Uganda Bankers Association (UBA) has sought to allay fears about the safety and reliability of agency banking following reports that commercial banks and developer of the platform are battling in court over copyright infringement.
Sections of the media last week reported that several banks recently experienced issues in the agency/mobile banking platform.
The media reports attributed this to attempts by some chief finance officers of some commercial banks seeking to take over the control of the agency banking platform from the software developer, POS.
But in a statement issued on Tuesday, 28 September 2021, whereas UBA acknowledged that while the software developer has since sued some of the commercial banks, the agency banking platform is well regulated by Ugandan laws and hence not an illegality.
“The amendment of Financial Institutions Act (2016) to include Agent Banking was a due process whose objectives and intentions were and remain very clear. It is unrelated and makes no reference to systems or technical solutions to be deployed in the conduct of agent banking,” UBA said.
It also adds that the agency banking platform is safe and secure.
“The industry & its membership have internal frameworks & processes through which solutions are sourced and deployed. Control frameworks are put in place and any system malfunctions, frauds, if any or indeed any incidence or occurrence is handled including where necessary with the support & collaboration of law enforcement agencies as appropriate. This is done to ensure maintenance of system integrity and safety of customer funds. The existence of the above frameworks gives our membership comfort in not alarming customers & the general public,” the statement adds.
This website understands that the ongoing court battle features developers of Pos Banking; Nicholas Lugonjo and Henry Owarwo Mugumya VS 12 banks; Centenary, Stanbic, Finance Trust, Barclays currently ABSA Uganda, Bank of Africa, DFCU, KCB, Post Bank, Housing Finance, Exim, Diamond Trust and Equity Bank in Uganda.
The developers of the software accuse the banks of copyright infringement and unjust enrichment. Lugonjo and Owarwo claim that after receiving all the details of the software, the banks turned them away and took on the ownership of the software themselves. It is said that after securing the Agency Banking regulation in 2017, three top Bank Managers convinced the leadership of their umbrella body, Uganda Bankers’ Association to form a company that would manage online/agency banking in Uganda.
They then entered into agreement with Eclectics International Limited, a Company registered in Mauritius to partner with the Agent Banking Company of Uganda Ltd to run the online banking business.
Lugonjo and Owarwo are seeking an order for all monies gained from the use of the software to be accounted for and remitted to them.
In the statement, UBA says since the matter is subject to a court battle, they are not ready to comment about it.
But they claim that the Agent Banking Company of Uganda (ABC), is a special purpose industry vehicle duly incorporated as a Joint Venture Company with TIN No 1010640456 between UBA and Eclectics International, a regional based ICT company providing various banking technology solutions to over 250 financial institutions across 26 countries in Africa.
“These two institutions to date are the registered shareholders of the Agent Banking Company of Uganda. The Company does not have individual shareholders,” UBA says.
UBA adds that at incorporation of ABC (U) LTD way back in 2017, the executive committee of UBA then, that oversaw the execution of this strategic initiative, signed off documentation leading to its establishment and governance of the said SPV/JV for the first five years ending 31st March 2022.
“The executive committee included those member bank CEOs referred to in the media reports,” UBA adds.
“A Board of Directors was constituted as part of the governance framework and is composed of representatives of UBA Member Banks and Eclectics International. In September 2020, UBA further established a fully-fledged investment committee to oversee this and other such industry initiatives. To date, 21 financial institutions are integrated to ABC’s Shared Agent Banking System (SABS) with over 15,600 agents spread across the country serving customers of those supervised financial institutions on the platform compared to less than 600 branches and under 1,000 ATMs five (5) years ago. The operations of ABC are further guided by all heads of Agent Banking of member banks through their monthly meetings,” they added.
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