Rwandan banks have rolled out new products and slashed lending rates amid rising competition from regional banks entering the market.
In the past three months, banks have repackaged their products, introduced new products like branchless, mobile and electronic banking, and lowered their lending rates.
Central bank figures indicate that commercial banks’ average lending rate slipped to 16.72 per cent from 16.87 per cent in May. The average deposit interest rate was reported at 8.2 per cent in March, 8.1 per cent in April and up to 9.9 per cent in May.
Industry analysts say the entry of Equity Bank and Kenya Commercial Bank is awakening competition in the Rwandan retail banking market, as the majority of the existing banks had been focusing on corporate clients.
In the Burundian market, Tanzania’s CRDB Bank announced it would open a branch in Bujumbura before the end of the year, joining Kenyan banks Diamond Trust Bank and KCB in an increasingly competitive environment. General manager Bruce Mwilei said more branches in Burundi are planned after the Bujumbura opening.
“Our target is to grow the bank to a major financial giant in East and Central Africa,’’ said CRDB managing director Charles Kemei.
“It is going to be challenging (for new players), given that everybody has been stepping up their game,” said Lawson Naibo, the chief operating officer of Bank of Kigali, currently Rwanda’s biggest local bank by assets.
The introduction of agency or branchless banks, which has been rolled out by KCB Rwanda and Equity Bank, is expected to be a key driver in banking growth. This is in addition to mobile banking which has been rolled out by almost all the commercial banks. Far more East Africans have access to mobile banking than traditional banking.
