By KABONA ESIARA
In Summary
- BK TecHouse is expected to create new business opportunities for the bank, whose profit after tax grew marginally to Rwf20.8 billion ($25.2 million) last year, from Rwf20.5 billion ($24.8 million) in 2015.
- CEO said that having a
Rwandan player in the digital space is set to boost financial inclusion
and promote cashless transactions with the potential it could be
exported abroad.
Bank of Kigali has launched BK TecHouse, a technology
solutions company, reinforcing the listed lender’s diversification drive
as it seeks to spread risks and tap into new income lines.
BK TecHouse provides IT solutions in banking,
education, agriculture and health. The technology solutions company is
expected to create new business opportunities for the bank, whose profit
after tax grew marginally to Rwf20.8 billion ($25.2 million) last year,
from Rwf20.5 billion ($24.8 million) in 2015.
BK blames the marginal growth on increasing competition.
BK TecHouse CEO said that having a Rwandan
player in the digital space is set to boost financial inclusion and
promote cashless transactions with the potential it could be exported
abroad.
The digital solutions company is the fourth
subsidiary that BK has launched since 2013, and the second this month
following the commissioning of insurance firm Bank of Kigali General
Insurance (BKGI), on March 16. In 2013, the lender launched BK Custodial
Services and brokerage services firm BK Securities.
However, the contributions that the subsidiaries make to the general income of the group have remained marginal.
Management said that diversifying business
will help the lender retain customers as it will create more value for
them by enhancing convenience and the quality of their everyday lives
beyond mere transactions.
BK chief executive Diane Karusisi said: “We
don’t want to be Kodak that got disrupted by digital photography or the
taxi conductor whose role is being disrupted by digital card tap and go
payment solutions; even the driver is not safe as technology explores
the viability of driverless cars; we want to be part of the change.”
Bank of Kigali hopes its insurance wing will
rope in some 300,000 account holders to insure with the lender. BK is
betting on its large customer base and wide branch network to offer
insurance services to Rwanda's untapped market.
“We have done sufficient surveys so we are coming in knowing the
issues dogging the sector. I know some players are facing a number of
issues and the sector currently suffers a high rate of unpaid claims,
but we are just starting out and it serves us well to know all this at
the beginning,” said Alex Bahizi, the CEO of BKGI at the official
launch.
The lender is courting a Mauritian company
Aprica investments Ltd which has more than 160 years experience in
insurance business to buy a 30 per cent stake in BK General Insurance.
BK Custodial Services on the other hand has
boosted the banks’ fee revenues through investment advisory services
while BK Securities has done so by offering stock broking services and
other capital market financial services.
“Diversifying business into a one-stop
financial services centre has helped the bank remain profitable and
attractive to clients at a time of growing competition from Kenyan
subsidiaries including KCB, Equity Bank, I&M Bank and the Pan
African bank, Ecobank,” said Davis K Gathaara, an investment advisor.
Data from National Bank of Rwanda shows that assets of Rwanda's
banking industry dropped by 11.5 per cent at the close of December 2016,
to about $2.5 billion from $2.8 billion in December 2015“The slowdown of domestic demand in 2016 affected business earnings and
reduced their demand for credit to expand their businesses. The total
amount of loan applications received by banks declined from Rwf937
billion in 2015 to Rwf861 billion in 2016,” National Bank of Rwanda
February 2017 Monetary Policy and Financial Stability statement notes.
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