EDITORIAL: It’s time for financial institutions to educate consumers | New times

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The latest analysis by TransUnion Rwanda, which operates the Credit Reference Bureau, further showed that young people have increasing access to credit facilities.

Rwandan millennials, born between 1981 and 1996, dominate the banking sector loan market, at 56.4%, ahead of Generation X, born between 1965 and 1980, which stands at 21.5%.

Mobile loans are more popular among Gen Z, born 1997 to date, accounting for 68.2% of all their loans, compared to 56.3% for Gen Y.

However, the younger generation, Gen Z, has a nonperforming loan rate of 7.0%, due to a lack of financial education and a need to develop better credit management skills.

While the use of credit facilities is a positive development, now is also the perfect time for financial institutions across the country to begin financial literacy awareness sessions for their clients, especially among young people.

As the middle class grows, as the banked population grows, the lack of adequate financial knowledge could reverse the gains made.

By focusing on the financial well-being of their younger clients, financial institutions will help their clients achieve sustainable financial well-being.

Although access to loans is gradual, the skills to manage funds will be essential to reduce non-performing loans and avoid cases such as asset auctions.

The move is also an indication of the need for Rwandan banks to accelerate their digitization in response to consumers’ appetite for seamless and seamless online transactions that are likely to grow due to increased competition.

The development is also forcing banks to adjust their setup to focus more on risk management and customer focus, as well as data insights to improve decision making.

It will also improve forecast accuracy to inform strategic decisions.

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