Ugandan Banks at the Crossroads: Will They Survive the Telecom Disruption?

For decades, banks in Uganda enjoyed an unquestioned dominance in financial services. They were the gatekeepers of money — deposits, withdrawals, loans, and card payments. But in the past fifteen years, a storm has been brewing, and it is no longer on the horizon. It is here, and it is shaking the very foundation of banking. That storm has a name: mobile money.

First, telecom giants MTN and Airtel redefined how Ugandans move money. They broke the monopoly of banking halls and ATMs, replacing them with agents on every corner and a few taps on a phone. Suddenly, the villager who had never seen the inside of a bank could send money across the country in seconds.

People accessing mobile money services with points along the street

Then came mobile loans — simple, quick, collateral-free credit delivered faster than any bank manager could approve. Slowly, banks’ stranglehold on lending began to weaken. And now, a new wave is here: virtual Visa and Mastercard solutions issued by telecoms.

With these, Ugandans can now pay for goods and services online without needing a traditional bank card. The quiet question hanging in the air is chilling: are banks becoming irrelevant?

During the launch of the MTN Virtual Card

Why Telecoms Are Encroaching on Banking Turf

Telecom companies did not wake up one morning and decide to play banker. They were pushed there by:

1. Customer Demand for Convenience – Ugandans crave speed, accessibility, and simplicity. Mobile money provides exactly that. No paperwork, no long queues, no intimidating bank halls.

2. Digital Adoption – With over 30 million mobile phone users, telecoms are better positioned than banks to reach the masses. They are leveraging their distribution networks, technology, and customer trust to expand.

3. Untapped Opportunities – Banks have traditionally focused on salaried workers and corporates, leaving millions of unbanked and underbanked Ugandans underserved. Telecoms saw the gap and stepped in.

4. Revenue Diversification – Voice and SMS revenues are declining for telecoms, so fintech has become their new goldmine. Financial services are now central to their growth strategies.

The Silent Extinction of Bank Customers

Every disruption eats away at the customer base of conventional banks:

• Mobile money made deposit-taking less attractive.

• Mobile loans chipped at the credit business.

• Virtual cards now threaten one of banks’ strongest assets — online payments.

If banks do not act, they will wake up one day to find themselves with only a fraction of their current customers, confined to serving the elite, while the masses — the lifeblood of financial ecosystems — belong entirely to telecoms.

What Ugandan Banks Must Do to Survive

This disruption is not a death sentence — but survival demands radical rethinking. Banks must:

1. Reimagine Customer Experience

   • Banking should not feel like a chore. Reduce friction in account opening, onboarding, and loan approvals. Banks must adopt the speed of mobile money.

2. Forge Strategic Partnerships

   • Instead of seeing telecoms as enemies, banks can integrate with them. Joint products, co-branded digital wallets, and shared payment platforms could create win-win ecosystems.

3. Innovate Beyond the Obvious

   • Move into spaces telecoms cannot easily dominate — wealth management, investment platforms, insurance bundling, and cross-border trade facilitation.

4. Leverage Data and AI

   • Banks sit on rich customer data. By harnessing AI-driven insights, they can personalize products, predict customer needs, and extend smarter loans.

5. Expand Financial Inclusion at Scale

   • Banks must stop seeing rural and informal sectors as “low-value.” These are the very markets fueling telecom success. Affordable micro-products, savings groups integration, and localized financial literacy could win back trust.

The Big Question: Who Will Own the Future of Money?

What Ugandan banks must realize is this: the future of money is not in marble halls, but in the palms of customers. Whoever controls that palm, controls the market.

Telecoms understand this truth — that convenience, speed, and accessibility are the currencies of modern finance. Banks must quickly adapt, or risk becoming historical relics.

The banking sector in Uganda still has a chance. But only if it stops looking at itself as a guardian of tradition and starts behaving like a startup hungry for relevance. Because in the world of disruption, it is not the biggest who survive, but the fastest to adapt.

Thoughts by Belguin Prosper Lumu, a Market Intelligence & Strategy expert.