Cash, Cloud, and the Continental Shift: National Bank of Rwanda’s Head of Payments on the Future of Finance | The CXO Conversations

Guest: Christian Kajeneri Mugenzi, Director, Payment Systems, National Bank of Rwanda

Host: Kwame Oppong, Director of FinTech and Innovation, Bank of Ghana

Full Transcript

[00:00:00] Kwame Oppong: Hello everyone! Welcome to CXO conversation. Today, I have an interesting guest with me. Chris Kajeneir from the Central Bank of Rwanda. He's the Director of Payment Systems. Welcome, Chris.

[00:00:17] Christian Kajeneri Mugenzi: Thank you, Kwame.

[00:00:18] Kwame Oppong: I'm Kwame Oppong, director of FinTech and Innovation at Bank of Ghana. Before we start this podcast, my first question and perhaps a quick reaction from you, US elections.

[00:00:30] Christian Kajeneri Mugenzi: Yeah, controversial answer. I'm very happy that trump was elected as an African. I put him on my WhatsApp status and I got so many reaction. Especially from relatives that live in the US and Canada. They really don't understand but I'm a Trump guy.

[00:00:48] Kwame Oppong: Wonderful. Fortunately, it is only you. You're always welcome to come to Ghana.

But let me ask you this question. We're hearing alot about AI, blockchain and all these interesting concepts at the Singapoe FinTech Festival (SFF) . From your perspective, how do you think AI is going to shape the financial services industry in the future?

[00:01:06] Christian Kajeneri Mugenzi: AI is already coming in. I think most people are using ChatGPT for a lot of regulation drafting, and maybe, little knowledge of exposure and risk of what kind of data they can post on the open source generative ai. Machine learning, large language models (LLMs) and deep learning have multiple use cases, one of them is predicting attacks in the area of cybersecurity.

Another one is prediction of your potential customer. In Telco, we used to have what we call CVM, customer Value Management, which was more SMS driven and collecting your data behavior, how you transact. I think in the financial area, systems that do Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT), like Software as a Service (SaaS). We've seen solutions where they're integrating AI to predict customer behavior who are prone to fraud or weird behavior? Let me put it this way. And I think it'll be a great tool for financial inclusion and protection. Especially in Africa.

We have other solutions. When it comes to Know Your Customers (KYC) or digital identification, where they're using AI tool. I think it'll be a huge leapfrog when it comes to financial inclusion, as far as African continent is concerned. We still have a challenge in infrastructure and in knowledge. I started seeing penetration of smartphone and internet access.

[00:02:44] Kwame Oppong: It's very interesting. As you were speaking, it occurred to me, the import of what you're saying is that AI is essentially going to transform, not just what we work on but even how we work.

[00:02:54] Christian Kajeneri Mugenzi: Pretty much.

[00:02:55] Kwame Oppong: And to that end, I think the next obvious question is. What is the future going to look like in terms of a hybrid work environments or hybrid work system? What do you think that could look like in the future versus what we see today?

[00:03:07] Christian Kajeneri Mugenzi: I've always been a big fan of remote work. I believe workspaces are not meant for everyone. They are people who are introverts, extrovert and ambivert. There are people who operate better when they are in a quiet place. And sometimes, I think I flip between ambivert and extrovert, but mostly inclined to extrovert.

But sometimes, I enjoy my introvert moment. I operate more when I work remotely, either from home or out of office. COVID has been a good proof. Unfortunately, it has come with some good things. Urban cities are facing challenges with traffic and commuting. I think it's gonna change the way people operate and the way people hire. Today, there are full remote entities like Zep or World Remit globally. They almost a pure remote entity.

FinTech and other companies like X are remote entities too. When El Musk first acquired X, I was listening to a book where he said that he doesn't believe in this remote thing and people need to show up in office. But I think it has created and shaped the way people do business in Africa, especially with our traditional mindset.

Most people didn't believe that people can actually operate remotely and be efficient without supervision. But it's a bit ironic and contradictive because when they hire people, they say, one of the criteria, you want someone mature with little supervision, but yet you still want to see the person in office and supervise them.

[00:04:42] Kwame Oppong: That's an interesting one. Had the same conversation with the Gen Zs in my office and the perspective is different. It's somewhat refreshing if you ask me. And clearly there's going to be some transformation that we have to accept and it's really going to reflect people's own preferences, their natural predispositions.

But an interesting issue that is closely associated is the issue of geopolitics. I think the various, to the point about the hybrid work system. The various generations have a very different experience and perception around it, but also another area that is very complex and varied across the generation is the issue of geopolitics.

What do you think the geopolitics impact would be on the financial sector, broadly?

[00:05:25] Christian Kajeneri Mugenzi: The financial sector's key success when it comes to traditional banking is interoperability. The banking industry is successful because it is interoperable. You can do transaction via Swift, BPC or different platforms. That's the key success.

I was reading an article from the group CEO of a telco, the biggest telco in Africa, interviewed in a journal, and he mentioned the same thing. I strongly believe the key success is interoperability in the financial sector. The main success of FinTech or mobile money wallet is that we're interoperable. People cannot continue to grow isolated, right?

We need to talk to each other and I am thinking about MTN, Orange, AirtelTigo, Safaricom, Cell C and the list is long. The challenges we are having and I'm happy that this podcast is between regulators. I think it's more a geopolitical issue. Lack of harmonisation. Delaying implementation of AfCFTA (African Continental Free Trade Area).

And for me, it's more the political delay than technology. I think we are both from private sector. We've seen private sector Pan-African FinTech doing this easily, at the expense of the consumer, at a high cost, but still people are paying B2B or even cross border. Geopolitics is a key challenge and there's a lack of understanding what it can do to connect.

Intra African trade is huge. Previously, we focused on West Africa Transaction, but now we have cooperation with the South. Lots of business people in Asia are willing to connect with African businesses but the geopolitics within Africa delay a lot of integration and whatever solution we need to implement.

That's an interesting question, that you asked because last week we were debating in office about an article from Sweden, where the whole Russo-Ukrainian war, is pushing countries like Sweden to go back to cash when they were above 90% cashless. When there's a projection by 2025, the country will be completely cashless.

They're saying, "Okay, this is really good and this is amazing but we are prone to any cyber attack. If anything happens to our digital wallet, the whole economy might freeze." We need to have an alternative to go back to either cash or cards. So the geopolitics sometimes affect your economy in a way that you don't see.

It was a very good debate in our financial stability WhatsApp group, where we are all shocked. Oh really? If this can happen in Europe, what about Africa? If in Europe they're afraid of cyber attacks. Due to X, Y, Z reason. What about Africa? So geopolitics can play a huge role.

One I mentioned is interoperability or cross border common market which require a lot of political will, harmonisation of regulation, like what we're doing. Me and you, between Ghana, Rwanda and the East African region. Regarding cashless, do we have a fallback system?

Do you have an alternative, if anything happen for any political tension that might occur between countries?

[00:08:59] Kwame Oppong: Interestingly that concern. It's almost like going back to the future, right? Countries that have advanced enough to start achieving that cashless dream or cash light dream are now looking at going back to have a fallback with cash, perhaps that's what CBDC does. CBDC is more sustainable because you don't have to deal with physical form factor of money and hard forms of money.

But that actually brings up a question of sustainability as well. What do you think businesses can really do in there in terms of helping advancing the issue of sustainability?

[00:09:27] Christian Kajeneri Mugenzi: I'll give you an example of what's happening in Rwanda. The transport industry needs to be subsidised by the government and there are really a lot of subsidies in Rwanda. But if you really want to report your carbon credit emission reductions, you need a digital wallet. If you mix cash and digital wallet, you don't have a full value chain of your transaction.

To create a bankable project or attract investment in EV and buses, you need to collect how many transactions are done per day, how many passengers and how many people are contributing to this reduction so that you can claim your carbon credit at the end of the year. This is one example.

The second one is, how do you manage your waste from production of using electronic devices? How do you recycle your whole value chain from any product that you're consuming? The whole FinTech industry is one of the biggest consumer of electronics that affect our carbon emission.

There are a lot of initiative in the sustainability area and Africa has a long way to go. There are initiatives from COP in UAE that we addressed and Rwanda is a big advocate in that area. We believe there are things that will be done in that area.

[00:10:48] Kwame Oppong: You're right. I think when you mentioned Rwanda is a big advocate in that area.

Any visitor to Rwanda can acknowledge that. The seriousness with which Rwanda is really taking this up. And it's important I think, over the long term for all of us as a global community to be able to emulate that. Sometimes we have concerns around people taking advantage of this genuine effort to drive sustainability to basically divert and exploit greenwashing.

And that brings me to the question. How do you think we can really protect the data, right? Not just perhaps data around green finance, green fintechs or sustainability, but more broadly, perhaps as a society, how do we protect data? And information away that gives consumers trust.

[00:11:33] Christian Kajeneri Mugenzi: Rwanda has a new law. I'll say new but it's been there for two years. This is the third year actually. Data protection and privacy law was issued in October 2021 and we had a grace period by the National Cybersecurity Agency until 2023, and then going forward, people had to comply.

What we like in quantitatively and globally, maybe some other markets have done it, is harmonisation and interpretation of regulation. What do we mean? It has created a lot of analysis paralysis and decision paralysis. And FinTech are lost in between regulators. What do I need to share? What am I not supposed to share?

We all use PII or personally identifiable information, but how do I select what I need to share or not? And all of a sudden we want to create small island within countries where we say, cloud is not allowed. But how will people operate if everyone has to bring a server in your country to operate.

I don't think most people understand how messy from a technology perspective that will be. I think we needs proper harmonisation, especially in the African continent. If Rwanda has a DPP, Ghana has one and East Africa has one. How do we create blocks of harmonisation? For example, in East Africa, West region and Southern region.

We create harmonisation by coming to the table and engaging in open dialogue. Maybe that can be an agenda to be strengthened under AICA and I assume it is. We need to find how to properly harmonise and educate. There again, the challenge that we have is education on the market players.

I've told people how do you do encryption of your data? Do you have one way hashing? Can you use simulated data? Can you use anonymised data? If you're doing simulation, building models or you're transacting. You usually don't need all these details of data. And you'd realize our startups are lacking awareness and education.

But instead of acting as a like a bottleneck. It's about creating multiple options or alternatives for the market player, for them to choose the definition of data privacy. But you realize it's more laziness in reading, which create a lot of paralysis or lack of knowledge. We are not exposed to this, this is new concept to us.

We've been exchanging data at the expense of the owner. And at the end of the day, this data do not belong to the financial institution or Telco operator. They belong to Kwame and Christian, not to them. I need to know. So it's awareness to the consumer and awareness to the market player what they need to do.

[00:14:18] Kwame Oppong: Those are very interesting perspectives to ponder on. Thank you very much for joining me in this conversation, Chris.

[00:14:24] Christian Kajeneri Mugenzi: Thank you, Kwame. Thank you. It's such a honour. Thank you for the hospitality when I was in your country.

[00:14:30] Kwame Oppong: You're most welcome.

[00:14:31] Christian Kajeneri Mugenzi: You've became a brother. Dr. Kwame Nkrumah, our founding president, said Africa will be fully liberated when we are fully united. What you've seen here in Singapore, is an eye opener in Asia. There's a lot that we need to do and it's such a honour that I had you as a host. Thank you.

[00:14:49] Kwame Oppong: Thank you very much for your kind words.