A leading bank in Uganda has deployed a new in-house SMS and USSD infrastructure as part of a move to strengthen control over its mobile banking communications and reduce reliance on third-party aggregators.
The bank partnered with CestaSoft, a technology provider specialising in enterprise solutions for financial institutions, to implement two platforms that connect directly to mobile network operators in Uganda.
SMS and USSD technologies play a critical role in digital banking across Africa. SMS is widely used for one-time passwords (OTPs), transaction notifications and customer alerts, while USSD enables menu-based banking services that can be accessed on both smartphones and feature phones.
For several years, the bank relied on external aggregators to deliver these services. However, the model increasingly created operational challenges related to regulatory compliance, cost and service visibility.
One of the bank’s SMS providers, True African, faced regulatory compliance issues, highlighting the risks associated with relying on third-party intermediaries to manage critical communication channels.
Aggregator services typically charge additional fees per SMS message and USSD session, which can significantly increase operational costs as transaction volumes grow.
The use of intermediaries also limited the bank’s visibility into message delivery performance, routing decisions and system errors.
To address these issues, the bank opted to move both SMS and USSD services onto infrastructure hosted within its own environment.
The first component of the deployment is a mobile services platform (MSP), which functions as the bank’s SMS gateway. The platform connects directly to mobile network operators’ SMS centres, consolidating all outbound messaging into a single system managed internally.
The SMS platform supports several types of communication, including OTPs generated by digital banking platforms, transactional account alerts and bulk marketing messages sent to customers.
The gateway also includes automated error-handling capabilities that reprocess failed messages, improving delivery reliability for time-sensitive communications such as authentication codes and transaction notifications.
In addition to the SMS platform, CestaSoft deployed an in-house USSD gateway that enables the bank to provide mobile banking services without relying on external aggregators.
USSD remains a widely used banking channel in Uganda, particularly among customers using feature phones without internet access.
Through the bank’s USSD short code, customers can access services such as balance enquiries, mini statements, fund transfers and account management using menu-based interactions.
By hosting the gateway internally, the bank now has direct control over session management, service availability and menu design.
The combined platforms create a unified communications layer that improves service reliability while giving the bank’s technology teams greater operational oversight.
Direct integration with mobile network operators also supports regulatory compliance requirements and removes the risks associated with third-party routing of sensitive financial communications.
The move is expected to improve delivery rates for critical messages such as OTPs and transaction alerts, while enabling the bank to scale messaging and mobile banking services more efficiently.
USSD services are also expected to play an important role in expanding access to digital banking for customers who do not use smartphones.
According to CestaSoft, the project demonstrates how financial institutions can strengthen their digital infrastructure by bringing key communications systems under their direct control.
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