and a USSD short code (*229#). The platform offers a bouquet of services that include a Groups’ and SACCOs’ management functionality, the ability to transfer funds within Wendi to mobile money accounts (Airtel and MTN), and bank accounts, deposits, withdrawals, and savings for both individuals and groups.

The savings solution therein enables users to save as little as UGX20,000/= and earn daily interest, which is also paid out on a daily.

One of Wendi’s strengths is its ability to enable customers to self-onboard through the Wendi mobile app and the USSD short code *229#.

So far, Wendi has enrolled over 1.4m customers in its first 18 months of operation. It has also paid over 700,000 beneficiaries of the government of Uganda’s Parish Development Model (PDM). It serves over 9,900 SACCOs. Wendi presently serves over 1.4 million (401,000 are not PDM-related) customers. Its agent banking base has grown to over 4,000 agents.

With this bouquet of digital products, today, only less than 20% of customers transact over the counter, compared to 80% four years ago.

“Four years ago, you would wait six months to get an ATM card; you would line up to get a service. Those days are gone. We don’t have long queues in our branches. Because of technology, a lot of our customers don’t have to come to the bank to interact with us physically,” Kakeeto told CEO East Africa Magazine in April 2024, adding that the target is to have up to 95% of all transactions happening outside the banking hall, driven by mobile banking, the Wendi Mobile Wallet and agency banking.

Investing in tech

To oversee this transformation and deliver on the new promise, Kakeeto attracted several financial services experts across different levels. These experts have been at the forefront of revolutionising the bank’s operations and success, transforming the bank into an admirable, award-winning financial services brand.

Overall, between 2019 and 2023, the bank invested in technology and the distribution network, putting up 13 new branches and refurbishing the existing 44 branches. The Bank has also heavily invested in staff training.

“Banking is a service and a service of skill; immense skill. You must have the right skill set, and you must have the right people for you to be able to perform at a banking institution. That is very, very important. Because we sell/offer similar things across the banking industry- it’s a very competitive industry, one of the things that differentiates you from the others is the people you have, and their skill and commitment,” Kakeeto believes.

Happy 5-Year Anniversary to @JKakeeto as our Managing Director.

His leadership has transformed not just the bank, but the lives of countless Ugandans.

Here’s to many more years of inspiring change, innovation, and prosperity! #Leadership #Anniversary #GrowProsper… pic.twitter.com/KXPw1ZR0Nh

— PostBank Uganda (@postbankug) October 14, 2024

Four years later, Kakeeto and the bank’s executive leadership team of 8 seasoned executives have achieved most, if not all, of those targets, transforming PostBank into a model tier-one commercial bank.

Thanks to this enhanced value proposition, a wider footprint (both digital and physical), and the December 2021 license upgrade to a tier-1 commercial bank, the bank has set new financial performance records.

At the end of 2023, customer deposits had more than doubled (127.2%) from UGX347.6 billion in 2019 to UGX789.6 billion. This enabled the bank to extend vital credit and more than double its loans and advances (225.6%) book, from UGX267.1 billion in 2019 to UGX602.5 billion.

MSMEs category and agriculture value chain

True to its mission of offering affordable financial services that drive financial inclusion for social and economic development, the biggest growth in lending was in the MSMEs category and agriculture value chain.

Enhanced lending enabled the bank to double its revenue base, from UGX110.6 billion in 2019 to UGX207.6 billion. Thanks to prudent cost management, the cost-income ratio has reduced from 88.6% to 83.4%, enabling the bank to achieve robust profit growth even as it invests significantly.

Over the past five years, net profit has grown at a compounded annual growth rate of 26.8%⏤ above the 10% target⏤ from UGX8.4 billion in 2019 to UGX27.5 billion at the end of 2023.

As a result, the taxpayer has experienced enhanced shareholder value, with return on equity improving progressively from 9.7% to 16.8% in the five years.

Total assets also more than doubled, growing by 118.2% from UGX490.6 billion in 2019 to UGX1,070.7 billion. PostBank is now one of only 14 banks with over UGX1 trillion in assets in an industry of 22 banks.

Thanks to this performance, the Auditor General, in his report for the year ended June 2023, singled out the bank as one of the best-performing government-owned parastatals with a significant Return on Assets.

Solid financial performance has also made the bank sustainable and self-financing. For example, the bank has comfortably met the Bank of Uganda (BoU) June 2024 deadline for a six-fold increase in the minimum absolute paid-up capital requirement. The bank was able to deploy internally generated profits of UGX64.5 billion to raise its capital buffers to UGX165 billion, which is UGX15 billion above the UGX150 minimum.

PostBank has also been a recipient of numerous awards. These include Banking Innovation Excellence won by “Wendi” at the 2023 Digital Impact Awards Africa, Outstanding Achievement in Financial Reporting under the Commercial Banks Category at the 2023 Fire Awards Uganda, and a Gold Award for Customer Experience Program at the 2023 SilverBack Awards Uganda. The bank also scooped the Best Visionary Government Performing Bank of The Year award at the 11th Visionaries of Uganda Awards and a Bronze Award for Excellent Integrated Reporting at the 2023 Fire Awards Uganda, only to mention a few.

In June this year, Julius Kakeeto, who was hitherto the Uganda Bankers’ Association Vice Chairman, was voted Chairman. In September 2024, Kakeeto was also named by CEO East Africa Magazine readers amongst Uganda’s 100 Leading & Most Admired CEOs.

Fostering Prosperity for Ugandans⏤ a new Promise 

Having successfully executed its 2019-2023 Strategic plan, the bank rolled out a new 2024-2028 plan in November 2023. The new plan, which focuses more on sustainability, incorporates economic, environmental, and social factors into the bank’s policies, practices, and processes to create long-term benefits for the bank’s various stakeholders. The new Strategy is anchored on the Purpose of Fostering Prosperity for Ugandans.

Aligned with its new tagline of Grow. Prosper, PostBank aims to foster prosperity for Ugandans by Driving sustainable financial inclusion and Stimulating entrepreneurship and services The bank has scaled up digital banking services by introducing alternative banking channels to boost financial inclusion nationwide.

In July this year, the bank launched a self-onboarding ZeroFlex digital account to enable customers to self-register and access financial services anywhere and anytime without the hustle of moving to the branches. Existing and new customers can self-register by filling in personal information that the bank uses to assign them an account to aid their financial transactions.

PostBank has been pivotal in supporting the Government in implementing projects to improve Uganda’s livelihoods. Some of the projects include PostBank disbursing the Parish Development Model money through the Wendi  mobile wallet, paying COVID-19 funds to households, and supporting the Landslide victims in Bududa, to mention a few.

Speaking at the 11th Annual General Meeting (AGM) in May 2024, Evelyn Anite, the State Minister for Investment and Privatization, lauded the bank for its innovative Wendi  Mobile Wallet, saying, “We were struggling with how to disburse the PDM funds until you introduced Wendi. When we went out for budget consultations, I visited West Nile, Lango, and Acholi for the same purpose. Everywhere I went, all I heard was ‘Wendi, Wendi.’ Local council chairpersons (LC5s) from different regions were asking why the government doesn’t allow them to use Wendi exclusively, as it is the most efficient system.”