Technology has the potential to greatly enhance financial inclusion

Kampala, Uganda | THE INDEPENDENT | Martin Barungi is the Director for Pesapal Uganda. He spoke to The Independent about the developments in the digital financial services and the future outlook.

Briefly describe Pesapal operations in Uganda?

Pesapal was established in 2012 as a pioneer in the E-commerce space, providing e-commerce payment solutions mostly to the hospitality industry in Uganda. Prior to our entry, many players in the industry relied on inconvenient methods such as bank transfers to receive payments from international tourists. Recognizing this gap in the market, we quickly gained traction by offering our customers the convenience of accepting card payments through their websites, which was highly appreciated by their visitors and guests.

What does the current landscape of digital financial services in Uganda look like and how does Pesapal fit into all this?

Digital financial services landscape is rapidly evolving globally, and the shift towards digitalization is being driven by the factors such as convenience, accessibility, and affordability, resulting in exponential growth in the sector. Governments, too, are now grappling with the challenges posed by this rapid expansion as it presents both opportunities and risks such as financial misconduct, fraud and money laundering.

The introduction of legislation to regulate the industry has led to increased consumer confidence, resulting in more people participating in the sector. For instance, mobile money users have increased from 21million in 2015 to over 35million today.

Despite the gains made by digital financial services, cash transactions still dominate the industry at about 80%, according to a Finscope survey. This underscores the work that is yet to be done by all players, if we’re to transform the financial sector, democratize finance and maximise inclusion.

How does Pesapal differentiate itself from the competition?

We place a significant emphasis on addressing customer needs through innovative solutions. Our strategic focus on problem-solving and providing comprehensive support has resulted in increased market traction. Despite facing competition from both traditional banks and other FinTech institutions, our competitive advantage stems from our unwavering commitment to understanding and meeting our customers’ requirements.

How does Pesapal ensure the safety and security of its digital service’s financial services?

We have made substantial investments in robust security platforms to prioritize the safety and security of customer funds and data. Our cyber security infrastructure is designed to prevent abuse by unauthorized third parties and ensure the integrity of our systems.

As a result, our platform maintains the highest level of card security, providing customers with the assurance that their customer information and funds are safeguarded. We have recently implemented 3D Secure posting for card payments to further enhance transaction security on our system, demonstrating our commitment to maintaining a secure environment for our customers.

What are the key challenges that Pesapal has faced in the Ugandan market and how has the company addressed them?

Traditionally, payment services were exclusively offered by banks and customers were reluctant to work with a non-bank provider. However, we focused on engaging with early adopters, solving their challenges and providing them with superior services. The market has now opened up, and more players are entering the space, following global trends in digital financial services.

We also encountered issues of online fraud and the police lacked the capacity to handle such matters. However, our investment in enhanced security of our payment infrastructure and processes has paid off and also, we now have a conducive regulatory environment for combating cyber fraud.

Furthermore, the dynamic technological environment requires continuous adaptation and innovation of new solutions to stay competitive in the market. With more players entering the country from different regions around the world, the market has become more competitive. However, we are innovating constantly, bringing new solutions to the market every so often and hiring brilliant talent in order to serve our customers better.

How are you positioning yourself to capitalize on emerging trends and opportunities in the financial sector?

We recognize the importance of keeping our eyes on the horizon to anticipate and leverage emerging trends. We plan to harness cutting-edge technologies such as Artificial Intelligence, big data, analytics, machine learning, and blockchain, which are increasingly becoming mainstream business drivers in the digital financial services industry worldwide.

Investing in research is a priority for us, as we strive to stay abreast of technological innovations in the industry and identify potential collaborators to work with. Our goal is to achieve win-win outcomes in the market, while continually seeking collaborative opportunities to drive value and serve our customers better.

How does do you see technology playing a role in advancing financial inclusion and driving sustainable growth in Uganda?

Overall, technology has the potential to greatly enhance financial inclusion by reducing the cost and complexity of financial services, providing greater access to financial services, and improving financial literacy in the wider population.