UBX: The Mother of Interoperability in Tanzania

Deputy Minister of Finance, Hamad Chande (seated in the middle) in a group photo with leaders of NMB Bank, UBX Company, and Umoja Switch (seated) during the launch event of the partnership between UBX Company and NMB Bank, which enables customers to access services through NMB Bank’s ATM network nationwide via interoperability system. Those standing are leaders and representatives of banks in the country.

What you need to know:

• For more than two decades in Tanzania, UBX has been at the forefront of transforming lives through technology. With more than 100 corporate clients served, more than 1000 projects completed, their services have reached more than 5 million consumers in Tanzania, Mozambique and Malawi.

Twenty years ago, a person in Mufindi would have to travel a long distance just to access an ATM machine that belongs to their bank. Today, like most things around us, technology has advanced. Banks can now enable their customers to withdraw cash from any ATM regardless of its ownership. If you wonder how that happened, then UBX is your answer.

When it first started in 2000, Intrinsic Technology Tanzania Ltd (ITT) was a software and computer services company with a handful of clients and staff. Later on in 2004, it was acquired by a South African company and gained a new name – Business Connexion Tanzania (BCX). It wasn’t until 2021, when it was acquired by Umoja Switch Company Limited (USC) that it gained the name that it has now – UBX Tanzania Limited.

This has been more than a progression of name changes. For more than two decades in Tanzania, UBX has been at the forefront of transforming lives through technology. With more than 100 corporate clients served, more than 1000 projects completed, their services have reached more than 5 million consumers in Tanzania, Mozambique and Malawi.

The power of interoperability: ATMs

UBX Ltd Managing Director, Seronga Wangwe, says there has never been a company that has been able to create such an infrastructure in Tanzania. He calls UBX the ‘Mother of Interoperability’.

In their humble beginnings, they kicked off with five banks and 30 ATMs in three regions namely, Dar es Salaam, Arusha and Mwanza. Today, there are more than 18 banks that are connected to 280 UmojaSwitch ATMs and over 800 NMB ATMs, which makes a network of more than 1000 shared ATMs across the country enabling Tanzania to get access to their funds at a minimal withdrawal fee. The phenomenon is known as interoperability; a huge milestone in Tanzania.

Deputy Minister of Finance Hamad Chande (centre), withdrawing cash from the NMB ATM during the launch of the partnership between UBX and the bank, which enables customers to access services through the NMB Bank ATM network nationwide through the interoperability. Witnessing are the CEO of NMB Bank Ruth Zaipuna (left), and the Chairman of the Board of Directors of UBX Sabasaba Moshingi (right).

There are three things that ATM interoperability has been able to achieve: reduce cost to both consumers and banks, offer more convenient services, and increase the speed to which services are offered. This can be said of all other types of interoperability.

But this is just the beginning. What UBX hopes to see is a financial sector that is more integrated. “We hope that other banks will come on board so that all local transactions between different banks are processed in Tanzania. It would reduce costs by at least 70 percent and increase the revenue for the banks and the government. That is the future we want to see.” Mr. Wangwe said.

The power of interoperability: Wakala

At the moment, individual banks have their own agents serving their customers only. UBX is looking to enable one agent to service more than one bank’s customers. This is what is known as agency banking interoperability, an approach that will reduce costs for individual banks, and offer more convenient services in a more timely manner.

Moreover, agents must have a Point-Of-Service (POS) device for each bank they represent. These devices are costly to the banks and the agents in terms of purchase of the actual POS, maintenance and time taken to educate each agent how each POS should function. Having one agent servicing several bank customers using one POS will solve this.

Apart from reducing cost for the agent and bank, the local mwananchi will not have to travel a long distance to find an ATM machine or look for their bank’s specific wakala. Having an agent within their local community, would make the service easily accessible and hence, more convenient.

According to Mr Wangwe, the company’s switching services stretch to Savings and Credit Cooperative Societies (SACCOS), whose members can access ATM and Wakala services nationwide.

Enhancing a healthy Financial Services Ecosystem

Wangwe explains that when fintech startups and banks arrive in Tanzania, they must follow a number of regulations from BoT and TCRA that require them to host their systems locally. That’s when UBX steps in. UBX is the only company that can help them enter the local fintech scene smoothly, providing hosting services and integration to their financial services ecosystem channels in line with set regulations.

With their state-of-the-art production and disaster recovery data centers located in Mikocheni and Kibaha respectively, UBX provides private cloud and colocation hosting services.

Moreover, UBX is the only fintech that is a Visa principal member and processor in Tanzania. Currently, UBX sponsors over six banks to issue Visa products and enables over fifteen banks to acquire Visa cards at their ATMs. It would be very costly for banks to do this on their own. A great aspect of the interoperability of local banks.

UBX has also been very supportive of the startup community where they are embraced. “We have systems that support the work that is done by the startup community. We provide the minimum possible ability to host their applications and various technological solutions. We have the infrastructure, and we are open for partnerships,” explained Mr. Wangwe.

The Zanzibari Government recently commissioned UBX to create a domestic revenue collection system, and they delivered. “It is the most advanced in East and Central Africa, using modern technology. This system has contributed to an increase of domestic revenue. We are encouraged to realise the role that we have in building the national economy as an institution, and the confidence that the government has in us.” Mr. Wangwe said.

Changing a culture

There is still room, he says, for the fintech space to influence a culture. “We still have a cash economy, to a large extent. Ask yourself, why someone would go to an ATM machine first to make a withdrawal, then go shop at the supermarket while they own a visa card. For us in the fintech space, cash is our greatest enemy,” he said.

He advised that we need to start teaching our children to move away from using cash, and become more conversant with using technology. “UBX is ready to work with the government, to equip students with practical knowledge of innovation and technology from an early age. UBX is ready and willing to offer these educational services, contributing to the development of the next generation of innovators and technologists in our country.

When people are not raised with such literacy they become rigid in accepting change as adults. It hasn’t always been easy for UBX to introduce new solutions. Apart from working with financial institutions, they have also worked in the transportation sector by creating cashless ticketing systems.

A few years ago, UBX created an e-ticketing system for commuter buses (daladalas). Users who were able to use preloaded cards for their daily commute around the city of Dar es Salaam. This was a huge success. After the pilot project, UBX is revamping the product to answer to the additional needs of commuters and bus owners.

UBX envisions an interoperable financial market enabling all financial services providers to effectively foster financial inclusion.