UGANDA CHRISTIAN UNIVERSITY-KAMPALA

FACULTY OF BUSINESS AND ADMINISTRATION

COURSE: MASTER OF BUSINESS ADMINISTRATION

COURSE UNIT: INTERNATIONAL FINANCIAL MANAGEMENT

LECTURER: Mr. KASOZI GEOFFREY

FINANCE GROUP 1 MEMBERS

SN STUDENT NAME REGISTRATION NO.

1 MARIA REGINA NAKIBUUKA KS21M15/024
2 TABAN FRANCIS DUKU KS21M15/015
3 RAMULA NABUKENYA
4 MALONGO TONGAKOL
Summary of the case study (Approach).
 Understanding some of the different financial services and their benefits.
 Challenges/ loopholes and opportunities of the financial services.
 Understanding Fintech and Financial Inclusion.
 Fintech potential to close the gap though its solutions for financial inclusion
 The societal financial functions that are likely to be impacted by Fintech.
 The financial sectors having the potential to be impacted by Fintech
 The effectiveness and ineffectiveness of Fintech solutions for financial inclusion
 Conclusion
 Showing the potentials other Fintech firms have in particular to Leading and
Capital raising platform to improve access to finance for underserved groups,
including SMEs.

 Understanding some of the different financial services and their benefits.

According to Spacey. J. (2021), he explains financial services as services that facilitate
commercial transactions, savings and investment. He goes ahead to give some of the common
examples and how they help improve peoples’ lives. These include:
Banking Accounts, that do allow customers to store money and to earn interest which are often
linked to payment and transfer services such as smart cards,
Credit card networking, these are entities that serves as a bridge between the retailers and the
bank and they provide the bank cards like the Visa cards, Mastercard, Rupay, Discover financial
and American Express.
Retirement Accounts, which are investment accounts available in many countries that have
favorable tax treatments designed to encourage individuals to save for retirement. Countries like
Uganda operates retirement accounts that are managed by NSSF Uganda and savers derives
interest from their savings.
Loans, such as credit cards, mortgages, bridge loans, construction loans, lines of credit and
business loans. (With the different examples of each loan) one of Uganda’s construction loans
Financial Market utilities, these are agencies that are part of the infrastructure of financial
services, they include, clearing houses, stock exchanges and payment systems like interbank
networks
Brokerages, Services that allow customers to buy and sell into financial markets stock markets
like Financial Markets are venues that connect buyers and sellers of financial assets like share
capital, bonds, treasury bills among others.
Custody services, services that manage the settlement and administration of securities such as
Stocks and bonds on behalf of their owners. In some cases a custody bank also secures and
manage physical assets such as gold, examples for today
Insurance, services that allow customers to transfer risk for a fee for example, to mention but a
few. (Spacey, 2021)
 Challenges/ loopholes and opportunities of the financial services.
For the lives of the people to better off, it is paramount that they are granted access to financial
service which includes payments, savings, and insurance. However, there have been huge
challenges/loopholes that stems from inequality in access to these financial services which is
commonly among the poor and SMEs that warrants the need for FinTech to think outside the box
and try to bridge these gaps. These challenges arise because of the nature of these markets which
includes:
The size of the economy, first is that they operate in a mini-economy in which production,
consumption, trade, and exchange, saving, borrowing and income-earning occur in very small
amounts. The effect of this is that transaction costs tend to be high as the ‘unit’ of transaction is
generally extremely small. This has important implications for the use of formal sector
institutions where the charging of any standardized administrative cost will commonly make
transactions unattractive to the poor and SMEs. (Matin, Hulme, & Rutherford, 1999)
Insecurity and risk. These arise because flows of income and expenditure commonly do not
match either due to household-specific factors (loss of earnings because of sickness, urgent
medical expenses, premature death, theft, insecure conditions of employment, difficulties of
contract enforcement), and or because of broader environmental factors (natural hazards, harvest
failure due to drought or flooding, national economic crisis due to Covide 19 impacts). The
covariant nature of the risks associated with this latter group are particularly problematic as they
weaken the capacity of community-based social security networks to provide support. (Matin,
Hulme, & Rutherford, 1999)
Therefore, these characteristics have a number of consequences.
(i) They limit the interactions of poor people with formal sector institutions.
(ii) They foster strategies of risk-spreading by the poor: for example, they do encourage
diversification of economic activities and the development of financial relationships with
networks of individuals, groups and agencies hence them having fewer options.
(iii) They lead to the use of savings and credit mechanisms by the poor as substitutes for
insurance so that savings, credit and insurance have to be treated in a unified way.
 Understanding Fintech in relation to Financial Inclusion.
Due to the identified loopholes of the financial services above, Fintech show an opportunity to
close the gap through its solutions for financial inclusion.
Financial inclusion is defined as the availability and equality of opportunities to access financial
services. It refers to a process by which individuals and businesses can access appropriate,
affordable, and timely financial products and services. These include banking, loan, equity, and
insurance products. (Wikipedia, n.d.) This aims to include everybody in society by giving them
basic financial services regardless of their income or savings. It focuses on providing financial
solutions to the economically underprivileged. The term is broadly used to describe the provision
of savings and loan services to the poor in an inexpensive and easy-to-use form. It aims to ensure
that the poor and marginalized make the best use of their money and attain financial education.
With advances in financial technology and digital transactions, more and more startups are now
making financial inclusion simpler to achieve.
Fintech, the word, is a combination of "financial technology." Fintech is used to describe new
technology that seeks to improve and automate the delivery and use of financial services. This is
utilized to help companies, business owners, and consumers better manage their financial
operations, processes, and lives by utilizing specialized software. Fintech now includes different
sectors and industries such as education, retail banking, fundraising and nonprofit, and
investment management, to name but a few. (Kagana, 2020)
Therefore, Fintech simplifies financial transactions for consumers or businesses, making them
more accessible and generally more affordable. It can also apply to companies and services
utilizing AI, big data, and encrypted block chain technology to facilitate highly secure
transactions amongst an internal network. Fintech strives to streamline the transaction process,
eliminating potentially unnecessary steps for all involved parties. For example, a mobile service
like Venmo or CashApp allows you to pay other people at any time of day, sending funds
directly to their desired bank account. However, if you paid instead with cash or a check, the
recipient would have to make a trip to the bank to deposit the money.

 Fintech potential to close the gap though its solutions for financial inclusion
Fintech has shown its potential to close gaps in the delivery of financial services to households
and firms in emerging markets and developing economies though its solution for financial
inclusion.
Fintech can democratize access to finance and the world can move closer to achieving financial
inclusion. Fintech has the potential to lower costs, while increasing speed and accessibility,
allowing for more tailored financial services that can scale. Over the last decade, 1.2 billion
previously unbanked adults gained access to financial services, and the unbanked population fell
by 35%, primarily boosted by the increase in mobile money accounts. While globally 1.7 billion
adults remain unbanked, Fintech is helping make financial services more accessible to an
increasing number of people.
Beyond mobile money, Fintech has also shown promise in areas such as Government to Person
payments and cross-border remittances. Our paper on Digital Financial Services explains how
this potential has been apparent during the COVID-19 crisis, when digital delivery channels have
helped governments quickly and securely reach vulnerable consumers with cash transfers and
emergency liquidity - allowing the transfer of funds with limited physical contact.
The financial sectors having the potential to be impacted by Fintech

A number of financial sectors that have the potential of being affected or are already affected by
the advancement of FinTech into the global market. These sectors include, business process
outsourcing, Investment and capital market markets, financial media and data solutions,
payments, HR and payroll technology, Digital lending, Security Technology. However, the four
major sectors that are of great interest are digital lending, payments, blockchain and digital
wealth management. This is because rapid pace of growth, disruptions in technological
advancement, and regulatory as well as other risks centered around them.

a. Digital lending. This is a nonbank technology lending. New companies can now
favorably compete with the traditional banks by providing juicy new offerings to
potential clients through providing access to expansive data, considerable computing
power, among others. The companies that participate in lending have digital platforms to
facilitate the lending and their clientele includes consumers and SMEs with sources of
funds being individuals and institutional investors. (Scott Kessler, 2016)
b. Payments. The rapid advancement of smartphones and the emergence of mobile
payments and blockchain technology have driven innovation across the payment systems
affecting majorly three areas as, credit and debit card transactions for examples, banks
like KCB Uganda now have debit cards that can facilitate online payments and transfers,
person-to-person payments; this is a transfer of funds from one person to another using
either debit/credit cards or Automated Clearing House system and finally In-store retail
payments which are facilitated through smartphone Apps like Apple pay and Starbucks.
(Panno, 2016)
Important to note is that the most affected payment system is the person-to-person payment.
c. Blockchain. This is simply summed up as decentralization through a shared ledger of
transactions. It consists of three main components; peer-to-peer network with groups that
are randomized, a digital ledger or database, and third parties. For example, unlike in the
past when ordering for a car ride wasn’t decentralized, today it is as easy as opening an
Uber or Safe Boda App in your connected gadget and ordering for your ride by dropping
your pin for your location and all drivers within your reached are alerted. This had
eliminated the need for an intermediary taxi firm as details of all the transactions are
authenticated (distance, price, and time).
d. Digital wealth management. As the investment and capital markets sector continues to
expand, one of the key dynamic discussions is the disruption of the traditional wealth
management. Tech firms like Robo-Advisors have developed automated, agile
technology that is rapidly changing how wealth can be managed. Over time, the
traditional wealth management focuses on wealthier clients whereas, the digital advisors
appeal to younger clients and the mass affluent demographic. The rise of digital wealth
management has created an industry shift from active to passive investment management.
 The proportion of assets that are managed passively have significantly risen in the recent
past. Much as FinTech companies are just a small part of the broader wealth management
space, their level of influence in wealth management is expected to grow bigger across
the globe.

Conclusion
However, as we have shown in this paper, provision still lags behind theory - there remains a
great need to narrow the gap and also deepen understanding. It has advanced in terms of
recognizing the need for products that meet the preferences and circumstances of poor people -
access to ‘lump sums’, regular and small savings and repayments, appreciating the importance of
incentives and commitment to sustainability. However, it remains weak on developing processes
that rapidly identify high quality ‘new products’ and on mechanisms for increasing depth of
outreach. The first ‘microfinance revolution’ has shown that the ‘poor are bankable’ – the second
revolution is faced with the challenge of showing that it is possible to offer a set of financial
services to the poor that meet their livelihood needs. (Matin, Hulme, & Rutherford, 1999)